Preview

Yoho

Better Essays
Open Document
Open Document
8036 Words
Grammar
Grammar
Plagiarism
Plagiarism
Writing
Writing
Score
Score
Yoho
The Transformation of IBM
IBM had a very good year in 1990. John Akers had guided his company through three major rounds of corporate restructuring since 1985, and he was proud of IBM's accomplishments. Recent product introductions were being hailed as technical breakthroughs with great market potential, the stock price had recovered, and internal morale was improving. Akers was determined that IBM be viewed as the world-class competitor in its field, and all the signs were pointing in the right direction-profits were growing again and IBM remained the market share leader in each of its businesses. But after an outstanding fourth quarter, Akers had to tell his shareholders in March 1991 that operating profits would be down sharply in the latest three months as a result of lower sales in the U.S. and Europe. Concerned about the magnitude of the downturn, the competitive Akers was growing impatient with the time it was taking to transform IBM, especially the vexing problems of meeting deadlines and getting the organization to be aggressive in solving quality issues and delivering on commitments. Akers challenged his senior management team: “How do we respond to this latest decline? Should we restructure ourselves to anticipate lower growth? And how do we improve our execution?" Akers made it clear that all options should be on the table.

History of the Company
IBM's first president was the legendary Thomas J. Watson Sr. After joining the Computing Tabulating and Recording Company in 1914. Watson changed the company's name to International Business Machines in 1924 and began building one of the most successful corporations in modern history. Among Watson Sr.’s most prescient strategies was seeing the whole world as IBM’s market. Between World Wars I and II. the company erected plants in Germany, France, and the U.K. and established agencies in Latin America and Asia. From the beginning, national companies were run by locals and given leeway in deciding product

You May Also Find These Documents Helpful

  • Satisfactory Essays

    IBM Case

    • 1385 Words
    • 36 Pages

    In the seven years (since 1994), that Lou Gerstner reigned over IBM, the company’s earnings per…

    • 1385 Words
    • 36 Pages
    Satisfactory Essays
  • Satisfactory Essays

    Sun Micr

    • 301 Words
    • 2 Pages

    Sun Microsystems is a leading supplier of computer related products, including servers, workstations, storage devices, and network switches. In the letter to stockholders as part of the 2001 annual report, President and CEO Scott G. McNealy offered the following remarks: Fiscal 2001 was clearly a mixed bag for Sun, the industry, and the economy as a whole. Still, we finished with revenue growth of 16 percent—and that’s significant. We believe it’s a good indication that Sun continued to pull away from the pack and gain market share. For that, we owe a debt of gratitude to our employees worldwide, who aggressively brought costs down—even as they continued to bring exciting new products to market. The statement would not appear to be telling you enough. For example, McNealy says the year was a mixed bag with revenue growth of 16 percent. But what about earnings? You can delve further by examining the income statement in Exhibit 1. Also, for additional analysis of other factors, consolidated balance sheet(s) are presented in Exhibit 2. 1. Referring to Exhibit 1, compute the annual percentage change in net income per common share-diluted (2nd numerical line from the bottom) for 1998–1999, 1999–2000, and 2000–2001. 2. Also in Exhibit 1, compute net income/net revenue (sales) for each of the four years. Begin with 1998. 3. What is the major reason for the change in the answer for question 2 between 2000 and 2001? To answer this question for each of the two years, take the ratio of the major income statement accounts (which follow Exhibit 1 on the next page) to net revenues (sales). (a) Cost of sales (b) Research and development (c) Selling, general and administrative expense (d) Provision for income tax…

    • 301 Words
    • 2 Pages
    Satisfactory Essays
  • Good Essays

    Tui Bus 499 Case Mod 1

    • 800 Words
    • 4 Pages

    Adversity breeds creativity, and this pending financial crisis led to a series of events that eventually turned this company around. From the financial perspective, the new leadership established quantifiable and achievable goals for this company. The first of which was to increase revenue at a faster rate than the market increased. Next, was to turn 30% of their revenue into operational profit. Lastly, they committed to doubling their earnings per share. All of these goals were ambitiously to be accomplished within 3 years, all the while improving on their customer relationships in a way that influenced their bottom line.…

    • 800 Words
    • 4 Pages
    Good Essays
  • Better Essays

    Al Dunpal Case Study

    • 1394 Words
    • 6 Pages

    Albert Dunlap was known for turning around badly shaped companies into profitable companies. Through his radical restructuring and downsizing methods, he created shareholder value. At Scott Paper, Dunlap fired 35% of all the employees and 71% of the corporate staff raising the stock price from $38.00 to $120.00 and sold the company to Kimberly Clark for more than $6B. Due to his past success, Al Dunlap was hired to turn around Sunbeam. Sunbeam had a long period of management and financial instability. In other words, Sunbeam needed a “savior.” Many believed this was Al Dunlap. Unfortunately, through his tenure at Sunbeam, stock price fell from a high $53.00 to $16.00 on the day that he was fired. Were his “rightsizing” techniques not adequate? or was he just an overpaid CEO?…

