1. EXECUTIVE SUMMARY

International Business Machines (IBM) is the largest information technology company in the world, the world’s largest business and technology services company, the world’s largest consulting services organization, the world’s largest information technology research organization, and the world’s largest financier of information technology. IBM is an innovation-based business serving the needs of enterprises and institutions worldwide. It defines innovation as the intersection of business insight and technological invention. By helping its clients redesign their business processes and organizational structure, enabled by new operating environments, IBM helps them to become on demand businesses. IBM first described this new model and set of capabilities in 2002, believing they represent the evolution of information technology architectures and of business and institutional models. IBM calls this architecture the on demand operating environment: an infrastructure based on industry-wide standards (commonly referred to as "open standards"), rather than proprietary technologies. The shift to standards-based technologies has been bolstered significantly in recent years by the rapid growth of the open source software movement, a result of large-scale collaboration among members of the worldwide developer and business communities. IBM’s clients include many different kinds of enterprises, from sole proprietorships to the world’s largest organizations, governments and companies representing every major industry and endeavor. Over the last decade, IBM has exited or greatly deemphasized its involvement in consumer markets and divested itself of other noncore businesses to concentrate on the enterprise market. The majority of the company’s enterprise business, which excludes the company’s original equipment manufacturer (OEM) technology business, occurs in industries that are broadly grouped into six sectors around which the company’s go-to-market strategies, and sales and distribution activities are organized: (1) financial services: banking, financial markets, insurance; (2) public: education, government, healthcare, life sciences; (3) industrial: aerospace, automotive, defense, chemical and petroleum, electronics; (4) distribution: consumer products, retail, travel, transportation; (5) communications: telecommunications, media and entertainment, energy and utilities; and (6) small and medium business: mainly companies with less than 1,000 employees.

1

Organizationally, IBM’s major operations comprise a global services segment; a systems and technology group; a personal systems group; a software segment; a global financing segment; and an enterprise investments segment. Global Services is a critical component of the company’s strategy of providing insight and solutions to clients. While solutions often include industry-leading IBM software and hardware, other supplier’s products are also used if a client solution requires it. Global services outsourcing contracts as well as BCS contracts range from less than one year to ten years. The systems and technology group provides IBM’s clients with business solutions requiring advanced computing power and storage capabilities. More than half of the systems and technology group’s eServer and storage systems sales transactions are through business partners and approximately 40% are direct to end-user clients and more than half are through the company’s Internet site. In addition, the group provides leading semiconductor technology and products, packaging solutions and engineering technology services to OEM clients(approximately 14% of systems and technology group revenue) and for IBM’s own advanced technology needs. While not reported as external revenue, hardware is also deployed to support global services solutions.The personal systems group includes sales of personal computers, business and computing solutions for retail stores and advanced printing capabilities for large enterprise clients and small and medium-sized businesses. In December 2004, it was announced that Lenovo Group, the largest information technology company in China, will acquire IBM’s personal computing division. This transaction closed in the second quarter of 2005.

The next segment, software, consists primarily of middleware and operating systems software. Middleware software enables clients to integrate systems, processes and applications across their enterprises. Middleware is designed to be the underlying support for applications provided by independent software vendors (ISVs), who build industry - or process-specific applications according to open industry standards. Approximately 40% of external software revenue relates to one-time charge (OTC) arrangements, whereby the client pays one up-front payment for a lifetime license.The remaining annuity revenue consists of both maintenance revenue sold with OTC arrangements, as well as software sold on a monthly license charge (MLC) arrangement. Typically, arrangements for the sale of OTC software include one year of maintenance. The client can also purchase ongoing maintenance after the first year.

2

Finally, the enterprise investments segment develops and provides industry-specific IT solutions supporting the hardware, software and global services segments of the company. Primary product lines include product life cycle management software and document processing technologies. Product life cycle management software primarily serves the Industrial sector and helps clients manage the development and manufacturing of their products. Document processor products service the Financial Services sector and include products that enable electronic banking. The company’s research and development (R&D) operations differentiate IBM from its competitors. IBM annually spends approximately $5-6 billion for R&D, including capitalized software costs, focusing its investments in high-growth opportunities. As a result of innovations in these and other areas, IBM has been awarded more annual US patents than any other company since the mid 1990s.In addition to producing world-class hardware and software products, IBM innovations are a major differentiator in providing solutions for the company’s clients through its growing services activities. The company’s investments in R&D also result in intellectual property (IP) income. Some of IBM’s technological breakthroughs are used exclusively in IBM products, while others are used by the company’s licensees for their products when that new technology is not strategic to IBM’s business goals. A third group is both used internally and licensed externally. In addition to these IP income sources, the company also generates value from its patent portfolio through cross-licensing arrangements and IP licensed in divestiture transactions. Just as IBM works to transform its client’s supply chains for greater efficiency and responsiveness to market conditions, IBM has undertaken a large-scale initiative to recast its own integrated supply chain as an on demand business operation, turning what had previously been an expense to be managed into a strategic advantage for the company and, ultimately, improved delivery and outcomes for its clients.

