CHAPTER I

INTRODUCTION

International Business Machines Corporation or IBM, is an American

multinational technology and consulting corporation, with headquarters in Armonk,

New York, United States. IBM manufactures and markets computer hardware and

software, and offers infrastructure, hosting and consulting services in areas ranging

from mainframe computers to nanotechnology.[3]

The company was founded in 1911 as the Computing Tabulating Recording Company

(CTR) through a merger of three companies: the Tabulating Machine Company, the

International Time Recording Company, and the Computing Scale Company. CTR

adopted the name International Business Machines in 1924, using a name previously

designated to CTR's subsidiary in Canada and later South America. Security analysts

nicknamed IBM Big Blue in recognition of IBM's common use of blue in products,

packaging, and logo.

In 2012, Fortune ranked IBM the #2 largest U.S. firm in terms of number of

employees (433,362), the #4 largest in terms of market capitalization, the #9 most

profitable, and the #19 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 (Interbrand), #2 most respected company

(Barron's), #5 most admired company (Fortune), and #18 most innovative company

(Fast Company).

IBM has 12 research laboratories worldwide and, as of 2013, has held the record for

most patents generated by a company for 20 consecutive years. Its employees have

garnered five Nobel Prizes, six Turing Awards, ten National Medals of Technology,

and five National Medals of Science. Notable inventions by IBM include the

automated teller machine (ATM), the floppy disk, the hard disk drive, the magnetic

1

stripe card, the relational database, the Universal Product Code (UPC), the financial

swap, SABRE airline reservation system, DRAM, and Watson artificial intelligence.

IBM is a global IT manufacturing and consulting company, with 335,000 employees

across nearly every industrialized country in the world. Once largely focused on the

sale of mainframes and related software contracts, IBM has evolved into lucrative

technology and business consulting, supported by a wide range of IBM software

platforms and products. Figure 1 shows IBM’s value system in the marketplace,

demonstrating a reliance on knowledge-based transformation and processes. Products

such as hardware and software are either sold outright, or used (along with

competitor’s products) as a basis for consulting engagements.

IBM is a global technology and innovation company that stands for progress. With

operations in over 170 countries, IBMers around the world invent and integrate

hardware, software and services to help forward-thinking enterprises, institutions and

people everywhere succeed in building a smarter planet.

IBM has been present in India since 1992. The diversity and breadth of the entire IBM

portfolio of research, consulting, solutions, services, systems and software, uniquely

distinguishes IBM India from other companies in the industry.IBM India's solutions

and services span all major industries including financial services, healthcare,

government, automotive, telecommunications and education, among others. As a

trusted partner with wide-ranging service capabilities, IBM helps clients transform

and succeed in challenging circumstances.

IBM has been expanding its footprint in India - and has a presence in over 200 cities

and towns across the country - either directly or through its strong business partner

network. IBM India has clearly established itself as one of the leaders in the Indian

Information Technology (IT) Industry - and continues to transform itself to align with

global markets and geographies to grow this leadership position. Widely recognised

as an employer of choice, IBM holds numerous awards for its industry-leading

employment practices and policies.

2

CHAPTER II

MARKETING

Marketing Strategies of IBM

Introduction

This study aims at examining the use of theoretical marketing approaches in the

practical business scenario. In this domain the marketing strategy of IBM has been

considered on empirical grounds. It is by the use of marketing theory and concepts

that the study evaluates the marketing strategies of IBM and its role in fulfilling the

firm' overall goals and objectives. Four specific aspects of marketing strategy

evaluation are assessed in this study. Initially the proceedings are related to the

importance and the use of information in successful marketing strategies by IBM.

This is followed by a discussion on IBM marketing strategies in relation to its

organisational strategy. The paper also makes an analysis of the application of IBM

marketing strategies in global context. Lastly e-business strategies of IBM in the

marketing domain are assessed.

Evaluation of marketing strategy of IBM

International Business Machines Corporation, better known as IBM, is a multinational

IT company involved in the manufacture and retail of computer hardware and

software applications, and IT consulting services. Employing the best talents in the

industry, IBM is today the largest as well as the most profitable information

technology employer in the world. Despite of the adverse economic conditions, the

firm achieve a significant increase in its net revenue and income in 2008 compared to

previous years.

Well - devised and efficient marketing strategies have been the key to IBM' global

success. The company strongly believes that devising effective marketing strategies

requires making appropriate decisions that can well enhance all kinds of competitive

advantages and can create all kinds of new sources of value for the purpose of

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improving the organisational revenue growth. According to Luq Niazi, Leader of

Strategy and Change at IBM, "when the leaders of an organisation think about their

business as components, it becomes clear which ones they need to own - and which

they do not". This clearly indicates the great emphasis that IBM places on the

performance and decision making capabilities of leaders in devising effective

marketing strategies. In addition, the firm also considers understanding the

requirements and needs of customers as crucial for developing effective marketing

strategies. Understanding the innovative demands of customers lies at the core of

developing effective marketing strategies.

