IBM SWOT - Professor Flemming PDF

Preview

Summary

Professor Flemming...

Description

IBM

Business Policy Section 1 Dr. Robert Fleming

Team 5:

Organizational Strengths ●

● ●

●

● ●

●

●

●

●

● ● ●

● ●

●

Brand Value IBM ranks at 22nd in the Brand Finance Report of 2016. Its brand value is $31.786 billion. Sector Rank IBM ranks 6th in the world in the technology sector. Cognitive Computing It provides sets of APIs and Saas products which give cognition to products and makes them think like humans. The application is in varied fields of commerce, healthcare, education, supply chain, talent etc. Cloud Computing It offers hardware and software solutions for companies preferring their private cloud network. Current Ratio IBM presented 1.41 for the current ratio. Multiple Business Solutions It deals into multiple solutions such as, software, data mining, analytics, cloud solutions, cognitive solutions etc. IBM is a one stop service provider to its customers. Partners and Acquires Reputed Brands Some of IBM partners are increasing the presence of IBM in multiple fields and providing exposure to other reputed and world class technologies. Good Range of Trial Products and APIs IBM develops wide range of products for free trials with continuous innovation. The customers have a variety of options to choose from. Providing APIs and Services for Mobile Computing More people are searching APIs which can be integrated and used in mobiles with the increasing use of mobile technologies. Comprehensive Features and Capabilities Across Key B2B Integration Pillars IBM B2B Cloud Services offer extensive features and capabilities across a range of areas. Huge Client Base IBM has a huge and extensive client base, which is present across the world. Geographically Diverse Business It lowers the risk and increases the value of the business over the long term. Global Market Leader They have a more stable business than their competitors and are more likely to acquire other businesses as opportunities comes about. Retained Earnings For 2016, IBM reported Retained Earnings of $153 billion. Uses Open Source Operating Systems (i.e. Linux) This allows IBM to use the I-line, z-line, and p-line series all with the same operating system. Expertise in Production Processes and Materials Management Due to IBM’s longevity they have an expertise in production processes and materials management  from their long history of innovation.

●

Extensive Intellectual Property Portfolio IBM has one of the highest numbers of patents which not only strengthens the

company and its competitive advantage but increases their property owning. ●

High Economies of Scale IBM has a high economy of scale due to the business’ capabilities in maintaining

competitiveness despite the high costs of developing new technological products. ●

● ● ● ● ● ●

●

●

● ● ● ●

Patents IBM leads the world in technological success with patents in the US for 17 straight years. Revenue IBM revenue in 2017 was 79.14 billion. Cloud Revenue IBM had 17 billion in cloud revenue during 2017. Stock Beta IBM has a stock beta of 0.96 percent. Dividend Yield For 2017 IBM has a dividend yield of 3.90%. Cash Equivalents In 2016, IBM reported $140 million in cash increases and cash equivalents. Stable Management IBM has very stable employees in their management positions that have a lot of experience and knowledge. Send Time Optimization Analyzes recipient behavior on a rolling basis to understand behaviors and forecast the ideal email delivery time for list recipients. High Customer Satisfaction IBM culture is based on customer satisfaction and customer oriented selling. Employees are taught that customer needs were always considered first during interaction. Longevity IBM has been in business for 100 years. Employee Strength IBM has more than 380,000 employees serving clients in 170 countries. Net Income The company’s net income was $5.8 billion in 2017. Fortune 500 In 2017 IBM was ranked number 32 on the Fortune 500 list.