The company spends approximately $41 billion annually through its supply chain, procuring materials and services around the world. The company’s supply, manufacturing and distribution operations are integrated in one operating unit that has reduced inventories, improved response to marketplace opportunities and external risks and converted fixed to variable costs. Likewise, in addition to its own manufacturing operations, the company uses a number of contract manufacturing (CM) companies around the world to manufacture IBM-designed products. The use of CM companies is intended to generate cost efficiencies and reduce time-to-market for certain IBM products. Some of the company’s relationships with CM companies are exclusive. The company has key relationships with Sanmina-SCI for the manufacture of some Intel-based products and with Solectron for a significant portion of the manufacturing operations of Global Asset. 3

2. HISTORY OF THE ORGANIZATION

The company’s history dates back decades before the development of electronic computers - before that it developed punched card data processing equipment. The company originated as the Computing Tabulating Recording (CTR) Corporation, which was incorporated on June 15, 1911 in Binghamton, New York. This company was a merger of the Tabulating Machine Corporation, the Computing Scale Corporation and the International Time Recording Company. The president of the Tabulating Machine Corporation at that time was Herman Hollerith, who had founded the company in 1896. Thomas J. Watson Sr., the founder of IBM, became General Manager of CTR in 1914 and President in 1915. On February 14, 1924, CTR changed its name to International Business Machines Corporation (IBM). The companies that merged to form CTR manufactured a wide range of products, including employee time keeping systems, weighing scales, automatic meat slicers, and most importantly for the development of the computer, punched card equipment. Over time CTR came to focus purely on the punched card business, and ceased its involvement in the other activities.

During World War II, IBM’s German subsidiary Dehomag (an acronym formed from German Hollerith Machine Company) provided the Nazi regime with punch card machines. Dehomag was taken over by the Nazis in 1939.In the 1950s, IBM became a chief contractor for developing computers for the US Air Force’s automated defense systems. Working on the SAGE anti-aircraft system, IBM gained access to crucial research being done at MIT, working on the first real-time, digital computer (which included many other advancements such as an integrated video display, magnetic core memory, light guns, the first effective algebraic computer language, analog-to-digital and digital-to-analog conversion techniques, digital data transmission over telephone lines, duplexing, multiprocessing, and networks). IBM built fifty-six SAGE computers at the price of $30 million each, and at the peak of the project devoted more than 7,000 employees (20% of its then workforce) to the project. More valuable to the company in the long run than the profits, however, was the access to cutting-edge research into digital computers being done under military auspices. IBM neglected, however, to gain an even more dominant role in the nascent industry by allowing the RAND Corporation to take over the job of programming the new computers IBM

4

went on to use its experience designing massive, integrated real- International Business Machines Corporation time networks with SAGE to design its SABRE airline reservation system, which met with much success. IBM was the largest of the eight major computer companies (with UNIVAC, Burroughs, Scientific Data Systems, Control Data Corporation, General Electric, RCA and Honeywell) through most of the 1960s. People in this business would talk of "IBM and the seven dwarfs", given the much smaller size of the other companies or of their computer divisions. Most of those companies are now long gone as IBM competitors, except for Unisys,which was the result of multiple mergers that included UNIVAC and Burroughs.

The company’s success in the mid-1960s led to inquiries as to IBM antitrust violations by the US Department of Justice, which filed a complaint for the case US v. IBM in the US District Court for the Southern District of New York, on January 17, 1969. The suit alleged that IBM violated the Section 2 of the Sherman Act by monopolizing or attempting to monopolize the general purpose electronic digital computer system market, specifically computers designed primarily for business. Litigation continued until 1983, and had a significant impact on the company’s practices. In 1981, the company introduced the IBM Personal Computer or PC, allowing the use of computers in schools, homes and businesses. Components for the computer were sourced from outside the company. The processor chip came from Intel and the operating system, called DOS (Disk Operating System), came from Microsoft. The IBM token-ring local area network, introduced in 1985, permitted personal computer users to exchange information and share printers and files within a building or complex. In 1991, the company spun-off Lexmark from its printer division. Lexmark went on to become a publicly-traded company in its own right and began to compete with IBM’s printing systems division. IBM introduced the ThinkPad in 1992, the first in a series of notebook computers to be manufactured by the company. On January 19, 1993, IBM announced a $4.97 billion loss for 1992, which was at that time the largest single-year corporate loss in US history. Since that loss, IBM made major changes in its business activities, shifting its focus significantly away from components and hardware and towards software and services. In 1995, IBM acquired Lotus Development and Tivoli Systems for $3.5 billion and $750 million respectively. In 1997, IBM demonstrated computing’s potential with Deep Blue, a 32-node IBM RS/6000 SP computer programmed to play chess on a world class level.