Based on IBM' market share and dominance in the IT industry, the firm can be aptly

described as a 'market leader'. Being a market leader, an important marketing strategy

which IBM uses against its competitors is the defensive marketing warfare strategy.

The defensive marketing strategy involves the firm employing tactics to maintain its

market share. There are several tactics that firms use for defending their market share,

such as fortification, counterattack, mobile defence and strategic retreat (Ries and

Trout, 2005). Being the courageous market leader that IBM is, the firm adopts the

best defensive marketing strategy which is "self attack". IBM' strategy is "cheaper and

better than IBM". Aware of IBM' tactic, customers wait for IBM' new prospects as

they know that the Big Blue will constantly introduce new and better products which

makes the firm' own products obsolete. Another key marketing strategy employed by

IBM for sustaining its market leadership is product differentiation strategies. Product

differentiation can be achieved using a variety of factors such as distinctive products,

reliability, durability, product design etc (Kurtz and Boone, 2006). IBM uses a

product differentiation strategy based on quality of performance. In line with its quest

for further growth and market leadership, the firm adopts a diversification strategy.

The importance of IBM' growth strategy has heightened in the current economic

situation with companies in the computer industry having faced a massive drop in the

industrial production and productivity of computer hardware and the future growth for

this segment also appearing dim. In such a context, IBM has strategically reduced its

exposure to hardware by diversifying into software and services.

IBM also realises the importance of maintaining good relationships with its customers

and in line the firm lays great emphasis on trust - based marketing strategies. Trust

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based marketing strategies stress on the need for organisations to gain ethical hold

over consumer dealings and also be honest and open about its products and the

services. For IBM, adoption of this strategy has been very effective in developing its

brand identity and image. In all of its marketing activities, the firm strives at building

customer trust and loyalty.

Importance and use of information in IBM marketing strategy

The importance and use of information is vital for gaining success. In line, IBM

adopted the strategy to take up Social Networking to the work place. It is an absolute

means of sharing ideas, complains and letters of appreciation in public. By means of

adopting networking opportunities, IBM established its strong hold over competitive

market. It is through the provision of Social Networking (SN), that IBM established

its commitment to technology and developed an enterprise - wide SN mindset. IBM is

the first major IT supplier that has got potential provisions for SN and is in the

process of changing the entire enterprise along with a credible application to address

the market.

By means of investments made in the SN domain, IBM has gained enough market

strengths in the enterprise lineage, global services, deep pockets and above all in

gaining loyal customers. By success of SN, IBM proved to be a fine player in the

domain of information networking. The proceedings have added many advantages to

its organisational global services. SN for enterprises have been implemented with

enough marketing strategies and this is what is providing IBM with technical

expertise in the field of organizational/adoption issues. The launching of more

facilities related to SN are relevant to the competition of the market. The launcher

came up with a new idea and launched it much before the though had developed in

anyone' mind. The second big thing to the adoption of marketing strategy is the IBM's

mindset in the launching of Lotus Connection. It is an information networking process

with collaboration-centric approach to SN and helps in information sharing and

uninterrupted workflow. By few minutes of exploration anybody can well get hold

over its functionalities. IBM kept it easy and user friendly; the basics of marketing

strategies.

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When it comes to the use of information system in IBM, the adoption of unique kind

of marketing strategies is predominant. The basic approach is in being innovative and

adopting something that is very user friendly and easy for the customer to adopt.

Complicacies in the same field can lead to failure of the same. This is the reason that

IBM lays emphasis over making it simple, easy and sharing more than the consumer

can expect. Once there is a kind of trust and sense of being facilitated gets into the

consumer, he hardly will opt for any other company and this is what IBM believes to

the core. Application of innovative ideas in the field of information sharing units can

be of great risk, but under the marketing strategy of IBM, this risk has been taken

again and again with enough success.

THEORY TO EVALUATE THE MARKETING STRATEGY OF IBM

It is by the use of marketing theory and concepts; we are evaluating the determined

marketing strategy of IBM in attaining its organisational goals and objectives. Initially

the proceedings are related to the importance and the use of information in successful

marketing strategies by IBM. Then there is the discussion about IBM marketing

strategies in terms of their overall organisational strategy. We will make an analysis

over the application of IBM marketing strategies in global context. Lastly we will

assess IBM e-business strategies in marketing domain.

International Business Machines Corporation, or the IBM, is basically a multinational

computer technology and has got hold over IT consulting services. The company has

established itself as one of the selected information technology companies since 19th

century. Adoption of marketing strategies for IBM has been a planned structure since

19th century and by means of these strategies it has earned enough success all over

the world. With its growth in the manufacturing as well as marketing domains of

computer hardware and software, it has gained the nickname of "Big Blue". On

marketing grounds, IBM follows strict infrastructural services, added by hosting

provisions and consulting services in various areas from mainframe computers to the

persuasion of nanotechnology.