    • 1394 Words
    • 6 Pages
    Better Essays
  • Good Essays

    hiho

    • 867 Words
    • 4 Pages

    One of your friends back home is planning a trip to Panamá with her family this summer. Since you have been driving across the country, and visiting the sites, you plan to write a letter to her telling her about some of the things that stand out from your trip that she may want to add to her itinerary. Before writing your letter, let’s organize the things you have learned about during your travels. Complete the chart below with information from your trip.…

    • 867 Words
    • 4 Pages
    Good Essays
  • Powerful Essays

    Johnsonville Case

    • 955 Words
    • 4 Pages

    As the company grew, Stayer realized problems with his management style. By 1980, he “began to feel uncomfortable with the business and the way in which he was managing it.” The quality of the product was slipping and employees were not invested in their work. General morale was low and performance was poor.…

    • 955 Words
    • 4 Pages
    Powerful Essays
  • Good Essays

    case study

    • 1136 Words
    • 10 Pages

    Upon being hired, he began looking over the financial statements, particularly the balance sheet as of December 31, 1998 and the pro forma income statement for 1999 as shown in Figure 1 and 2, respectively. His immediate reaction was that the firm had not made the move to automation that others in the industry had. The company’s manufacturing process was highly labor intensive as indicated by the fact that fixed assets (net plant and equipment) represented only $8 million out of total assets of $24 million (Figure 1) and that variable costs per unit were $25 in comparison to a sales price of $30 per unit (Figure 2).…

    • 1136 Words
    • 10 Pages
    Good Essays
  • Powerful Essays

    Excello Telecommunication

    • 1722 Words
    • 6 Pages

    Excello Telecommunication had seen many years of profitable sales. But, then in 2010 Excello had seen a drop of sales due to competition of their product by overseas manufactures. With all the years that this company had been in business they were now faced with the fact that their earnings estimates were not going to be met. There were many executive managers that were worried about the kind of effect this would have on the company bonuses, stock options, and the share prices of Excello's stock.…

    • 1722 Words
    • 6 Pages
    Powerful Essays
  • Powerful Essays

    An Analysis of the Ibm Case

    • 5993 Words
    • 24 Pages

    In the early 1900s (1924), IBM was known as “Computer-Tabulating Recordings” that used to primarily make scales, coffee grinders, cheese slicers and time clocks. IBM PC was a great success and the profits were high. IBM also known as “Big Blue” was ranked as the world’s largest company in terms of stock market value, as well as creating jobs around the world.The Watson’s led IBM for 57 years, (1914-1971). During their time, they introduced the System/360 family of mainframe computers. Also, six different models launched simultaneously hence new factories were required because the demand was high and this also created jobs. The leaders who followed them were not visionary as them, but they inherited a strong company.…

    • 5993 Words
    • 24 Pages
    Powerful Essays
  • Powerful Essays

    Ibm Structure

    • 1589 Words
    • 5 Pages

    IBM’s domestic division, which was led by tom Watson jnr. was responsible for research and development and for financing the operations of the entire global company. By 1950 not only was IBM domestic designing and manufacturing a large number of different models of computer, it was also designing and manufacturing many of the component and peripheral parts used in the computers such as disk drivers ,transistors, printers and file storage and servers. Many of these products were produced throughout the world and distributed by IBM’s international division. The increase in range of IBM’s activities, both domestically and internationally, put considerable strain on IBM’S organization structure which began to cause it many problems.…

    • 1589 Words
    • 5 Pages
    Powerful Essays
  • Powerful Essays

    Home Depot Inc

    • 876 Words
    • 11 Pages

    Current Situation     October 12th, 2000 the company announced lower then expected earnings for the 3rd and 4th quarter Largest one day drop (28%) to $35, a $33 billion loss in market capitalization Drop thought to be due to slowing economy, overvaluation of stock price or problems with the company’s future strategic direction Economy had experienced uninterrupted growth since 1992…

    • 876 Words
    • 11 Pages
    Powerful Essays
  • Satisfactory Essays

    Under the management of Thomas Watson Jr. IBM was able to put its label on 70% of the worlds computers and as a result dominated the industry. However before he achieved his success, Watson Jr. was a very Hedonistic…

    • 559 Words
    • 3 Pages
    Satisfactory Essays
  • Powerful Essays

    diversity as strategy

    • 7044 Words
    • 29 Pages

    the turnaround of IBM, we see a great business story. A less-told but integral part of that…

    • 7044 Words
    • 29 Pages
    Powerful Essays
  • Powerful Essays

    Both revolutions transformed the way customers viewed, used, and bought technology and this fundamentally shook up IBM. Purchasing decisions were now individuals’ and departments’ choices and not in the places where IBM had built its long-term customer relationships (IBM Archives). IBM had lost its customer relationships and under the leadership of John Akers, the strategy shifted from a long-term relationship with rental customers to a short-term relationship of a buy-sell transaction. When a firm loses its touch with the customers, it loses the context of its business and so it cannot make correct decisions (Mills D.Q. et.al,…

    • 2991 Words
    • 12 Pages
    Powerful Essays
  • Satisfactory Essays

    Will IBM's plan to give away some of its IT assets and intellectual property and increase its support of open-source software products like Linux be a successful growth strategy in the "brutally competitive marketplace" in which it operates? Why or why not?…

    • 347 Words
    • 2 Pages
    Satisfactory Essays