Growth through the pursuit of acquisitions continued in the late 1990s, and the company acquired CommQuest Technologies in 1998, followed with Mylex Corporation and Sequent Computer Systems in 1999, the latter of

5

which cost $810 million. In January 2001, the company gained control of Informix Software (a purchase of assets rather than a true acquisition) for $1 billion. In early 2002, the company acquired a firm called Crossworlds. This was followed with the acquisition of PWC Consulting, the global management consulting and technology services unit of PriceWaterhouseCoopers for $3.5 billion. The company recalculated this value as $3.9 billion in August 2003. Also in 2002, IBM sold most of its hard disk drive operations to Hitachi. The sale involved the creation of a joint venture called Hitachi Global Storage Technologies, which was 70%-owned by Hitachi. IBM acquired Rational Software in February 2003 for a consideration of $2.1 billion. Rational Software was a provider of open, industry standard tools, best practices and services for developing business applications and building software products and systems. In November 2003, Microsoft announced that it would be using IBM chips in its next generation Xbox game and consumer electronics devices. In the same month, IBM bought Productivity Solutions, a maker of automated self-checkout software used in retail and grocery stores. IBM acquired Green Pasture Software, a privately-held provider of document management software in December 2003.In March 2004, IBM acquired the Australian and New Zealand operations of network services integrator Logicalis Group. This was followed by the announcement of plans to acquire Daksh, India’s third largest business outsourcing company. In April 2004, IBM completed the acquisition of Trigo Technologies. Trigo’s productinformation management capabilities and technology were integrated into the IBM software group. Later in the same month, IBM acquired the business continuity services unit of Schlumberger. In June 2004, the company acquired Candle Corporation, a service provider. The company was integrated into IBM’s software group. The following month saw thecompany acquire Alphablox. The following month saw the company Alphablox and Cyanea Systems. During December 2004, IBM announced the proposed sale of its PC business to Chinese computer maker Lenovo, which was partially owned by the Chinese government, for $650 million in cash and $600 million in Lenovo stock. The deal was approved by the Committee on Foreign Investment in the US in March 2005, and was expected to be completed later that year. As a Result, IBM had a 19% stake in Lenovo, which was to move its headquarters to New York State and appoint an IBM executive as its Chief Executive Officer. The company also retained the right to use certain IBM brand names for an initial period of five years. Later that month, IBM agreed to make security changes at a North Carolina research facility in order to secure regulatory clearance for the sale of its personal computer business to Lenovo.

In January 2005, the company announced that it would pledge 500 of its patents for use by the open computing community, representing a major

6

shift in the way it managed and deployed its intellectual property portfolio. IBM’s intent was to help form an industry-wide "patent commons," in which patents were used to establish a platform for further innovation in areas of broad interest to information technology developers and users. The pledge was applicable to any individual, community, or company working on or using software that meets the open source initiative (OSI) definition of open source software. Later that month, IBM announced it had acquired SRD, a privately held company based in Las Vegas, Nevada, and provider of identity resolution software. SRD’s operations were integrated into IBM’s information management software organization and SRD products were immediately available from IBM. Financial details were not disclosed. The following month IBM announce that it had entered into a definitive agreement to acquire Equitant, a global business transformation outsourcing (BTO) provider that focused on the management and optimization of the Order-to-Cash cycle for large companies. The company had offices in Ireland and North America and serves clients globally. In March 2005, IBM and Ascential Software announced that the two companies had entered into a definitive agreement for IBM to acquire the equity of Ascential Software, a publicly held company based in Westboro, Massachusetts, in an all cash transaction at a price of approximately $1.1 billion. During the same month, IBM completed of its acquisition of Corio, seven weeks after reaching a definitive agreement to purchase the San Carlos, California-based company. The acquisition strengthened IBM’s application services portfolio by adding Corio’s capabilities and technologies which facilitated application deployment and automated application management for clients. The acquisition also enhanced IBM’s application services capabilities for clients using business software from Ariba, Epiphany, Oracle, PeopleSoft, SAP and Siebel. April 2005 saw the company acquire Houston, Texas-based, Healthlink, the US’ foremost healthcare process improvement and information technology consulting services company. This acquisition boosted IBM’s capabilities as a healthcare consulting and services leader, at a time of upheaval in the healthcare industry worldwide. Financial terms of the deal were not disclosed. Following the acquisition of Healthlink, all 12 healthcare companies listed on Fortune magazine’s 2004 Global 500 list became IBM customers. In the following month, IBM announced it had acquired Gluecode Software, a privately held company based in El Segundo, California, and a provider of software and support services for open source application infrastructure software. Financial details were not disclosed.

7

IBM-INDIA-Milestones:

1992  

  IBM enters Indian market through a joint venture with the

Tata Group. The JV company is christened Tata Information

Systems Limited (TISL).

   

1995  

  Accredited ISO Tickit 9001 (recertified to ISO9001:2000 in

year 2001).

   

1997  

  TISL Becomes Tata IBM Ltd, IBM Global Services launched -

offers a range of IT services from IBM including networking

services, outsourcing, education, system integration,

consulting, software development and hardware design.

   

  Solution Partnership Center is set up in Bangalore to help

Indian ISVs port application onto proven IBM hardware

platforms like AS/400 and RS/6000.

