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About IBM About IBM Pakistan Introduction Products & services Hardware asset management for IT Smarter analysis of IBM Smarter analytics at banking and insurance IBM smarter business model strategy Corporate level strategy of IBM Corporate portfolio analysis BCG Model Corporate grand strategy Growth strategy Stability strategy Retrenchment strategy Business level strategy of IBM Analysis of business level strategy Functional level strategy Sub business unit strategy Financial highlights SWOT analysis Recommendation Conclusion

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International Business Machines Corporation, or IBM, is an American multinational technology and consulting corporation headquartered in Armonk, New York, United States. IBM manufactures and sells computer hardware and software, and it offers infrastructure, hosting and consulting services in areas ranging from mainframe computers to nano technology. The company was founded in 1911 as the Computing Tabulating Recording Corporation through a merger of three companies: the Tabulating Machine Company, the International Time Recording Company, and the Computing Scale Corporation. CTR adopted the name International Business Machines in 1924, using a name previously designated to CTR's subsidiary in Canada and later South America. Its distinctive culture and product branding has given it the nickname Big Blue. In 2012, Fortune ranked IBM the #2 largest U.S. firm in terms of number of employees 433,362. 4th largest in terms of market capitalization, 9th most profitable and the 19th largest firm in terms of revenue. Globally, the company was ranked the 31 largest in terms of revenue by Forbes for 2011. Other rankings for 2011/2012 include #1 company for leaders (Fortune), #1 green company worldwide (Newsweek), #2 best global brand (Inter brand), #2 most respected company (Barron's), #5 most admired company (Fortune), and #18 most innovative company (Fast Company). IBM holds more patents than any other U.S.-based technology company, and has nine research laboratories worldwide. Its employees have garnered five Nobel Prizes, six Turing Awards, nine National Medals of Technology, and five National Medals of Science. Famous inventions by IBM include the automated teller machine (ATM), the floppy disk, the hard disk drive, the magnetic stripe card, 2

the relational database, the Universal Product Code (UPC), the financial swap, SABRE airline reservation system, DRAM, and Watson artificial intelligence. Sam Palmisano stepped down as chief executive officer on January 1, 2012, but retained his position as chairman. He was replaced by veteran IBMer Ginni Rometty.

About IBM
At IBM, we strive 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.

IBM Pakistan
IBM established its operation in Pakistan in 1952, and has continued since then to create a long-standing business along with a technological and social heritage in Pakistan. We are dedicated to helping our customers pursue new market opportunities and becoming more productive through the end-to-end transformation of their business models and the innovative application of ebusiness technology and solutions. The country headquarters are based in Karachi with branch operations in Lahore and Islamabad and remote maintenance services in over 30 cities. IBM along with over 20 business partners provides product distribution, sales and technical support, solution offerings, technology and business consultancy services. IBMers value... Dedication to every clients success. Innovation that matters for our company and for the world. Trust and personal responsibility in all relationships.

Type Traded as Industry Founded Founder(s) Headquarters Area served Key people

Products Revenue Operating income Net income Total assets Total equity Employees Divisions Website

Public NYSE: IBM Dow Jones Component S&P 500 Component Computer hardware,Computer software, IT services, IT consulting Endicott, New York, U.S. (June 16, 1911) Charles Ranlett Flint, Thomas J. Watson Armonk, New York, U.S. Worldwide Samuel Palmisano (Chairman) Ginni Rometty (President and CEO) See IBM products US$ 106.91 billion (2011)[1] US$ 20.28 billion (2011)[1] US$ 15.85 billion (2011)[1] US$ 116.43 billion (2011)[1] US$ 20.13 billion (2011)[1] 433,362 (2012)[2] Financing, Hardware, Services, Software IBM.com

Systems & Servers (US)

1. System x offers 2. AMD processor-based servers (US) 3. Blade Center (US) 4. Cluster servers (US) 5. Intel processor-based servers (US) 6. Linux servers (US) 7. Mainframe servers (US) 8. POWER processor-based servers (US) 9. System i (iSeries) (US) 10.UNIX servers (US) 11.x86 servers for Windows and Linux (US)