Organizational Weaknesses ●

●

●

●

● ● ●

●

● ●

●

●

● ● ● ● ●

IBM’s Dependence on Large Businesses Large businesses are dependent on IBM’s mainframes, services, and software but they are all expensive compared to solutions for small businesses. Fluctuations in client spending could weigh down IBM’s top-line growth. Low Retention of Employees The company does not have a loyal customer base their policies do not retain employees.It can face a huge loss for training and developing life skills and losing it. Depends Mostly on Outsourcing Work The company depends on its work being outsourced to countries like China, India which are prone to natural and political uncertainties. Costly Product and Services Because customers are used to using their free trial products, when it comes to actually purchasing the products at the end of the period, their high pricing acts a deterrent. Size of the Company The size of the company is exceeding to its requirements, which needs to be cut down. Extending Expenditure The company is leading to slow and consistent abrasion. Expensive Software Solutions and Services The company’s software and IT technology are strong, and the software solutions and services are expensive. Brand Identity The company is associated with Old and Big, which doesn’t appeal to the younger generation that will soon take over the tech market. Brand Value Suffered a decline in brand value of $3.642 billion from 2015 to 2016. Imitable Products Due to their cost minimization process, they are unable to emphasize product uniqueness. Supply Chain The supply chain for IBM contains very few alternatives, which leaves them less options should they need to negotiate a better supplier deal. Litigations IBM has been involved in numerous lawsuits, which successful or not, still dampers the brand image to consumers, and costs the company a lot of money in settlements. Shrinking Product Mix IBM is discontinuing more products than they are introducing. Low Degree of Diversification IBM does not have a diversified product line which leads to increased risk. Revenue For 2016, IBM reported a total revenue of $80 billion. Operating Income For 2016, IBM reported an operating income of $12 billion. Expensive Services and Software Solutions IBM offers expensive solutions for enterprises that require expensive software and hardware.

●

● ●

● ● ● ● ● ● ● ● ●

●

Lack of Vendor Supported CRM Integration There is a lack of vendor supported CRM integration beyond Microsoft Dynamics CRM and Salesforce.com. Limited Ecosystem Limited ecosystem of integrated third party product. Lacks Market Visibility When compared to other companies such as Eloqua, Marketo, and Hubspot, IBM lacks market visibility. It can lead to leaving IBM in a lagging position. Products PCs and hard disk drives are becoming commodities are not customizable. Fortune 500 Ranking In the past 5 years IBM’s ranking has decreased from 20 to 32. Expensive Products They need to produce cheaper products to acquire more customers. Gross Profit IBM’s gross profit is down 4 billion from 2015. Income Tax Expense IBM’s income tax expense was 5.6 million. This is double what it was in 2015. Glassdoor Review IBM has 35,000 reviews on glassdoor and only has an employee review rating of 3.6. Glassdoor CEO Approval Rating IBM’s CEO Virginia Rometty has only a 67% approval rating on glassdoor. Workforce Changes IBM workforce has been decreasing due to large rolling layoffs and buyouts. Americans Losing Jobs IBM has approximately one third of its entire workforce located in India.This may be viewed as foreigners taking jobs away from Americans which may hurt sales in the United States. Cognitive Computing IBM has many competitors emerging with new cognitive computing technologies.

Environmental Opportunities ●

●

●

● ●

● ● ● ●

●

●

●

● ●

●

●

Cloud Software By obtaining cloud software, IBM can position themselves better in the market and see continued growth. Mobile Computing IBM applications like Mobile Cloudant, MobileFirst and API connect give IBM a base in the field. Cheaper Products IBM produces a number of costly products. If they were to produce cheaper products, they could acquire many more customers. Opportunities to Invest Expand upon the already standing $240 million investments. Alliances If IBM decided to form any type of analysis, they could expand upon their business and learn about other companies and competitors. Increased Globalization IBM is currently able to reach out to multiple markets and benefit from the new markets. Fortune 500 Ranking Start climbing back up the list, as their rankings have fallen over the years. Global 500 Ranking Build the company back up, as their rankings have fallen over the years. Increased Use of Technology in Companies, Institutions, and Schools Across the Country It is simply the trend of society to digitize our businesses, education and other functional institutions in order to cut costs and increase quality. React to its Current Brand Identity They have identified their weakness with brand identity and the younger generation, now they can release new product lines to cater to this market. IBM’s Open Source Operating System The open source operating system will lead to long and short-term benefits because it allows IBM to be self-sufficient and compete with itself as opposed to other brands taking away some of their market share. IBM Utilizing Blockchain It is an innovation in the language of programming, which allows things to be public, but be safe from data manipulation. Demand for Cloud Computing The Cloud Computing market has grown by 33% (2016). Business Diversification in Various Industries Diversifying into different industry results in less risk and many opportunities for increased revenue. Alliances with Firms From Different Industries Making alliances with firms in different industries would make market entry much easier and can lead to the creation of many new products. $1 Billion Investment to Start a Separate Business Unit for Watson Watson is the new industry/product line that IBM is using to under the data-processing AI field. It is estimated by Rometty that the industry can generate $10 million a year in a decade.

