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Business
Opportuniti
es at IBM
Presented by: Section 2
Founded in 1911 and a leader in computer companies for many years. Led the
innovations like System/360 family of products, floppy and early versions of ATM
1991
IBM stopped growing after 45 years in a time when the industry was booming
1993
For first time IBM hired outside CEO-Lou Gerstner and managers viewed new business
opportunities as distractions or threat to core business
Mid 1990s
Starting of its service business and a steady improvement was observed but still lagging
the competitors. They were also not able to capture new business opportunities
July 2000
Thompson, a 34 year veteran of IBM, was promoted as Vice Chairman and put in charge
Mid 2002
Revenues of most of EBOs rose sharply but the process remained informal and
corporate strategy group took over the responsibility of EBOs
2003
Revenue in $ Milliions
50000
40000
30000
20000
10000
0
1990
1992
1994
1996
1998
Years
2000
2002
2004
External Environment
Raw
Materials
Sector
Industry
Sector
Human
Resource
s Sector
Suppliers
382000
Employe
es
$1 Tn
Industry
$648 Bn IT
Services
Considerabl
e fall from
peak
employee
count of
434000
Financial
Resource
s Sector
Revenue
81.74billio
n USD
(2015)
Net inco
me
:
13.19billio
n USD
(2015)
Market
Cap
Technolo
gy
Sector
Market
Sector
Biggest
Clients
include
American
and Chinese
government
s
Increased
Focus on
Emerging
Markets
Sector
defined by
constant
change and
rapid
innovation
Emerging
technologies
causing
disruption
Setting up of
EBO Division
to keep pace
with sector
Administrativ
e
Support
Technical
Core
Technical
Support
Top
Management
Middle
Management
Engage
directly with
market place
Managed by
experience
since start
start-stage
Focus on
business
opportuniti
es
Innovation
&
Refinement
Signal
Processing
Scanning
Environment for
technological market
and other signals
Collect and filter
signals from
background noises
Scan forward in time
Process signals into
relevant information
for decision making
Strategy
Scanning
Environment for
technological market
and other signals
Collect and filter
signals from
background noises
Scan forward in time
Process signals into
relevant information
for decision making
Implementati
on
Resourcing
Scanning
Environment for
technological market
and other signals
Collect and filter
signals from
background noises
Scan forward in time
Process signals into
relevant information
for decision making
Scanning
Environment for
technological market
and other signals
Collect and filter
signals from
background noises
Scan forward in time
Process signals into
relevant information
for decision making
Horizon 2
Horizon 3
Rapidly growing
business
Emerging business
Were experiencing
accelerating growth
and profitable in
medium term
Needed disciplined
risk taking and
significant resource
commitments
To be judged on
revenue growth and
market- segment
share gain
Disadvantages
Horizon 2
Horizon 3
Wireless
On Demand
Workplaces
Growt
h
Rates
Digital
Media
Linux
Learning
Solutions
Life Sciences
Grid
PLM
Core
Business
Growth
Business
Safety and
Security
Flexible Hosting
Services
Level of Uncertainties
BTO
Emerging
Business
Organizational Structure
Functional Structure
Divisional Structure
Matrix Structure
Organisation Design
IBM had a mechanistic design due to its long legacy of
success
Organizational Strategy
Porters Competitive Strategy:
Differentiation
Learning Orientation
Decentralised
Structure
Strong Capability in
research
Customer centric
Approach
Increasingly used by
technology companies
At group level
Group cohesiveness and informal expectations disrupted
Alters task and role relationships so new norms needed
Distinguishing features of H3
Each stage unique, therefore allowed unique strategies to
go through
Still in advancement stage so slow growth allowed so that
creative ideas get proper incubation
Determining the stage would enable handling the
challenges well with the needed strategies
Flexibility to change situations in rapidly changing market
makes it abler to deal with the emerging opportunities
Evolution of EBO
It moved from traditional to modern method by creating
a common place of control and balancing various levels
of investments
In the Thompson era activities were being consolidated
and people assigned clear role in the organisation
Monthly reviews and self-evaluation assessments tool
place
These helped define the new ways of doing business
Corporate strategy era began the use of EBO plans
The stages of organisation development were
recognised as plans became well know
These development strategies to enable the organisation to carry out its core
objects in future
Monitoring ensures that funds used in economic manner to get the output
Chaos theory
Managers cant measure, predict or control the surprise and rapid changes
These randomness and disorder occurs within certain larger pattern of order
Organisation be viewed as natural system than precise, predictable machines
Matrix structure
A simplified and effective matrix structure required as both technical
expertise and product innovation and change needed to meet goals
Functional, divisional and geographic structures combined with horizontal
linkages do not work
Most suitable to present challenges faced
Condition 1 : share scarce people and equipment across product lines
Condition 2 : critical outputs pressure- technical knowledge and new products
Condition 3 : frequent external changes and high interdependence internally
So vertical and horizontal authority lines require equal recognition, thus dual
authority needed for balance of power
Product matrix more suitable as project managers have primary authority
and functional managers simply assign personnel & give advisory expertise
Thank You !!