1. All software by category 2. Software A-Z

Storage (US)
1. 2. 3. 4. 5. 6. All storage Disk systems Tape systems Storage area network Network attached storage Storage software

Hardware Asset Management for IT

IBM Hardware Asset Management for IT is a comprehensive solution that combines asset purchasing, inventory, financial, maintenance and contract management into one flexible interface. It tracks and manages the complete life cycle of your IT assets and provides workflows to manage the processes for control, audit and reconciliation of authorized versus deployed assets. This solution helps manage hardware assets by: Prioritizing and organizing contract management activity through alerts and workflow. Reducing the costs of purchase orders by streamlining the IT asset procurement process. Avoiding unnecessary purchases through accurate inventory management. Enabling efficient financial control of hardware assets by reconciling what's been purchased, received, deployed and invoiced. Identifying and removing older IT assets that are costly to maintain.

IBM Hardware Asset Management brings together two powerful IBM software products that help you avoid hardware life-cycle management problems: IBM Tivoli Application Dependency Discovery Manager and IBM Tivoli Asset Management for IT. Together they provide the tools you need to discover, analyze, plan, execute and monitor all your hardware assets. The products deliver:

A flexible, easy-to-configure, Web-architected solution built on J2EE leading, standards-based technology featuring advanced business process management. An easy-to-upgrade asset management system that keeps 6

configurations of the asset management application intact. Closed-loop automation across business silos. A configurable user interface, dashboards, key performance indicators (KPIs), reports, ability to create new applications and more.

The IBM Hardware Asset Management solution offers a complete, integrated way to achieve cost controls and meet service goals based on industry best practices. It maximizes the performance and lifetime value of complex assets and closely aligns them with your overall business strategy to help you:

Lower Total Cost of Ownership through efficient, system-wide discovery and management processes. Enhance service delivery by standardizing hardware management processes. Increase the efficiency of change management and the effectiveness of planning. Help meet internal and regulatory compliance requirements.

What is Smarter Analytics?

Organizations that embrace business analytics outperform their competition. Dont get left behind. Smarter Analytics is IBM's approach to business analytics. With IBM Smarter Analytics, you can extract insights from your enterprise data and all the big data that is continuously flowing in from a variety of new sources.

Outperform your competition with Smarter Analytics

In todays fast-paced marketplace, you need to make decisions quicker than ever before. And those decisions must be based on facts. But often, the facts are hidden away in the volumes and complexity of business data and big data available to your company. How do you turn this into a business opportunity? How do you handle the massive volume of data that is rapidly arriving from a variety of structured and unstructured sourcesfrom product tracking systems and social media sites, to video feeds and images? As reported in a recent article in the New York Times, Its not just about Big Data its about finding big 7

patterns beyond the data itself. But how do you find them? And more importantly, how can you use them once you do? Smarter Analytics, IBMs holistic approach to business analytics,turns information into insight, revealing those patterns within your data so you can make the right decisions at the right time. Leading companies across various industries are using the insights they glean from analytics to achieve significant outcomes in areas such as customer satisfaction and retention, operational efficiency, financial processes, and risk, fraud and compliance management. By embedding insights into actions across the organization, you can gain clear insight into all areas of your businessyour customers, your competition and your market. And by giving you the ability to predict trends before they happen, Smarter Analytics can enable you to stay one step ahead of the competition into the future.

Achieve better outcomes in industry:

Companies that experience the greatest impact from analytics are applying it throughout all aspects of their business. They embed data-based insights into every processfrom scenarios that manage risk, to algorithms that process orders coming in through new digital channelsand they empower their employees to act confidently and decisively at the point of impact. Making analytics pervasive can help businesses: Grow, retain and satisfy customers. Transform financial processes. Manage risk, fraud and regulatory compliance. Increase operational efficiency.

Smarter Analytics, IBMs holistic approach to analytics, comprises a full range of technologies and services that can help organizations in every industry see results.

