Beyond Blue Q3
Q3. What was IBM's horizontal scope in 2005? Using the four tests for horizontal scope, comment thereon in terms of any divestments you would recommend. Explain your strategic rationale.
Answer- The horizontal scope of a company guides it in terms of which industry it should compete in. IBM’s horizontal scope in 2005 ranged from Computer technologies (as the core competency) to Business consulting, research and development. Acquisition and alliances with PWC,Nextel, Mayo and Boeing were another highlighting feature. Thus the business scope was wide enough including traditional Accounting, Customer Service, Human capital consulting, Procurement to Consumer Electronics, Insurance claims processing and supply chain optimization thus adding value to the company.
a) Better-Off Test – Post IBM’s acquisition of PricewaterhouseCoopers to gain business expertise to defeat its business consulting rival, Accenture as well as add value in the company’s business process and giving more value to the customer IBM went on for more successful take over like Nextel’s customer service management to add more value to serve the customers better. It also went on for unpaid alliance with MAYO and thru this initially the group did not show results but then later came up with new software product for medical research and the research and development is still on and after this it also made alliance with Boeing and Honeywell International Inc.
b) Best Alternative Test – In case of IBM’s takeover of Nextel common ownership was the best option for IBM to succeed in the customer service management field. IBM’s Alliance with MAYO clinics, Boeing and Honeywell International Inc. was a strategic alliance.
c) Best Parent Test – IBM achieved business expertise through its Alliance with MAYO clinic, Boeing and Honeywell International Inc. and collaboration with Nextel, P&G HR and its acquisition of PwC. IBM thus, created maximum value.
d) Good Parent Test – IBM had technical expertise with
Answer- The horizontal scope of a company guides it in terms of which industry it should compete in. IBM’s horizontal scope in 2005 ranged from Computer technologies (as the core competency) to Business consulting, research and development. Acquisition and alliances with PWC,Nextel, Mayo and Boeing were another highlighting feature. Thus the business scope was wide enough including traditional Accounting, Customer Service, Human capital consulting, Procurement to Consumer Electronics, Insurance claims processing and supply chain optimization thus adding value to the company.
a) Better-Off Test – Post IBM’s acquisition of PricewaterhouseCoopers to gain business expertise to defeat its business consulting rival, Accenture as well as add value in the company’s business process and giving more value to the customer IBM went on for more successful take over like Nextel’s customer service management to add more value to serve the customers better. It also went on for unpaid alliance with MAYO and thru this initially the group did not show results but then later came up with new software product for medical research and the research and development is still on and after this it also made alliance with Boeing and Honeywell International Inc.
b) Best Alternative Test – In case of IBM’s takeover of Nextel common ownership was the best option for IBM to succeed in the customer service management field. IBM’s Alliance with MAYO clinics, Boeing and Honeywell International Inc. was a strategic alliance.
c) Best Parent Test – IBM achieved business expertise through its Alliance with MAYO clinic, Boeing and Honeywell International Inc. and collaboration with Nextel, P&G HR and its acquisition of PwC. IBM thus, created maximum value.
d) Good Parent Test – IBM had technical expertise with