● ●

●

● ●

●

●

● ● ●

●

●

●

●

Consulting Business IBM invested $100 million to expand its consulting business. Acquisitions In the past IBM has been able to acquire new companies and use them to better their company. IBM could continue this trend with new companies to help them become more competitive. Expansion There is an opportunity to build a strong global presence through expansion. The company can increase its business by focusing on engagement solutions. Emerging Economies These economies have a lot of use for technology services. Innovative Schemes Greater innovation can help this company produce unique services that meet customers needs. This can also be used for easier usage and venturing into better products. Online Market Offers financial companies the ability to greatly expand their business. Can market to a much wider audience for relatively little expense. Advertising Focusing on advertising and marketing can help boost the brand image and work to attract a younger demographic. Higher Customer Involvement Incorporating customer involvement in product design can increase customer loyalty. Data Analytics This market is expected to reach $125 billion in the evaluation. Twitter IBM has an opportunity with Twitter to incorporate Twitter’s massive data streams into IBM’s cloud-based analytics. Cloud-Based Solutions The demand for cloud computing services is growing and is expected to become more than $1.9 billion. The public based cloud services is also expected to rapidly grow. Small and Medium Sized Companies IBM is well-known for competing on a large scale and working with large corporations. Working with small and medium sized companies as well can help expand their overall business and help get their name out to younger companies. Expand Software Divisions IBM can expand on this area to better compete with companies such as Amazon that have a controlling market share. Lowering Price IBM currently has fairly expensive products and services. If the company was able to lower these prices this could then appeal to other markets. The company would also be able to use this as a strategy in their business model.

Environmental Threats ●

●

●

● ●

●

●

●

●

●

●

●

● ●

Microsoft (Competition) Microsoft owns a cloud service called OneDrive that directly competes with IBM’s cloud service for businesses. Microsoft (Reliance) IBM is absolutely dependent on Microsoft and the company would be jeopardized if anything happened to Microsoft. Amazon Amazon currently holds the biggest market share for cloud computing with their Amazon Web Services. Google One of the most valuable companies in the world. Also owns Google Cloud. SAP International company that develops and publishes enterprise software applications with a focus on business analytics. In 2016, their overall revenue was $23.1 billion. They operate in 180 countries and have more than 350,000 customers. Oracle Corporation Multinational computer technology company that specializes in developing, manufacturing, and marketing hardware systems. Salesforce.com Inc. Leading provider of cloud-based customer relationship management computing software. Introduced the first CRM software in 2000. Generated $8.4 billion in revenue in 2017. EMC Corporation EMC develops, delivers, and supports information infrastructure products with a focus on data storage and security. Accenture PLC Accenture provides management consulting in technology and outsourcing services. One of its major differentiations is the global delivery model, it enables the company to use the resources of people worldwide. Hewlett Packard Global technology corporation that provides a wide range of enterprise IT solutions to commercial clients, including systems integration, software design, storage, and networking. Imitation of Products Product differentiation is not well defined. Competitors in this industry have very similar products. Cyber Crime An increase in cyber crime introduces new problems into the industry. It also exposes weaknesses in the information infrastructures. Dell The third largest computer hardware manufacturer in the world. Lenovo The second largest personal computer vendor in the world with 20 percent market share as of 2017.