The company considers that to make marketing strategies, it is important to have

appropriate decisions that can well enhance all kinds of competitive advantages and

can create all kinds of new sources of value for the purpose of improving the

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organisational revenue growth. As declared in its official website. IBM considers that

their strategy and change services target in helping their clients in transforming their

economy and related businesses by the scope of identifying strategic options. This

further gets added by provisions for developing strategic and planned change

programs to meet the demands of their consumers. According to Luq Niazi, Leader -

Strategy and Change,

"When the leaders of an organisation think about their business as components, it

becomes clear which ones they need to own - and which they do not"

Importance and use of information in IBM marketing strategy

The importance and use of information is very vital for gaining success and thus IBM

in particular came up with Social Networking provisions. It is an absolute means of

sharing ideas, complains and letters of appreciation in public. By means of adopting

networking opportunities, IBM established its strong hold over competitive market. It

is through the provision of Social Networking (SN), that IBM could establish its

commitment to technology and SN mindset. The company uses its technological

supports and draws new kinds of driving features. IBM is the first major IT supplier

that has got potential provisions for SN in the process of changing the entire

enterprise along with a credible application to address the market.

By means of investments made in the SN domain, IBM has gained enough market

strengths in the enterprise lineage, global services, and deep pockets and above all in

gaining loyal customers. By success of SN, IBM proved to be a fine player in the

domain of information networking. The proceedings have added many advantages to

its organisational global services. SN for enterprises has been implemented with

enough marketing strategies and this is what providing IBM with technical expertise

in the field of organizational/adoption issues. The launching of more facilities related

to SN are relevant to the competition of the market. The launcher came up with a new

idea and launched it much before anybody can ever think of it. The second big thing

to the adoption of marketing strategy is the IBM's mindset in the launching of Lotus

Connection. It is an information networking process with collaboration-centric

approach to SN and helps in information sharing and uninterrupted workflow. By few

7

minutes of exploration anybody can well get hold over its functionalities. IBM kept it

easy and user friendly; the basics of marketing strategies.

When it comes to the use of information system in IBM, the adoption of unique kind

of marketing strategies is predominant. The basic approach is in being innovative ad

adopting something that is very user friendly and easy for the customer to adopt.

Complicacies in the same field can lead to failure of the same. This is the reason that

IBM lays emphasis over making it simple, easy and sharing more than the consumer

can expect. Once there is a kind of trust and sense of being facilitated gets into the

consumer, he hardly will opt for any other company and this is what IBM believes to

the core. Application of innovative ideas in the field of information sharing units can

be of great risk, but under the marketing strategy of IBM, this risk has been taken

again and again with enough success.

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CHAPTER III

IBM MARKETING STRATEGY IN RELATION TO

ORGANISATIONAL STRATEGY

The measurement of strategic effectiveness in an organizational strategy can be

discovered through SWOT analysis. This is a structure that figure out strengths,

weaknesses, opportunities and threats of a particular company. Added to this there is

the initiation led by Johnson and Scholes model for corporate strategy (Rifkin, 2001).

Under this persuasion we can evaluate a company on the basis of three key success

criteria. These are marked as following;

1. Suitability can be assessed to identify the factors that will support the

strategies.

2. Feasibility is all about the adoption of executing the strategy into practical

field.

3. Acceptability is something that will determine the reactions that the

organisation will receive by the execution of the strategies.

At IBM there is enough encouragement for creative marketing tactics. Anybody

within the organisation can attain these tactics. The application of SWOT and the

Johnson and Scholes model proves that IBM has got enough potentiality to gain well

crafted assessment about itself. Its main strength lies in identifying its weaknesses.

The approaches are all very professional and the marketing persuasions are well

structured as per the organisational structure. As per the declarations made by the

official site of IBM, the basic marketing strategy in relation to organisational strategy

adopted by IBM is more concerned about the proceedings led by HRM. The

perspectives of organisational dealings are strategically adopted to meet the demands

of HRM.

The typical business culture of IBM is customer centric and for that they make their

HR department feel the responsibility. It has been marked that on traditional ground

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many IBM executives along with aspiring general managers are selected for the

purpose of improving sales force and market oriented projects. It can be well marked

as Samuel J. Palmisano, the current CEO, IBM; initially joined the company in the

position of a salesman.