Smarter Analytics at work in banking and insurance

Banks and insurance companies are overwhelmed with volumes of data stored in financial and operational systems throughout corporate offices and local branches. Smarter Analytics can give these institutions a comprehensive view across claims and applications, customer service, the workforce and overall performance. Risk, fraud and regulatory compliance can be managed across the entire business. More insight into customers provides an opportunity to build loyalty by offering the right products and services. MoneyGram International, a leading global payment services company, uses a powerful algorithm-based software platform to help managers better understand who is using the companys services. This knowledge has helped them prevent more than USD37.7 million in fraudulent transactions, reduce customer fraud complaints by 72 percent and quickly address regulatory requirements. Westfield Insurance, stepped up its game through analytics. The insurer worked with IBM not only to update its business intelligence technologies but also to put change management processes in place that trained people to use information strategically. The company can now select and manage risk more confidently, and market and sell its products more effectively. Primerica worked with IBM to enhance their Primerica Online portal, which provides the capability to actively drill down into deep volumes of critical business information. Insurance representatives can dynamically interact with this information to gain insights that would have been too time-consuming and laborintensiveor just impossiblebefore the portal enhancements. Smarter Analytics at work in healthcare In the healthcare industry, organizations are using analytics to sift through the massive amounts of patient data and better understand the connections between different symptoms, diseases and treatments. They can actually predict outcomes 9

by correlating and analyzing information such as patient demographics, diagnostic information and clinical data to help to identify and develop more effective treatments, leading to more personalized care. Analytics can also be applied in healthcare organizations to increase operational efficiency and improve performance management. Smarter Analytics at work in retail In retail, understanding every facet of the customer is key to success. Smarter Analytics can help retailers see hidden patterns in customer data, keep track of customer sentiment, predict where the market is going, and give customers what they want, when they want it, at the right price. By applying analytics across corporate and retail locations, retailers can improve operational efficiency, better inform merchandising supply chains and deliver a smarter shopping experience. ConAgra Mills keeps a commodity business competitive through analytics. Econometric models enable the company to optimize production at all its plants, which improves its operating margin. Now, the company can systematically predict demand and mitigate price riskwhich adds great value and enhances its stature with customers. The online retailer wehkamp.nl has developed a comprehensive behavioral retargeting program that uses display ads, emails and on-site product recommendations to weave greater relevance into the customer experience, expand brand reach and drive impressive sales performance gains. Elie Tahari created a seamless reporting framework that delivers real-time insights on sell-through rates and inventory. This information makes it possible for the company to optimize store-level merchandising decisions to help ensure that the most popular fashions are in the right place at the right time.


Apply new analytics tools to reveal new opportunities: In this age of big data, organizations must be able to fully exploit all sources of data and content for insight. Executives need to make decisions based not only on operational data and customer demographics, but also on customer feedback, details in contracts and agreements, and other types of unstructured data or content. How can you manage all of this data, and give executives access to the visually compelling information they need to make timely, informed decisions? Smarter Analytics can help you expand from enterprise data to big data with an enterprise-class big data platform that is part of a comprehensive information management foundation. Smarter Analytics also includes software and tools for business analytics, such as predictive analytics, social media analytics, text analytics, business intelligence and other analytics applications.


Accelerate delivery of pervasive analytics with a big data platform

Your infrastructure must support, secure and provide efficient access to big datawithout adding complexity. But for many organizations, data is dispersed throughout the business in fragmented systems. Existing systems struggle to manage the complexity of new data sources, such as streaming data and video content. And information is not trusted. Deploying an information and big data strategy that flows directly from your business strategy can help you optimize the outcomes that matter to your organization. Integrating data throughout the business and establishing clear information governance processes can increase confidence in your data. You can manage the volume, velocity and variety of informationboth internal and externalto uncover new, deeper insights that can help create competitive advantage. Use predictive analytics to identify and respond to new opportunities

