Ibm Case Study
1) What factors led to IBM’s success during the 1960’s and 1970s and its problems during the late 1980 and earry1990s?
Factors led to IBM’s success during the 1960’s and 1970s:
- First mover in IT industry -> advantages (less competition, more customers)
- Right investment to S/360
- Success of PC
- Great reputation -> attract top talent
Factors led to its problems during the late 1980 and earry1990s:
- Did not keep in touch with customers
- Didn’t understand market need (fewer purchase IBM mainframes)
- Marketing effort missed the mark
- Turf battles between autonomous divisions
- Spending too much on fixed cost (building, data processing cost, ..)
- Management IT problems such as poor internal IT problems
- Products complexity and the organization to develop them
- Executives were isolated to growing problems (deep level of hierarchy)
2) What did Gerstner do when he assumed the role of CEO in April 1993? Evaluate Gerstner’s approach in crisis management. How well did he perform as a turnaround manager? What challenges did he face as he attempted to position the company for growth?
What Gerstner did:
- Focus on customers and get executives involved in their own customers
- Keep key employees
- Hired Jerry York charged with get the cost in control and Rick Thoman took charge of cutting inefficient brand and keep important brand - ThinkPad
- Cut unnecessary cost
Few months since Gerstner took charge, IBM posted small profit (382 million). By the end of 1994, profit had risen to 5 billion on revenues of 64 billion. In comparison with the loss of 4 billion in 1992, what Gertsner did was amazing. He coped with IBM problems by solving the most severe to the less one. At that time, problems of products and customers was the most serious which cost IBM billion dollars in loss.
Challenges that Gertsner faced as he attempt to position company for growth:
- IBM was a large corporation based on different countries with different culture.
- High
Factors led to IBM’s success during the 1960’s and 1970s:
- First mover in IT industry -> advantages (less competition, more customers)
- Right investment to S/360
- Success of PC
- Great reputation -> attract top talent
Factors led to its problems during the late 1980 and earry1990s:
- Did not keep in touch with customers
- Didn’t understand market need (fewer purchase IBM mainframes)
- Marketing effort missed the mark
- Turf battles between autonomous divisions
- Spending too much on fixed cost (building, data processing cost, ..)
- Management IT problems such as poor internal IT problems
- Products complexity and the organization to develop them
- Executives were isolated to growing problems (deep level of hierarchy)
2) What did Gerstner do when he assumed the role of CEO in April 1993? Evaluate Gerstner’s approach in crisis management. How well did he perform as a turnaround manager? What challenges did he face as he attempted to position the company for growth?
What Gerstner did:
- Focus on customers and get executives involved in their own customers
- Keep key employees
- Hired Jerry York charged with get the cost in control and Rick Thoman took charge of cutting inefficient brand and keep important brand - ThinkPad
- Cut unnecessary cost
Few months since Gerstner took charge, IBM posted small profit (382 million). By the end of 1994, profit had risen to 5 billion on revenues of 64 billion. In comparison with the loss of 4 billion in 1992, what Gertsner did was amazing. He coped with IBM problems by solving the most severe to the less one. At that time, problems of products and customers was the most serious which cost IBM billion dollars in loss.
Challenges that Gertsner faced as he attempt to position company for growth:
- IBM was a large corporation based on different countries with different culture.
- High