Global context in IBM marketing planning

In the global context, IBM has proved itself as a strong contender by managing to

sustain in the most difficult situations. It has overcome the twists and turns it initially

faced in adjusting to the 'bricks-and-clicks' business structure. Overcoming all the

hurdles IBM is now achieving milestones through the advantages forwarded by brick-

and-click enterprises. It is through this enterprise structure that IBM has transformed

into a major player in terms of getting hold over global marketing plans. Its

formulisations are inclusive of creating a global brand blueprint. It is a mode that

usually gets expressed locally and after attaining some success approaches on global

grounds. IBM always follows the process of establishing central framework and then

architects the relevant consumer experiences to gain consistency with the brand.

IBM always concentrates in gaining single view from its consumers and that helps in

assessing the risk factors of global marketing strategies (Rometty, 2001). In order to

meet the diversified point of views, IBM follows the structure noted below;

Process of analysing the context of 'when', 'where' and 'how' the appropriate

and relevant customer data can be collected. This is an approach that is done

under the provision of practical market survey.

The means to create absolute governance framework with special attentions

led over management policies and overall practices. These are the sources that

are collected through the purpose of encouraging customer centricity added by

the scope to safeguard customer privacy.

Approaches led by institute consistent processes for target customer is the next

step. In this process the relationship led by the management across all the

domains of sales and provided services of the organisation are scrutinized

professionally.

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The process of appointing efficient team leaders and strong management

initiators. IBM also appoints a leader who can perform as a single customer

advocate and is very much accountable for all the sorted touch points.

The marketing strategies adopted by IBM to meet global demands and competitions

are well inclusive of a robust infrastructure. It has the provision for optimising

flexibility and a hub-and-spoke architecture for collecting consumer demands on

global arena. There is also well marked acknowledgement for all the innovative ways

adopted by the partners of IBM. Developments attain by the partners of IBM in global

terms is also directly related to the marketing strategies followed by IBM. IBM

understands the fact that partners can add much hold over the local market and can

reach the consumer with more in-depth formulations. This is the reason that they

believe in developing capitalized relationship with these partners for future

opportunities.

IBM and e-business strategies

The motive of any electronic business is to achieve consumer demands through

internet networking. This is a provision that can collect more consumers all over the

world with very minimum investment. It is an exclusive means adopted through the

dealings related to information and communication technologies. For the development

of business proceedings through ICT is considered to be the best means. In case of

IBM the role of e-business is very strong. Through e-business strategies, IBM is

enabling itself to all kinds of external activities and is applying determined

relationships for respective business dealings, with individuals, diversified groups and

all other corporate. According to 'Who Says Elephants Can't Dance?'; a book by a

former CEO of IBM, Louis Gerstner (2003), the approach of IBM for "e-Business

strategies is handled under IBM's marketing provisions and under specialised internet

teams since 1996.

It is through its e-business strategies that IBM is able to link its internal as well as

external data processing systems with more efficiencies and flexibilities. E-business

helped IBM in coming much closer to its consumers and that builds the bridge of

reliability and consumer loyalty to the brand. The proceedings led by IBM for the

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development and implementation of e-business are more strategic and led

concentration over diversified functions occurring through electronic capabilities.IBM

is also a part of the entire value chain proceeding for more profitable dominance over

the local as well as global market. There are some predominant sectors where the e-

business strategies are applied to gain more trust and money from the consumer.

These activities are noted below;

1. electronic purchasing

2. supply chain management

3. processing orders electronically

4. handling customer service

These proceedings are adding special technical standards in the e-business structure of

IBM. It is also utilising e-business strategies to exchange of data between its partners

and associate companies. As a matter of fact the e-business strategies of IBM are not

much different from the other marketing strategies. The basic difference however

depends over the expansion of management for sending and receiving contracts from

the consumer. It is under this strategic implementation that IBM has adopted many

local dealers to be a part of its services. These dealers are of course selected through

some professional modes. The reputations of these dealers are marked by IBM first

before offering the partnership. In terms of services for each product sold through e-

business, IBM provides appropriate training to all those people who are a part of this

structure. With strategic planning IBM is also into the dealings related to integrated

intra and inter firm business proceedings.

It can be well concluded that the marketing strategies adopted by IBM are very much

structured on the basis of trust-based marketing strategies. It is through this theoretical

approach that IBM has established itself very strongly, amidst burgeoning and very

unpredictable online as well as global marketplace. IBM concentrates in providing its

consumer every possible facility that he demands and that too with very balanced

services. It is more about having the trust of every single consumer, rather than having

lots of them without the trust. The products and services provided by IBM can

guarantee their utility to the customer's satisfaction. In a nutshell, IBM has got

professional and the courage to take a risk for innovative ideas. It explores the

consumer's domain through proper hold over the local and global proceedings.