Decision makers need to be able to spot and analyze trends, patterns and anomalies. Plan, budget and forecast resources. Compare what-if scenarios. Predict threats and opportunities. Identify, measure and manage risk exposure. IT systems and software must support these efforts. Predictive analytics, powered by IBM SPSS software, makes it possible to use all of your datawhether structured or unstructuredto build predictive models. When you can see emerging trends and patterns hidden deep within the data, your company can make the most effective decisions. Social media applications, such as IBM Cognos Consumer Insight, make it possible to analyze customer


sentiment, product and brand associations, and emerging topics related to your organization or market. Traditional business intelligence (BI) capabilities are expanding beyond reporting, analyzing and creating dashboards and scorecards. BI practitioners must also plan and perform scenario modeling, real-time monitoring and predictive analytics. Managers want the ability to do their own analysis and visualize the data in real time. They want to connect the predictive analytics and social media analytics with traditional BI reports and dashboards to gain a full view of the business, customers, competitors and the marketplace. Improve decision making with content analytics About 80% of the information created and used by an enterprise is unstructured data located in content. This figure is growing at twice the rate of structured data. How can you access that 80% to unlock critical business insight? IBM Content and Predictive Analytics software gives you the ability to analyze this unstructured data. You can search, assess and extract meaning from large volumes of information found in emails, documents, chat logs and other unstructured data. And decision makers can use these insights to make faster, more informed decisions. Seton Healthcare Family is using IBM Content and Predictive Analytics for Healthcare to provide deep content analysis and evidence-based reasoning for better decision making. This enables the hospital to identify patients who are likely to be readmitted, and introduce early interventions to reduce cost and mortality rates, and improve patient quality of life.


IBMs Smart Business Model Strategy:

IBMs Smarter Planet initiative is more than smart branding. The initiative reflects smart evolution in IBMs business model. Over the past decade, the Fortune 500 company exited commodity IT hardware (e.g., personal computers) to make investments in high-end IT, such as data analytics. As IBMs income from hardware fell from $2.7b to $1.4b, income from software rose from $2.8b to $8.1b between 2000 and 2009. The broader scope and higher-end capabilities positions IBM as a catalyst to advance individual enterprise performance and significantly advance system-wide improvements in health care, transportation, energy, public safety, water and educational systems, or what IBM calls a creating a Smarter Planet. IBM is now positioned to improve how cities where all these systems come together in a system of systems operate. Thus the Smarter Cities initiative. The aim of the Smarter Cities initiative is to make cities systems more instrumented, integrated and intelligent so that cities better serve the needs of their businesses and citizens. I had the privilege of a short interview with Dr. Colin Harrison, a key leader in the Smarter Cities initiative at the IBM Research Lab in Zurich, Switzerland. Dr. Colin Harrison will be the keynote speaker at the Greater Madison Chamber of Commerce 58th Annual Dinner, October 7, 2010 5-9PM at Monona Terrace in Madison, Wisconsin. Creating, attracting and retaining talent and knowledgeintensive businesses is Job #1 in economic development today and the Smarter City perspective complete with examples from Iowa to Europe and Asia will be a useful perspective for Madisons leaders to consider. Dr. Harrison, with IBM since 1979, has a track record of successes reflective of IBMs view that information technology is transformational technology, to be deployed to improve life. Dr. Harrison explained how the concept for Smarter Cities emerged from a number of directions, mainly the following three.


IBM had been working during the last decade with an innovative economist, Carlota Perez, who helped IBM understand the implications of the global economy moving into a fifth long-wave Kondratiev cycle. (These are 50-60 years cycles created from technological innovation and the response of organizations to them.) The fifth cycle is the information technology cycle, in which a growing share of GDP uses integrated hardware and software producing what IBM refers to as a wired planet. The second direction was work Harrison was doing in sustainability and the environment, where IBM had a long-standing strategic focus. Harrison saw a lot of commonality in need across multiple applications, creating an opportunity for IBM to create a technical architecture that could be leveraged across multiple projects and systems. A third direction was IBMs work with a new small city being constructed in Dubai that had, as one aim, limits on the total daily usage of energy by the city in its entirety. This project helped Harrison and his team understands a city as a system of systems, with interconnectedness between the systems.