●

● ● ●

● ● ● ● ● ●

●

● ● ● ● ●

HP The largest personal computer vendor in the world with 21 percent market share as of 2017. Competition in the “cloud as a service” industry Competition in this market is growing even faster than the industry itself. Competition in the “predictive analytics” industry Numerous companies are making alternatives to Watson, at a cheaper price. Fluctuating Market Trends The technology market is rapidly expanding and changing and can hurt IBM if they don’t adapt quick enough. Government Regulations Government regulations can delay timing on projects and restrict growth. Economic Decline An economic decline can decrease the number of potential customers. Stock Market Major crash of the stock market will lower buyer confidence. Employee Loss Having employees leave the company to join another company is not ideal. Few Supply Chain Suppliers Not many options for IBM to negotiate with or switch to. Economic Politics Trade wars and tariffs can cause difficulty in buying or selling products and materials overseas. Data Breaches Breaches of data in IBM’s systems and other companies’ systems will will give technology companies a negative image. Size of Company The massive size of IBM can make coordination on projects difficult. Negative Media Exposure Any kind of negative press can hurt sales and buyer confidence in IBM greatly. System Failures If a computer system goes down indefinitely, it will lose IBM a lot of money. Consumer Distrust in Technology Companies Some consumers distrust tech companies due to privacy and ethical concerns. Legal Issues Any kind of legal case brought against IBM can be detrimental.

Mission Statement: “To lead in the creation, development and manufacture of the industry’s most advanced information technologies, including computer systems, software, networking systems, storage devices and microelectronics. And our worldwide network of IBM solutions and services professionals translates these advanced technologies into business value for our customers. We translate these advanced technologies into value for our customers through our professional solutions, services and consulting businesses worldwide.”

Goals 1. Increase IBM’s revenue from the cloud from 20% to 30% in five years. Strategies: ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ●

Create a team Gather a marketing team Gather a technology team Asses the cloud market Assess the competitors in the cloud market Compare and contrast the findings of the competitors in the cloud market Brainstorm ideas on how to increase revenue from the cloud market Maintain and update already functional components Maintain easy use Maintain accessibility Have the technology team create something to differentiate the IBM cloud from other clouds Run a program test to make sure this new differentiation works Have the marketing team market this new product or expansion Market to the multiple generations Monitor the company’s progress Monitor the company’s competitors Keep making changes to better IMBs cloud Gather surveys from customers about their experiences Asses their feedback Use their feedback to improve the cloud

Program Objectives: Year 1: ● Create a team ● Gather a marketing team ● Gather a technology team ● Asses the cloud market ● Assess the competitors cloud market ● Compare and contrast the findings of the competitors cloud market ● Brainstorm ideas on how to increase revenue from the cloud market ● Maintain and update already functional components ● Maintain easy use ● Maintain accessibility ● Have the technology team create something to differentiate the IBM cloud from other clouds ● Run a program test to make sure this new differentiation works ● Have the marketing team market this new product or expansion ● Monitor the company’s progress ● Monitor the company’s competitors

Year 3: ● Gather surveys from customers about their experiences ● Assess their feedback ● Maintain and update already functional components ● Maintain easy use ● Maintain accessibility ● Use their feedback to improve the cloud ● Keep updating and making changes to better the cloud ● Have the marketing team market any new product or expansion ● Market to multiple generations ● Monitor the company’s progress ● Monitor the company’s competitors

Year 5: ● Gather surveys from customers about their experiences ● Asses their feedback ● Use their feedback to improve the cloud ● Maintain already functional components ● Maintain easy use ● Maintain accessibility ● Keep updating and making changes to better the cloud ● Have the marketing team market any new product or expansion ● Monitor the company’s progress ● Monitor the company’s competitors

Impact Objectives: Year 1: ● Increase revenue to 23% from base value Year 3: ● Increase revenue to 26% from base value Year 5: ● Increase revenue to 30% from base value

Implementation Issues: 1. Issue 1: Keeping up with competitors Resolution Strategies: ● Asse...