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CHAPTER IV

NEW PRODUCT DEVELOPMENT FOR IBM AND

MARKETING STRATEGY FOR THAT PRODUCT

The management of new product development involving electronic and computer-

oriented consumer and systems products is a special case because of the challenges

created by high technology and complex systems. There is a big project risk involved

as the whole project might fail and make a huge loss for the investors, even if the

product performs as designed in development. These factors are external to the project

team-in the company organization and culture or in the global marketplace. They are

often missed by the technical and engineering personnel in the project because of the

tendency to fix narrowly on the product itself and its design and function,

And not on the company's success in getting it successfully to the market.

IBM WILL DEVELOP A COMPUTER THAT WORKS AS A HUMAN BRAIN

IBM is carrying out a project focused on developing a computer that would work as a

brain, so it can solve problems by considering the real context in which the things are

happening.

This type of technology is called “Cognitive computing”, and it will require the

combined work of neurobiologists, computer and materials scientists and

psychologists. In order to develop the project, some researchers from Stanford

University, Cornell University and the University of California-Merced are

collaborating. Besides, the project is supported by the Defense Advanced Research

Projects Agency that has invested $4.9 million.

“The mind has an amazing ability to integrate ambiguous information across the

senses, and it can effortlessly create the categories of time, space, object, and

interrelationship from the sensory data”, said Dharmendra Modha, a researcher at

IBM who is leading the collaboration.

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“There are no computers that can even remotely approach the remarkable feats the

mind performs”, said Modha. “The key idea of cognitive computing is to engineer

mind-like intelligent machines by reverse engineering the structure, dynamics,

function and behavior of the brain”.

SEGMENTATION OF THE MARKET

THE COUNTRY CHOSEN IN THIS CASE IS INDIA

NEUROSCIENCE, SUPERCOMPUTING, NANOELECTRONICS

Market segmentation is a strategy that involves dividing a larger market into subsets

of consumers who have common needs and applications for the goods and services

offered in the market. These subgroups of consumers can be identified by a number of

different demographics, depending on the purposes behind identifying the groups.

Marketing campaigns are often designed and implemented based on this type of

customer segmentation.

In this case we can segment the market by the age group of the people who will be

using the end product; this type of computer will be mostly used by the older group of

people who understand what is nanoelectronics and its applications.

SELECTION OF TARGET MARKET

Target Marketing involves breaking a market into segments and then concentrating

your marketing efforts on one or a few key segments.

Psychographic segmentation – based on lifestyle preferences, such as being urban

dwellers

DIFFRENTAITION AND POSITIONING OF THE OFFERING IN THE

CUSTOMERS MIND

In marketing product differentiation is the process of distinguishing a product or

offering from others, to make it more attractive to a particular target market. This

14

involves differentiating it from the competitors products as well as ones own

products.

Differentiation in quality is what IBM will be aiming for in this product as this

product will of superior quality and design which will give IBM a competitive edge

over other companies which plan to launch such a product in the future.

MARKETING OBJECTIVES

Short term targets for milestones with defined measurable achievement.

For example if IBM is planning to get over a million units of sale in this particular

year, then objectives should be defined in such a way

That actual performance can be compared with the objective.

A MARKETING MIX FOR THE NEW PRODUCT OR SERVICE

Product

The product is cognitive computing

Price

The price would be based on development costs plus profits

Place

The place of launch would be INDIA

Promotion

The product would be promoted to the age group of over 25 yrs

People

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Indian organisations aim to apply for the Investors In People accreditation, which tells

consumers that staff are taken care off by the company and they are trained to certain

standards.

Process

Banks that send out Credit Cards automatically when their customer's old one has

expired again require an efficient process to identify expiry dates and renewal. An

efficient service that replaces old credit cards will foster consumer loyalty and

confidence in the company. Hence efficiency is our aim.

Physical evidence

Physical evidence is an essential ingredient of the service mix, consumers will make

perceptions based on their sight of the service provision which will have an impact on

the organisations perceptual plan of the service.

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CHAPTER V

STRATEGIC POSITION ANALYSIS

Strategic Direction

External Analysis

PESTLE Analysis

• Skilled Employees - Despite the ranks of skilled workers in India and other

countries, competition has shrunk the pool of available candidates. Employees

work in a ‘virtual organization’, where location is no longer defined; employees

are connected to each other through networks and technology.

• Commoditization of Technology - As competitors become adept at duplicating

the same types of services IBM develops, competition increases and profits

drop. Because IBM does not force clients to use any particular product, it is

easy for clients to move to IBM, at the risk of them easily moving elsewhere.

• Pressure to Innovate - Innovation of new products and services (or the

acquisition of the same) is the lifeblood of IBM, missteps in predicting industry

trends can be costly investments with little return.

A dangerous position for IBM is the non-differentiation between a skilled

employee working for IBM and the same employee later working for a competitor.

Clients may not see value in paying IBM’s premium prices if the same services

can be found cheaper elsewhere. Simply paying employees more merely increases

costs all around and may not be an effective solution – a new way to differentiate

the available pool of talent, raise competitive barriers, and yet keep overhead costs

low must be found.