Corporate Level Strategy IBM:

IBM operates primarily in a single industry using several segments that create a value by offering a variety of solutions that include, either singularly or in some combination, technologies, systems, products, services, software and financing. This may lead you to believe that IBM has adopted a corporate level strategy of concentrating on a single business unit, but this is only half the picture. For IBM there is not one general type of corporate strategy that best suits their needs, but a combination of both a concentration on a single business strategy as well as a vertical integration strategy. A single business unit strategy means that IBM is concentrating on competing successfully within the confines of a single business unit. An advantage of choosing such a strategy is that the IBM can focus its total and collective resources to dominating and becoming successful in this business area. If IBM were to attempt to pursue some other strategy such as diversification, they might spread their resources out too thin, thus inhibiting 15

them from taking advantage of some other opportunities that may come about due to a lack of available resources. Another advantage to pursuing a single business unit strategy is that IBM is remaining within an area with which it has a great deal of competence and experience. Vertical integration can be seen in the corporate level strategy of IBM in their acquisition of various inputs such as the LSG Group Inc., which offers services ranging from application development to information technology consulting. This is known as backward or upstream integration.IBM operates in more than 150 countries worldwide and derives more than half of its revenues from sales outside the United States.

Level of Strategy Corporate strategy



Market definition

Diversification into new product or geographic markets Attempts to secure competitive advantage in existing product or geographic markets Information systems, human resource practices, and production processes that facilitate achievement of corporate and business strategy

Business strategy

Market navigation

Functional strategy

Support of corporate strategy and business strategy



One way to think of corporate-level strategy is to compare it to an individual managing a portfolio of investments. Just as the individual investor must evaluate each individual investment in the portfolio to determine whether or not the investment is currently performing to expectations and what the future prospects are for the investment, managers must make similar decisions about the current and future performances of various businesses constituting the firm's portfolio. The Boston Consulting Group (BCG) matrix is a relatively simple technique for assessing the performance of various segments of the business. The BCG matrix classifies business-unit performance on the basis of the unit's relative market share and the rate of market growth as shown in Figure 1.

BCG Model of Portfolio Analysis:

Products and their respective strategies fall into one of four quadrants. The typical starting point for a new business is as a question mark. If the product is new, it has no market share, but the predicted growth rate is good. What typically happens in an organization is that management is faced with a number of these types of products but with too few resources to develop all of them. Thus, the strategic decision-maker must determine which of the products to attempt to develop into commercially viable products and which ones to drop from consideration. Question marks are cash users in the organization. Early in their life, they contribute no revenues and require expenditures for market research, test marketing, and advertising to build consumer awareness. If the correct decision is made and the product selected achieves a high market share, it becomes a BCG matrix star. Stars have high market share in high-growth markets. Stars generate large cash flows for the business, but also require large infusions of money to sustain their growth. Stars are often the targets of large expenditures for advertising and research and development to improve the product and to enable it to establish a dominant position in the industry. Cash cows are business units that have high market share in a low-growth market. These are often products in the maturity stage of the product life cycle. They are usually well-established products with wide consumer acceptance, so sales revenues are usually high. The strategy for such products is to invest little money 17

into maintaining the product and divert the large profits generated into products with more long-term earnings potential, i.e., question marks and stars. Dogs are businesses with low market share in low-growth markets. These are often cash cows that have lost their market share or question marks the company has elected not to develop. The recommended strategy for these businesses is to dispose of them for whatever revenue they will generate and reinvest the money in more attractive businesses (question marks or stars). Despite its simplicity, the BCG matrix suffers from limited variables on which to base resource allocation decisions among the business making up the corporate portfolio. Notice that the only two variables composing the matrix are relative market share and the rate of market growth. Now consider how many other factors contribute to business success or failure. Management talent, employee commitment, industry forces such as buyer and supplier power and the introduction of strategicallyequivalent substitute products or services, changes in consumer preferences, and a host of others determine ultimate business viability. The BCG matrix is best used, then, as a beginning point, but certainly not as the final determination for resource allocation decisions as it was originally intended. Consider, for instance, IBM Computer. With a market share for its Macintosh-based computers below ten percent in a market notoriously saturated with a number of low-cost competitors and growth rates well-below that of other technology pursuits such as biotechnology and medical device products, the BCG matrix would suggest IBM divest its computer business and focus instead on the rapidly growing iPod business (its music download business). Clearly, though, there are both technological and market synergies between IBM computers and its fast-growing iPod business. Divesting the computer business would likely be tantamount to destroying the iPod business.