1998

 

January IBM School of Enterprise Wide Computing launched at Indian

Institute of Information Technology (IIIT), to offer short-term

courses to the public and credit courses on enterprise-wide

computing to graduate and undergraduate students.

    8

April IBM India Research Laboratory established in New Delhi,

located in the sprawling campus of Indian Institute of

Technology (IIT).

   

1999 

September IBM India Limited formally launched - after government

approves Tata's divestment plan.

   

November IBM India launches PC manufacturing in Pondicherry

IBM Global Services India achieves CMM Level 5 Rating.

   

2000  

June Global e-business software center set up in Gurgaon to offer

IBM’s customers a range of services including technical

consultation, proof of concept and technical presentations,

implementation planning, solution architecture, application

design and development, deployment, and education and

training.

   

November IBM Global Financing launched in India to provide flexible

and attractive financing and leasing programs to fund

information technology (IT) requirements of Indian

customers.

2001  

  India Software Development Labs established in Pune and

Bangalore to develop, enhance and support key IBM

products & technologies with a committed investment of US

$ 100 Million. The state-of-the-art facility is playing an

9

important role in IBM’s Linux Strategy, working closely with

the worldwide Linux Technology Centre.

   

2002  

June IGSI recognized as the "Top MNC Software Services

Exporter" and "Top Foreign Equity Company" in Karnataka

for Year 2001-02 by Software Technology Parks of India

(STPI), Bangalore Chapter.

   

July IGSI has also been also recognized as ‘Distinguished IT

Exporter' for 2001-02 by MAIT.

   

July Dataquest, India's leading trade magazine has also rated IGSI

as the Top MNC Software Services Exporter for Year 2001-

2002.

   

November IGSI Exports Services has also been successfully assessed

at People Capability Maturity Level 5 (version 2.0) by SEI, one

of the few organisations in the world to gain this

achievement.

   

2003  

January IBM India Research Labs launches a "Technology Center" at

its facilities to showcase business applicability of cutting

edge technologies to organisations in India and ASEAN.

   

May IBM Corporation announced the establishment of a new

center in Bangalore, India to provide technology design

10

services for advanced chips, cards and systems to

companies in India and across Asia.

   

May IBM India announced the launch of the 'India Smart Centre', a

virtual toll-free service centre to provide cutting edge

services and support to the small and medium businesses in

metros and small towns. The center, the first one of its kind,

will provide easy to use repair and restoration services for

IBM desktops, and notebooks.

11 3. PRODUCT PROFILE

IBM is world’s largest information technology company. It offers a variety

of services ranging from business transformation consulting to software,

hardware, fundamental research, financing and the component

technologies used to build larger systems.

IBM has the e-business capabilities, products, services and partner

network to help large and small enterprises plan, build and implement the

e-business infrastructure they need to thrive in the Internet economy. Linux

support has further enhanced IBM’s e-business infrastructure enabler

capability. IBM is the only company in the world that offers end-to-end

solutions to the customers from hardware to software, services and

consulting. The Company also offers finance and leasing facilities to its

customers.

IBM’s offerings:

Personal Computing Division offers a range of personal computing devices

such as IBM ThinkPad notebooks, desktops, workstations and monitors.

This integrated family of end-to-end ‘Think’ offerings are simpler, reliable,

more secure and resilient; and require fewer resources to deploy, manage

and support.

Enterprise Server Group offers a portfolio of servers, storage and print

solutions to meet all e-business requirements. The eServers (xSeries,

12

iSeries, pSeries, and zSeries) offer a broad range of products from low-

range, mid-range to high-end servers and mainframes, presenting

customers with the best technologies and practices to support their e-

business infrastructure requirements.

IBM has been providing leading-edge storage technology to organizations

around the world for nearly half a century. IBM offers a complete portfolio

of storage networking products and solutions that not only includes LTO,

SAN, NAS but also IP Storage - iSCSI appliances and gateways.

IBM Software Group offers its customers comprehensive solutions to meet

their e-business requirements. IBM Software is organized around four

segments offering best-of-breed solutions for financial services,

manufacturing, process, distribution, government, infrastructure and small

& medium business sectors.

Transformation and Integration: A family of middleware called the IBM

WebSphere software platform that focuses on the fundamental IT

infrastructure required for any ebusiness initiative planned by

organisations. Key products that are central to the WebSphere

software platform include: WebSphere Application Server, WebSphere

Commerce Suite, WebSphere Studio, MQSeries, VisualAge

development tools and CICS.

Leveraging Information: Focused on gathering, managing and

analyzing reams of data for organisations, IBM offers a portfolio of

database management tools such as DB2 Universal Database, IBM

Content Manager, DB2 OLAP Server, DB2 Everyplace, IBM Warehouse

Manager, IBM Enterprise Information Portal, and HotMedia. About 70%

of all the corporate data in the world is managed by IBM software

13

residing on IBM servers. Data management continues to be an area of

significant growth for the company.