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CHAPTER VI

BUSINESS STRATERGY CONSULTING

Leverage core competencies to formulate innovative strategies, create

new business models and ensure successful transformations for

sustainable growth and profitability

Overview

Business leaders understand that profit, success and continued growth are all achieved

through an intelligent, articulate and well-crafted business strategy.

Markets, competition, industry changes, adapting business models, and mergers,

acquisitions and divestitures are just a few factors that your organization must not

only keep pace with, but strive to master in order to drive ongoing business success.

IBM's business strategy expertise can help define and understand market drivers,

innovative value propositions, risks, technology strategies, globalization, M&A

activity and the development of new business models. The business strategy offerings

help your enterprise understand and leverage core competencies to drive real value by

formulating leading-edge, implementable strategies that result in sustainable growth

and profitability.

The business strategy consulting practice can assist in the following areas of your

organization:

Growth & business model innovation strategies: Continuously innovate to

transform your business model, including where and how you compete, in order to

spur growth, provide differentiation and increase competitiveness.

M&A services: Take your company from vision to value in pursuit and integration of

deal transactions—acquisitions, mergers, divestitures or spin-offs.

Sustainability strategy: Clarify economic logic of sustainable actions, and set a

strategy for sustainability (energy, carbon, water, and corporate social responsibility)

within the context of your company's business and operating models.

18

Smarter business: Understand what is needed internally and externally to be

interconnected, instrumented and intelligent in order to become more nimble and

adept.

Cloud enabled business models: Innovative approaches that leverages the dynamic

nature of cloud as an enabler of new business models

BUSINESS CHALANGES

Business leaders today are addressing many challenges and opportunities in today's

growingly digital world, including:

Leveraging business insights and technological capabilities to drive innovation in

business models, and across customers, markets and channels in order to create

growth and sustainable advantage

Realizing higher value from critical merger, acquisition and divestiture activities

Developing an implementable roadmap for more efficient and environmentally

conscious policies and operations

Harnessing and leveraging new technology to become more agile and dexterous while

optimizing past and existing investments in technology and infrastructure

IBM's approach to Mergers & Acquisitions (M&A) is based on the need to align

strategy, selection and implementation. This means focusing on doing the right deal

for the right reason. When these basic principles are followed, organizations are able

to use M&A to:

Increase market share

Obtain critical mass

Establish new growth platforms

Extend geographic coverage

Add capabilities

Diversify portfolio

Divest to focus on core businesses / competencies

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IBM's M&A services practice has a significant track record of helping over 1,000

leading organizations achieve these benefits through mergers, acquisitions and

divestitures.

MARKET LEADER IN M&A SOLUTIONS

In addition to the consulting services offered, IBM also offers clients the leading on-

demand SaaS solution for transaction automation, known as IBM M&A Accelerator.

This solution is an online application enabling deal participants to track, manage and

share all related M&A activities throughout the deal lifecycle. M&A Accelerator

automates all aspects of the M&A process including target tracking, due diligence,

pre-close planning, integration execution, and post-deal synergy monitoring..

Achievement of synergies or lack thereof is immediately visible to executives and

M&A leaders, allowing them to quickly capture more value from all their transactions

or quickly course correct their efforts.

IBM’s M&A Accelerator is a powerful, highly configurable, yet easy to deploy and

use, tracking and management solution. This solution will streamline your M&A

efforts, while improving results, and providing unprecedented top-down visibility.

Overview of IBM M&A Accelerator

M&A Accelerator is like having a GPS for executing a mergers, acquisitions or

divestment. If you are acquiring another organization, you need ways to achieve

consistent success and better results in your M&A transactions. You need an M&A

automation solution that provides a complete system of record to help you capture,

execute, and monitor your M&A processes and achievements. In essence, it is your

M&A system of record, a single place to create and track all assumptions, synergies,

documents, activities, risks, issues, and measurements and achievement related to a

transaction.

M&A Accelerator quantifiable benefits as noted by our extensive commercial

client base:

Track & Manage realization of value drivers

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o Focus entire deal team on activities tied to value – M&A Accelerator connects the

dots between activity and value with our built in SmartLinks

o Create visible value driver measurement to enable early identification of problems

and develop appropriate course corrections

Increase productivity of the entire deal team

o Eliminate the administrative burdens on the deal team

o Automated deal tracking, reporting, and measurement

o We take over the mechanics, tracking all the moving parts, which allows the

execution team to focus on high value activities (like decision making) and minimize

the distraction to the core business, improve results

Reduce Risk

o Drive identification and resolution of cross functional issues before they cost you hard

dollars

o Avoid dropping issues between the due diligence/integration handoffs

o Avoid the cost of a 1 day slip. On a deal with $50 million in synergies, the cost of a 1

day slip is more than $100,000!