As the previous discussion implies, corporate-level strategists have a tremendous amount of both latitude and responsibility. The myriad decisions required of these managers can be overwhelming considering the potential consequences of incorrect decisions. One way to deal with this complexity is through categorization; one categorization scheme is to classify corporate-level strategy decisions into three different types, or grand strategies. These grand strategies involve efforts to expand business operations (growth strategies), decrease the scope of business operations (retrenchment strategies), or maintain the status quo (stability strategies).

Growth strategies are designed to expand an organization's performance, usually as measured by sales, profits, product mix, market coverage, market share, or other accounting and market-based variables. Typical growth strategies involve one or more of the following: 1. With a concentration strategy the firm attempts to achieve greater market penetration by becoming highly efficient at servicing its market with a limited product line (e.g., McDonalds in fast foods). 2. By using a vertical integration strategy, the firm attempts to expand the scope of its current operations by undertaking business activities formerly performed by one of its suppliers (backward integration) or by undertaking business activities performed by a business in its channel of distribution (forward integration). 3. A diversification strategy entails moving into different markets or adding different products to its mix. If the products or markets are related to existing product or service offerings, the strategy is called concentric diversification. If expansion is into products or services unrelated to the firm's existing business, the diversification is called conglomerate diversification.


When firms are satisfied with their current rate of growth and profits, they may decide to use a stability strategy. This strategy is essentially a continuation of existing strategies. Such strategies are typically found in industries having relatively stable environments. The firm is often making a comfortable income operating a business that they know, and see no need to make the psychological and financial investment that would be required to undertake a growth strategy.

Retrenchment strategies involve a reduction in the scope of a corporation's activities, which also generally necessitates a reduction in number of employees, sale of assets associated with discontinued product or service lines, possible restructuring of debt through bankruptcy proceedings, and in the most extreme cases, liquidation of the firm. Firms pursue a turnaround strategy by undertaking a temporary reduction in operations in an effort to make the business stronger and more viable in the future. These moves are popularly called downsizing or rightsizing. The hope is that going through a temporary belt-tightening will allow the firm to pursue a growth strategy at some future point. A divestment decision occurs when a firm elects to sell one or more of the businesses in its corporate portfolio. Typically, a poorly performing unit is sold to another company and the money is reinvested in another business within the portfolio that has greater potential. Bankruptcy involves legal protection against creditors or others allowing the firm to restructure its debt obligations or other payments, typically in a way that temporarily increases cash flow. Such restructuring allows the firm time to attempt a turnaround strategy. For example, since the airline hijackings and the subsequent tragic events of September 11, 2001, many of the airlines based in the U.S. have filed for bankruptcy to avoid liquidation as a result of stymied demand for air travel and rising fuel prices. At least one airline has asked the courts to allow it to permanently suspend payments to its employee pension plan to free up positive cash flow.