Leveraging Know-How: The Lotus product line helps organisations

leverage its collective wisdom to increase responsiveness and

innovation through tools that enable information sharing, knowledge

management and collaboration with partners, suppliers, employees

and customers.

Managing Technology: IBM helps its customers manage complex

networks running on multiple platforms through its Tivoli range of

products. Tivoli software provides a seamlessly integrated, flexible

and secure e-business infrastructure management solution for

traditional enterprises, emerging e-businesses, and Internet

businesses.

The company offers the following products and services:

Personal computing:MonitorsHandhelds

Servers:BladesMainframesIntel processor-basedMidrangeUNIXClusters

Storage:Disk systemsHard disk drives

14Microdrives

Tape systemsSAN, NAS and iSCSIStorage software

Software:Application and web development toolsApplications - desktop and enterpriseApplication serversBusiness integrationCollaboration and knowledgeDatabase and data managementeLearning softwareEnterprise messagingHost transaction processingNetworkingOperating systemsPortals - commerce - personalizationSecurityStorage managementSystems managementWireless - voice – pervasive

Others:Upgrades, accessories and partsIBM certified used equipmentMicroelectronicsNetworkingPrinting systemsPoint-of-sale systems and kiosks

Business Consulting Services:Application managementBusiness intelligenceCustomer relationship managementeBusiness integrationFinancial managementPortals, knowledge and content managementProcurementProduct lifecycle managementSecurity and privacyStrategic changeSupply chain and operationsWireless e-business

15Infrastructure Services:

Application managementeBusiness hostingTechnical supportContinuity and recoveryMaintenanceNetworkingSecurity and privacyStorageStrategic outsourcingWirelessMajor Products And Services

On-Demand Services:Applications and infrastructureBusiness processesOrganization and culture

Other Services:PC servicesFinancingTechnology design servicesTechnical training

16

4. IBM BUSINESS UNITS

IBM Global Services, is one of the largest players in India offering IT

services such as Integrated Technology Services, Strategic

Outsourcing and Learning Services.

IBM Business Consulting Services (IBM BCS) is the newly established

consulting arm of IBM Corporation, formed after the merger of

erstwhile PwC Consulting and IBM globally in 2002. With more than

60,000 consultants and professional staff in more than 160 countries

globally, IBM Business Consulting Services (IBM BCS) is the world's

as well as India’s largest consulting services organisation.

IBM Business Consulting Services provides clients with business

process and industry expertise, a deep understanding of quality

technology solutions that address specific industry issues, and the

ability to design, build and run those solutions in a way that delivers

bottomline business value.

In India, IBM BCS offer businesses, quality solutions, ranging – from

Strategic Consulting, Supply Chain and Operations, Financial

Operations, Human Capital, Customer Relationship Management, e-

business integration, Business Transformation Outsourcing across a

broad spectrum of industry segments including – Communications,

Distribution, Finance, Industrial and Energy and Utilities.

17

IBM Global Financing, provides flexible and attractive financing and

leasing programs to fund Information Technology (IT) requirements of

Indian customers. IGF helps customers through greater access to the

hardware, software, solutions and services essential to compete in the

global marketplace.

Customers can buy IBM products from its Business Partners. Also,

IBM sells its range of desktop computers, ThinkPad mobile computers

and Netfinity Intel-based servers or through ShopIBM

(htttp://www.ibm.com/in), an online product store.

India is an important market for IBM and the company has been

making significant investments from time to time.

IBM Solution Partnership Center, Bangalore: (One among 10

facilities worldwide)Independent Software Vendors are encouraged to

port their solutions on IBM platforms in this Center and develop Web

based applications for Indian customers.

Linux Solution Center, Bangalore: (One among 7 facilities

worldwide) The center supports Business Partners and Independent

Service vendors across the ASEAN / South Asia region.

IBM Linux Competency Center, Bangalore: (One among only 4

facilities in Asia) This center develops standards and embedded

software for open source, undertaking high-end research in the area

for IBM Worldwide.

18

Software Development Centers, Bangalore and Pune: The

two labs focus on design, development and implementation of

solutions for IBM's worldwide customers and laboratories. The facility

enables development of operating systems including Linux,

networking protocols, high-end graphics and multimedia, databases

and compilers, parallel computing, object oriented technology, Java,

XML and high end applications in manufacturing, banking and

finance, telecom and media, and retail and distribution.

India Research Laboratory, Delhi: (One among 8 facilities

worldwide) The Laboratory built in association with Indian Institute of

Technology, Delhi is focusing on areas critical to expanding India's

technology infrastructure including weather forecasting, electronic

commerce, supply chain management and distribution, cellular and

mobile telephony systems and distance learning.

Global e-business Software Center, Gurgaon: This state-of-

the-art center combines IBM's global experience and technology

expertise to deliver e-business solutions for Indian organizations. The

Center offers IBM’s customers a range of services including technical

consultation, proof of concept and technical presentations,

implementation planning, solution architecture, application design

and development, deployment, and education and training. The e-

Governance Center, a part of this facility offers technology, support

and infrastructure to help governments and Total Service Providers to

design, develop, test and port prototypes of e-Governance

applications.