Assess, analyze and build strategies for your customers to address

markets, marketing, sales, service and online interactions

Overview

In a massively interconnected world, businesses are prioritizing customer intimacy as

never before. Globalization, combined with dramatic increases in the availability of

information, has exponentially expanded customers’ options. Organizations are

realizing more and more that ongoing engagement and co-creation with customers

produce sustainable differentiation and profitable growth. Moreover, the information

explosion has resulted in an unprecedented opportunity to develop deeper customer

insights.

The right market and customer strategy can help an organization turn customers into

advocates, infuse customer interactions across each channel with positive impressions

of the company, and help engender a feeling of loyalty across the customer base. The

IBM customer experience and market strategy consulting services can help your

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organization achieve its goals. Assess, analyze, and build strategies to address

markets, marketing, sales, service and online interactions.

The IBM consulting offerings include the following integral components:

Customer centric strategy: Strategies to help you focus on customer experience and

care

Channel transformation: Strategies and approaches to help implement experience

and care activities across any and all applicable channels

Social media strategy: Strategies and approaches to create meaningful customer

experiences and drive deeper customer relationships in the social web space

Digital brand & presence strategy: Strategies and approaches to better leverage and

manage your brand in a digital, web-based world

Smarter sales & marketing: Consulting services to help you understand how to

improve revenue and manage the sales and marketing organization through more

intelligent, instrumented and interconnected marketing and communications activities.

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CHAPTER VII

IBM IN INDIA

Big Blue is not only a leading employer in India, it also has the highest IT services

revenues.

IT giant IBM is not just one of the largest private sector employers in India, but is also

the biggest player in the domestic IT services space. Its portfolio of clients includes

Bharti Airtel, Idea, Vodafone and Max New York Life, to mention a few. Data

collated from various reports, analysts and industry shows that the US company

derives annual revenues of over $2 billion from the domestic IT services market, with

a marketshare of over 13 per cent.

At this level, Big Blue — as IBM is known — is ahead of domestic rivals HCL (both

HCL Technology and HCL Infosystems), TCS, Wipro and even global rivals like the

HP-EDS combine (including MphasiS) and Accenture. HCL's IT services revenues in

India are estimated to be around $1.2 billion. Wipro, which draws around 22 per cent

of its IT services revenues from India, is believed to be the number-three player, with

estimated revenues of $1 billion, closely followed by HP/EDS. TCS, which recently

renewed its focus on India, generates revenues of $500 million.

An email sent to IBM India's spokesperson for this article remained unanswered.

Being among the first IT firms to establish its presence in India, for its hardware

business back in the 1930s, IBM has been able to harness its offshore operations for

global delivery. With an offshore workforce estimated at 100,000, IBM has paid India

and Indian firms no less than what it has made from India. For example, most Indian

IT services providers provide manpower to IBM on contract to cater to its domestic as

well as global customers.

“IBM is an exception in the domestic market. Its association with India is longer than

most Indian or global companies. Other than as a market, it has used India as a

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strategic location for its global delivery model,” says Amneet Singh, vice-president of

Global Sourcing at research firm Everest Group.

While IBM no longer furnishes the geographic break-up of its headcount, the

company's last publicly announced figure for India was 53,000 employees as on

January 1, 2007. The latest figure, according to estimates of HR consultants and

analysts, is expected to be double that, of which 70,000 work at its strategic global

services division, which includes BPO IBM Daksh. This means that of every three

employees working with its global services division, at least one is from India. IBM's

global services division is estimated to have a worldwide headcount of 190,000.

Besides, of the 70,000 working for its global services division in India, 20,000 work

for the BPO business. The domestic business is also believed to have around 10,000

people. The R&D and consulting divisions are estimated to have 3,500 and 2,000

people, respectively. While the employee strength of IBM's hardware division in India

is unknown, this is manpower intensive and requires strong sales and service

capabilities.

But more than IBM's success in utilising India as a strategic global delivery centre, its

success may be viewed more for its success in leveraging India as a key growth

market. In the last five to six years, IBM has clinched most of the IT outsourcing

contracts announced in the domestic telecom space, thereby maintaining its leadership

position.

Starting with an outsourcing contract worth $1 billion from India's largest telecom

service provider, Bharti Airtel, in 2004, it signed another multi-year mega outsourcing

contract with Idea Cellular in 2007, worth about $800 million. In the same year, it

bagged an outsourcing contract from Vodafone, which is estimated to be worth more

than $600 million. Besides, state-run BSNL has also awarded IBM an outsourcing

contract, although the size is comparatively smaller.

“The only other company which has been able to compete with IBM in the domestic

telecom space to a certain extent is Wipro, especially since it pocketed a $600-million

outsourcing deal from Aircel and similar-sized deals from Unitech Wireless in the last

two years,” said an industry analyst, requesting anonymity.