Business-level strategies are similar to corporate-strategies in that they focus on overall performance. In contrast to corporate-level strategy, however, they focus on only one rather than a portfolio of businesses. Business units represent individual entities oriented toward a particular industry, product, or market. In large multi-product or multi-industry organizations, individual business units may be combined to form strategic business units (SBUs). An SBU represents a group of related business divisions, each responsible to corporate head-quarters for its own profits and losses. Each strategic business unit will likely have its' own competitors and its own unique strategy. A common focus of business-level strategies are sometimes on a particular product or service line and business-level strategies commonly involve decisions regarding individual products within this product or service line. There are also strategies regarding relationships between products. One product may contribute to corporate-level strategy by generating a large positive cash flow for new product development, while another product uses the cash to increase sales and expand market share of existing businesses. Given this potential for business-level strategies to impact other business-level strategies, business-level managers must provide ongoing, intensive information to corporate-level managers. Without such crucial information, corporate-level managers are prevented from best managing overall organizational direction. Business-level strategies are thus primarily concerned with: 1. Coordinating and integrating unit activities so they conform to organizational strategies (achieving synergy). 2. Developing distinctive competencies and competitive advantage in each unit. 3. Identifying product or service-market niches and developing strategies for competing in each. 4. Monitoring product or service markets so that strategies conform to the needs of the markets at the current stage of evolution. In a single-product company, corporate-level and business-level strategies are the same. For example, a furniture manufacturer producing only one line of furniture has its corporate strategy chosen by its market definition, wholesale furniture, but its business is still the same, wholesale furniture. Thus, in single-business organizations, corporate and business-level strategies overlap to the point that they should be treated as one united strategy. The product made by a unit of a diversified company would face many of the same challenges and opportunities 21

faced by a one-product company. However, for most organizations, business-unit strategies are designed to support corporate strategies. Business-level strategies look at the product's life cycle, competitive environment, and competitive advantage much like corporate-level strategies, except the focus for businesslevel strategies is on the product or service, not on the corporate portfolio. Business-level strategies thus support corporate-level strategies. Corporate-level strategies attempt to maximize the wealth of shareholders through profitability of the overall corporate portfolio, but business-level strategies are concerned with (1) matching their activities with the overall goals of corporate-level strategy while simultaneously (2) navigating the markets in which they compete in such a way that they have a financial or market edge-a competitive advantage-relative to the other businesses in their industry.


PORTER'S GENERIC STRATEGIES: Harvard Business School's Michael Porter developed a framework of generic strategies that can be applied to strategies for various products and services, or the individual business-level strategies within a corporate portfolio. The strategies are 1. Overall cost leadership, 2. Differentiation, and 3. Focus on a particular market niche. The generic strategies provide direction for business units in designing incentive systems, control procedures, operations, and interactions with suppliers and buyers, and with making other product decisions. Cost-leadership strategies require firms to develop policies aimed at becoming and remaining the lowest cost producer and/or distributor in the industry. Note here that the focus is on cost leadership, not price leadership. This may at first appear to be only a semantic difference, but consider how this fine-grained 22

definition places emphases on controlling costs while giving firms alternatives when it comes to pricing (thus ultimately influencing total revenues). A firm with a cost advantage may price at or near competitors prices, but with a lower cost of production and sales, more of the price contributes to the firm's gross profit margin. A second alternative is to price lower than competitors and accept slimmer gross profit margins, with the goal of gaining market share and thus increasing sales volume to offset the decrease in gross margin. Such strategies concentrate on construction of efficient-scale facilities, tight cost and overhead control, avoidance of marginal customer accounts that cost more to maintain than they offer in profits, minimization of operating expenses, reduction of input costs, tight control of labor costs, and lower distribution costs. The low-cost leader gains competitive advantage by getting its costs of production or distribution lower than the costs of the other firms in its relevant market. This strategy is especially important for firms selling unbranded products viewed as commodities, such as beef or steel.