19

Manufacturing Facility, Pondicherry: Set up in 1999, the plant

currently manufactures commercial desktops, low and mid-range

servers. Local manufacturing has helped in reaching products to

customers faster, besides giving the flexibility to configure the

systems to specific customer requirements.

IBM shares the belief that India can unleash its true potential only

through making IT available to and usable for large numbers of

people. A key area of action is IT education, and particularly education

for the masses. IBM has partnering relationships in India with a

number of educational institutions including the IITs at Delhi, Kanpur

and Chennai. The company is making a significant contribution to the

field of mass education through its support to the Bharatiya Vidya

Bhavan. IBM has contributed equipment, software and a three-year

grant towards operational expenses to the Bhavan's Mumbai and

Delhi Centers. IBM has also set up an IT Center in Mumbai in

association with Victoria Memorial School for the Blind to impart IT

education to visually impaired people. IBM is looking forward to

continuing its multi-faceted contribution and is committed to India,

both as a market and as a resource base.

20

5. IBM SUPPLIER CONDUCT PRINCIPLES

Integrated Supply Chain:

Forced or Involuntary Labour

IBM Suppliers will not use forced or involuntary labour of any type (e.g., forced, bonded, indentured or involuntary prison labour); employment is voluntary.

Child Labour

IBM Suppliers will not use child labour. The term “child” refers to any person employed under the age of 15 (or 14 where the law of the country permits), or under the agefor completing compulsory education, or under the minimum age for employment in the country, whicheveris greatest. We support the use of legitimate workplace apprenticeship programs which comply with all laws and regulations applicable to such apprenticeship programs.

Wages and Benefits

IBM Suppliers will, at a minimum, comply with all applicable wage and hour laws and regulations, including those relating to minimum wages, overtime hours, piece rates and other elements of compensation, and provide legallymandated benefits.

21

Working Hours

IBM Suppliers will not exceed prevailing local work hours and will appropriately compensate overtime. Workers shall not be required to work more than 60 hours per week, including overtime, except in extraordinary business circumstances with their consent. In countries where the maximum work week is less, that standard shall apply. Employees should be allowed at least one day off per seven-day week.

Non-discrimination

IBM Suppliers will not discriminate in hiring and employment practices on grounds of race, religion, age, nationality, social or ethnic origin, sexual orientation, gender, gender identity or expression, political affiliation, ordisability.

Respect and Dignity

IBM Suppliers will treat all employees with respect and will not use corporal punishment, threats of violence or other forms of physical coercion or harassment.

Health and Safety

Suppliers will provide their employees with a safe and healthy workplace in compliance with all applicable laws and regulations. Consistent with these obligations, IBM Suppliers must have and implement effective programs that encompass life safety, incident investigation, chemicalsafety, ergonomics, etc., and provide the same standard of health and safety in any housing that is provided for employees. Suppliers should strive to implement management systems to meet these requirements. At IBM, we have always set high standards for the way we conduct business – in areas from corporate and social responsibility to sound business ethics,

22

including compliance with all applicable laws and regulations. In turn, we expect the same commitment from our suppliers. This is the why we have established the IBM Supplier Conduct Principles. These principles speak to the commitments we make to our clients, our legacy of innovation and relationships built on trust and personal responsibility. They establish the standards required for conducting business with IBM. Our goal is to work with our suppliers to ensure full compliance with these principles, as they in turn apply them to their own suppliers they work with in the delivery of goods and services for IBM. We will consider these principles in our selection of suppliers and will actively monitor their compliance.

Protection of the Environment

IBM Suppliers will operate in a manner that is protective of the environment. At a minimum, suppliers must comply with all applicable environmental laws, regulations and standards, such as requirements regarding chemical and waste management and disposal, recycling, industrial wastewater treatment and discharge, air emissions controls,environmental permits and environmental reporting. Suppliers must also comply with any additional environmental requirements specific to the products or services being provided to IBM as called for in design and product specifications, and contract documents. Suppliers should strive to implement management systems to meet these requirements. Laws, including Regulations and Other Legal Requirements IBM Suppliers will comply with all applicable laws and regulations in all locations where they conduct business. Ethical Dealings IBM expects our suppliers to conduct their business in accordance with the highest ethical standards. Suppliers must strictly comply with all laws and regulations on bribery, corruption and prohibited business practices.