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Other than telecom, IBM has also established a solid presence in the domestic

insurance sector, snapping up large outsourcing contracts from leading insurance

players like Max New York Life, Reliance Life, Birla Sun Life and ICICI Prudential.

The largest deal it signed in this space was with Max New York Life in 2008,

estimated to be worth around $500 million.

In banking, though, it has not been able to make much of a dent. It has only managed

deals with Canara Bank and Kotak Mahindra Bank. Its customers in manufacturing

include Bhilai Steel Plant and SAIL, mostly for SAP implementation.

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CHAPTER VIII

CORPORATE LEVEL STRATERGY

IBM operates primarily in a single industry using several segments that create a value

byoffering a variety of solutions that include, either singularly or in some

combination,technologies, systems, products, services, software and financing. This

may lead you to believethat IBM has adopted a corporate level strategy of

concentrating on a single business unit, butthis is only half the picture. For IBM there

is not one general type of corporate strategy that bestsuits their needs, but a

combination of both a concentration on a single business strategy aswell as a vertical

integration strategy.A single business unit strategy means that IBM is concentrating

on competing successfullywithin the confines of a single business unit. An advantage

of choosing such a strategy is thatthe IBM can focus its total and collective resources

to dominating and becoming successful inthis business area. If IBM were to attempt

to pursue some other strategy such asdiversification, they might spread their resources

out too thin, thus inhibiting them from takingadvantage of some other opportunities

that may come about due to a lack of availableresources. Another advantage to

pursuing a single business unit strategy is that IBM isremaining within an area with

which it has a great deal of competence and experience. Thisdecreases the likelihood

of IBM partaking in a venture that may be unsuccessful and it keepsIBM in an area

where their existing capabilities and resources can contribute and add value.But

concentrating on just one business area may not be enough and so as previously

stated,IBM has also adopted a corporate level strategy that involves vertical

integration. Verticalintegration can be seen in the corporate level strategy of IBM in

their acquisition of variousinputs such as the LSG Group Inc., which offers services

ranging from application developmentto information technology consulting. This is

known as backward or upstream integration.Choosing a strategy such as vertical

integration generally gives a company a competitiveadvantage by improving

scheduling, by creating efficiency-enhanced assets, by protectingproduct quality and

by enabling the company to build barriers to new competition.IBM operates in more

than 150 countries worldwide and derives more than half of its revenuesfrom sales

outside the United States. IBM has adopted an international strategy with respect

tohow it plans to compete and operate globally. By adopting an international strategy

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IBM looksto create value on a global basis by transferring valuable skill and products

to foreign marketswhere local competitors lack those skills and products. Although

much of IBM's revenues comefrom overseas sales, they tend centralize the majority of

the decision-making and other company functions right her in the United States. This

means that they first develop marketingand product decisions in the United States and

then transfer what they have done in the UnitedStates to other countries.This does not

mean that no adaptation was done at all but it does mean that any adaptation thatmay

have been done was kept to a minimal. In many cases the modifications IBM may

carry outwith respect to its business decisions in a particular market may be due to the

laws and policiesin a particular country. IBM could also be forced to modify its

business decisions in a certaincountry due to the economic and political changes in

those countries and by macroeconomicchanges, including recessions and inflation. An

example of this would be when a weakness inthe economy of Asia had an adverse

effect on the companies business in 1998 and forced it tochange its strategy with

respect to that market while the countries economy got itself back together.

CORPORATE GRAND STRATEGIES:

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

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:

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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.

STABILITY STRATEGIES:

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:

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.

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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:

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

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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 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 business-level 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

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(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.

ANALYSIS OF BUSINESS-LEVEL STRATEGIES:

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 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

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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.

FUNCTIONAL-LEVEL STRATEGIES:

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.

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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. Business-level

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.

Sub Business Unit:

In IBM, a strategic business unit (SBU) is a profit centre 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.

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CHAPTER IX

CONCLUSION

As the conclusion, we believe that the best way to research IBM strategy in India 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 Indian 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.

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CHAPTER X

BIBLOGRAPHY

BOOKS

Gerst, Louis V. (2003) Who Says Elephants Can't Dance. Leading a Great Enterprise

through Dramatic Change. Harper Paperback

Bruce Barkley (2008) Project management in new product development. McGraw-hill

books

Rifkin, J. (2000) The Age of Access, Putnam Books, New York

WEBSITES

IBM Global Business Services, http://www.935.ibm.com/services/uk/index.wss/home

http://www.935.ibm.com/services/au/index.wss/ibvstudy/igs/a1006209?

cntxt=a1005848

http://news.cnet.com/IBM-meets-lowered-estimates/2100-1014_3-885259.html

http://www.modha.org/

http://www.ibm.com/

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