Inputs Transformation (throughput) Output


Functional-level strategies are concerned with coordinating the functional areas of the organization (marketing, finance, human resources, production, research and development, etc.) so that each functional area upholds and contributes to individual business-level strategies and the overall corporate-level strategy. This involves coordinating the various functions and operations needed to design, manufacturer, deliver, and support the product or service of each business within the corporate portfolio. Functional strategies are primarily concerned with: Efficiently utilizing specialists within the functional area. Integrating activities within the functional area (e.g., coordinating advertising, promotion, and marketing research in marketing; or purchasing, inventory control, and shipping in production/operations). Assuring that functional strategies mesh with business-level strategies and the overall corporate-level strategy. Functional strategies are frequently concerned with appropriate timing. For example, advertising for a new product could be expected to begin sixty days prior to shipment of the first product. Production could then start thirty days before shipping begins. Raw materials, for instance, may require that orders are placed at least two weeks before production is to start. Thus, functional strategies have a shorter time orientation than either business-level or corporate-level strategies. Accountability is also easiest to establish with functional strategies because results of actions occur sooner and are more easily attributed to the function than is possible at other levels of strategy. Lower-level managers are most directly involved with the implementation of functional strategies.

Strategies for an organization may be categorized by the level of the organization addressed by the strategy. Corporate-level strategies involve top management and address issues of concern to the entire organization. Business-level strategies deal with major business units or divisions of the corporate portfolio. Businesslevel strategies are generally developed by upper and middle-level managers and are intended to help the organization achieve its corporate strategies. Functional strategies address problems commonly faced by lower-level managers and deal with strategies for the major organizational functions (e.g., marketing, finance, production) considered relevant for achieving the business strategies and supporting the corporate-level strategy. 24

Sub Business Unit:

In IBM, a strategic business unit (SBU) is a profit center which focuses on product offering and market segment. SBUs typically have a discrete marketing plan, analysis of competition, and marketing campaign, even though they may be part of a larger business entity. An SBU may be a business unit within a larger corporation, or it may be a business unto itself. Corporations may be composed of multiple SBUs, each of which is responsible for its own profitability. General Electric is an example of a company with this sort of business organization. SBUs are able to affect most factors which influence their performance. Managed as separate businesses, they are responsible to a parent corporation.


Financial highlights:



SWOT analysis on IBM:

We are going to produce a SWOT analysis to find out how effective IBM is operating and what internal factors may influence its success. A SWOT analysis analyses the internal factors that may influence the success of a business. The initials SWOT stand for: S trengths. W eaknesses. O pportunities. T hreats. Here is a SWOT analysis on IBM:

Leading provider of IT services. Strong research and development capabilities. High profitability.

Weak enterprise mobility production portfolio.

Expansion in emerging market Growing information on demand markets Strategic acquisitions.

Competitors. Well known successful brands as competitors. Competitors bring out similar products. Economic slowdown in USA and Europe.


There is a criticism on the management that the salaries of the employees are not adequate for attracting employees. And this will shake the confidence and working habit of the employees. Most of the company employees, are sticking to one seat only with the result that they become master of one particular job and lose their grip on other management operation. Rotate or promote policy should be adjusted. Refresher Courses for the staff are most important in any international organization. Foreign experts can also be called for this purpose. Recruitments should be strictly on merit basis and induction should be after proper and extensive training. The quality of Food and taste which is given to the staff at canteen must be improved. Proper access to all the equipments and resources necessary for training must be given to all the internees. IBM just targeting the A class consumer no more products for middle class and lower class. Receive online CV in that manner, at backend all data is saved and maintain. That helps to reduce the CV data bank. And easily retrieve able using different filters as required. Install that software which is like mobile CALL LOG to check the miss bells to give follow up.


As the conclusion, we believe that the best way to research IBM strategy in Pakistan is to try and contact IBM and perhaps, brief interview should conduct with the global brand, we think wider marketing strategy is universal across the globe. At the heart of the IBM philosophy and their aim is to bring Good Quality product which is easy to utilizes and delight mothers. HR department work efficiently and now their customers that is their employees need Psychological satisfaction. It is a relatively new Multinational on the Pakistani front as compared to its competitor which has a lot bigger area of operation and also manufactures same type of items. But it has established a strong footing for itself in the computer industry. Management has designed rules and regulations which are supposed to be followed by everyone. Policies have been formulated for major and minor issues both. Relationship with the employees is maintained at a cordial level. Employees work with commitment and dedication to achieve the best for the organization. Job satisfaction soars at a high level. ..