23

6. FAST FACTS

CORPORATE

IBM is the world's largest information technology company, as well as the world's largest business and technology services provider ($36 billion);and the world's largest IT financier ($35 billion in assets).  (3/03)

All of IBM's core businesses - from servers to storage systems, to middleware, to services - gained market share in 2002.  (3/03)

In 2002, Business Week (with data from Interbrand, Corp. and J.P. Morgan Chase & Co.) ranked IBM the third most valuable brand worldwide, after Coca-Cola and Microsoft.  (8/02)

Forbes Magazine's annual "Super 500" composite ranking of the most powerful companies in the U.S. named IBM the highest-ranking technology industry company on their 'Computers and Electronics' list, and number nine overall.  Fortune Magazine's 'Fortune 500,' named IBM the highest-ranking technology company on its 'Computers and Office Equipment' list and number eight overall. (4/03)

In the Wall Street Journal's eighth annual Shareholder Scoreboard -- which ranked returns for stockholders based on total return -- IBM ranked sixth among 30 DJIA stocks on the basis of five-year-returns.  (3/03)

In Fortune Magazine's 21st annual "Top Ten Most Admired Companies - Computer Industry" list, IBM ranked number one.  Ten thousand executives and analysts rated companies based on innovation, financial soundness, employee talent, use of corporate assets, long-term investment value, social responsibility, quality of management, and quality of products and services.  (3/03)

24

Employees and retirees gave more than $30 million to more than 10,000 health and human services agencies through the Employee Charitable Contribution Campaign in 2002.  (3/03)

In 2002, IBM became the only company chosen for 15 consecutive years by Working Mothers Magazine to be on the Top Ten List of the 100 Best Companies for working mothers. (3/03)

Over the past five years, the number of female executives in IBM has risen from 185 to 692.  (3/03)

Since 1995, IBM has invested $70 million in its Reinventing Education program - which will touch 100,000 teachers and 10 million students in 10 countries by the end of 2003.  IBM provides research and technical expertise, as well as equipment and cash contributions, to improve teaching and learning and raise student achievement.  (3/03)

Through the MentorPlace program more than 6,000 IBM volunteers provide academic assistance and career counseling to students in grades 3-12 in 11 countries - part of the 4 million hours IBM employees volunteered to community organizations in 2002.  (3/03)

Chief Executive magazine's "Top 20 Companies For Leaders" survey in its June 2002 issue ranked IBM as the number one company for grooming talented senior executives.  The corporate leadership development survey was conducted in conjunction with Hewitt Associates and included 240 large U.S. companies.  (6/02)

IBM was named number 38 on the Fortune Magazine 2003 list of the 100 Best Companies to Work For. IBM was selected from among 1,000 firms. To select this year's list, the Great Place to Work Institute in San Francisco surveyed a random sample of employees from 269 company finalists.  More than 40,000 employees responded to the survey, and nearly half of them gave additional written comments. (2/03)

IBM, Fannie Mae and American Express, were named the three best U.S. employers of minority women in 2003, according to Working Mother magazine.  (5/03)

25 

GLOBAL FINANCING

IBM Global Financing is the largest IT financier in the world, with an asset base of $35 billion.  It delivers financial services to nearly 125,000 customers in more than 40 countries. (3/03)

By assets, IBM Global Financing would be a top 25 U.S. commercial bank.  (3/03)

$35 billion in new financial agreements signed in 2002,  $14 billion for customer and government financing and $22 billion for commercial financing, primarily for Business Partners.  (3/03)

GLOBAL SERVICE

In 2001, Dataquest named IBM the industry leader in custom ASIC chips for the third year in a row. (April '02)

In May 2001, IBM introduced "pixie dust," IBM's newest storage breakthrough, which uses new material -- antiferromagnetically-coupled (AFC) media -- to quadruple the areal density of current hard disk drive products and surpass 100 billion bits/square inch, something previously thought impossible. IBM plans to implement AFC media across its hard disc drive product lines. (2/02)

In 2001, IBM introduced the world's quietest high-capacity mobile disk drive that also enables the longest battery life among leading notebook drives on the market. This new family of drives -- the 60GH and 40GN -- also includes enhanced availability features for nontraditional applications. These industry-first models increase available hard disk drive "power-on hours" and are designed to meet the requirements for emerging applications such as those found in 24x7 blade server environments. (2/02)

In 2001, IBM developed the "double-gate" transistor, a new significantly smaller transistor that can carry twice the electrical current and operates at twice the speed of current transistors. (12/01)

26

In 2000, IBM tripled the capacity -- but not the size -- of the world's smallest and lightest hard disk drive, the IBM Microdrive. It gained capacity from 340 megabytes to 1 gigabyte, and can hold up to 1,000 high-resolution photographs, 1,000 novels 200 pages long or nearly 18 hours of CD-quality music, while remaining the size of a matchbook. (1/01)

INTELLECTUAL PROPERTY

IBM's Personal Systems Group (PSG) is made up of three worldwide business units: the Personal Computing Division, the Printing Systems Division, and Retail Store Solutions.The Personal Computing Division generates most of the $12 billion in yearly revenues for the group. Each division develops and sells hardware, software, and services for customers in businesses of all sizes.  (3/03)

The IBM ThinkPad notebook boasts more than 50 patents alone, and that number increases yearly.  (3/03)

Virtually every U.S. household receives customized documents printed on IBM digital printers, including telephone, power and insurance bills, financial statements and more. IBM's heritage in printers dates back more than 40 years, and IBM continues to lead in printing innovations. (3/03)

