The Fall of Ibm
Title: Case # 15 The Fall of IBM and Case #16 IBM in 2009
Objective
To be the world’s leading mainframe and software Service Company that offers its customers professional innovative services that deliver value by providing them with state of the art solutions that leverage IBM’s industry and business process industries.
Problems
During the mainframe system era, IBM’s competitors began selling cheaper and high performing IBM compatible central processing units that posed a threat to the company. Entry of Japanese competitors posed a threat to IBM because they had the technical capability to build a powerful computer that matched IBM’s mainframe system. Customers began buying clones from competing companies who promised quality similar to IBM. Due to the price competition, IBM was forced to reduce the price of its products to cope with the customer’s demands. There was also a threat on new technologies being developed to outperform the products of IBM. An example was the introduction of Minicomputers which acted as a substitute to some IBM mainframe applications. Even though IBM was successful with its PC division, clones were being made which reduced IBM’s sales. IDM had a hard time acquiring programmers because they were not attracted to IBM’s bureaucratic and conservative corporate culture in which centralized decision making limited their opportunities to be creative and innovative. At some point, IBM was slow to realize the impact of innovative technology on the industry. Due to its bureaucratic culture there was slow decision making and there was power struggle among the divisions. IBM was also experiencing an increase on low-cost competitions on its outsourcing services business. An example was with its competition with Indian companies who had a low cost of operation. There was an intense competition on designing software’s that met the needs of customers. Many of IBM’s competitors were merging and this posed a threat to IBM’s capacity to
Objective
To be the world’s leading mainframe and software Service Company that offers its customers professional innovative services that deliver value by providing them with state of the art solutions that leverage IBM’s industry and business process industries.
Problems
During the mainframe system era, IBM’s competitors began selling cheaper and high performing IBM compatible central processing units that posed a threat to the company. Entry of Japanese competitors posed a threat to IBM because they had the technical capability to build a powerful computer that matched IBM’s mainframe system. Customers began buying clones from competing companies who promised quality similar to IBM. Due to the price competition, IBM was forced to reduce the price of its products to cope with the customer’s demands. There was also a threat on new technologies being developed to outperform the products of IBM. An example was the introduction of Minicomputers which acted as a substitute to some IBM mainframe applications. Even though IBM was successful with its PC division, clones were being made which reduced IBM’s sales. IDM had a hard time acquiring programmers because they were not attracted to IBM’s bureaucratic and conservative corporate culture in which centralized decision making limited their opportunities to be creative and innovative. At some point, IBM was slow to realize the impact of innovative technology on the industry. Due to its bureaucratic culture there was slow decision making and there was power struggle among the divisions. IBM was also experiencing an increase on low-cost competitions on its outsourcing services business. An example was with its competition with Indian companies who had a low cost of operation. There was an intense competition on designing software’s that met the needs of customers. Many of IBM’s competitors were merging and this posed a threat to IBM’s capacity to