IBM has more than 1.7 million point-of-sale systems installed around the world, and the greatest number of patents and inventions in the industry. IBM retail solutions are installed in more than 60 of the world's top 100 retailers.  (3/03)

RESEARCH

IBM Research is the world's largest information technology research organization, with more than 3,000 scientists and

27

engineers at eight labs in six countries.  Locations include New York, San Jose, Austin, Zurich, Haifa, Tokyo, Beijing and Delhi.  (3/03)

IBM's Carbon Nanotube technology uses tiny cylinders of carbon atoms - 50,000 times thinner than the average human hair -- roughly 10 atoms across, but with five times the strength of steel-- to build transistors, which could lead to smaller, faster, lower-power computer chips.  (3/03)

For the tenth consecutive year, IBM received the most U.S. patents over any other company -- 3,288 U.S. patents in 2002, nearly double the number of the next closest company. Over the past decade, the U.S. Patent Office has issued IBM 22,357 patents - more than for ten of our top U.S. competitors combined. (3/03)

IBM has employed a total of five Nobel Prize Laureates: two still working with the company. (3/03)

IBM's On Demand Innovation Services unit was formed in 2002, combining the talents of IBM Research with IBM's Business Consulting Services.  This new unit will work in the marketplace   on some of our customers' most pressing challenges, and bring them back into the traditional lab to be solved with new technology.  ODIS will become a primary channel for bringing the fruits of our investment in research (in 2002 IBM invested $4.8 billion in research and development) directly to our customers.  (3/03)

The potential size of silicon transistors was reduced by a factor of 10 in 2002, when IBM developed the world's smallest working silicon transistor, measuring just six nanometers. (3/03)

SERVERS

According to IDC (4Q 2002), IBM is the #1 server vendor in the world based on annual server revenue marketshare. (12/02)

IBM is the fastest growing major Intel-based 32-bit server vendor, growing revenue share 21 percent in 4Q02, far surpassing the growth of HP and Dell.  (IDC 4Q02) (12/02)

28

IBM is the #1 server vendor based on revenue share for high-performance computing at 36.7 percent, a 11.5 percent jump from the previous year while HP and Sun significantly declined (IDC 4Q02).  (12/02)

According to IDC (4Q 2002), IBM is the world's leading provider of supercomputers with a total of 93 teraflops of power (trillions of calculations per second) on the TOP500 list of the world's most powerful supercomputers, which is more than 31 percent of the total processing power on the list and more than 43 percent better than the next leading vendor with 64.8 teraflops.  (12/02)

According to the ITC (International Technology Group), the IBM eServer lowers end-to-end cost of ownership by 29-to-38 percent over the competition.  (5/02)

IBM is leading some of the largest and most complex supercomputer projects in the world;

In 1999, IBM unveiled "Blue Gene," a supercomputer capable of more than one quadrillion floating-point operations per second (one petaflop) to address fundamental and challenging questions in computer science and computational biology.

In 2000, IBM announced the delivery of ASCI White, capable of 16 trillion calculations per second. The system is being used by the U.S. Department of Energy's Lawrence Livermore National Laboratory to simulate nuclear testing.

In 2002, the U.S. Defense Department purchased an IBM supercomputer named "BlueOcean." The Naval Oceanographic Office will use BlueOcean in developing vaccines and to aid in other research initiatives. BlueOcean will process more than six trillion calculations per second.(7/02)

29SOFTWARES

IBM's e-business strategy is being fueled by the world's largest portfolio of software patents.  IBM received 7,500 software patents between 1993 and 2002.  The number of software patents received by IBM in 2002 was 1,332.  (6/04)

IBM purchased Rational Software Corp. for approximately $2.1 billion in February 2003. Rationale’s software development tools can be used to develop and upgrade any other company's software products. This acquisition is a critical part of IBM's open standard strategy.  (2/03)

IBM has engaged with thousands of customers worldwide, and has about 7,500 employees working in porting centres, research, services, development labs, and the sales and marketing of Linux.  (3/03)

More than 15% of the IBM mainframe capacity shipped in 2002 was for Linux workloads.  (3/03)

DB2 grew faster than the industry and faster than its nearest competitor in 2002.  (3/03)

IBM's WebSphere software platform has nearly 35,000 customers worldwide and the WbSphere family of products grew more than 20% in 2002.  (3/03)

Content management software revenue increased 26% in 2002.  (3/03)

IBM AS AN e-BUSINESS

IBM's on demand supply chain achieved $5.6 billion in cost reductions in 2002, with a target of $5 billion more in 2003.  (3/03)

Time between requisitions and supplier order placement has gone from 2-3 weeks to 2 hours, allowing IBM to react faster to changes in market pricing.  (3/03)

30

Web conferences: 9,000 e-meetings per month in 2002, avoiding $50 million in costs.  (3/03)

IBM customers visited IBM.com for online service an estimated 121 million times during 2001.  70 percent of "customer touches" are now done via the web.  Customers use IBM.com to obtain product information; installation and service information; download software updates, beta-code and fixes; track status of open problems; and communicate with IBM.  (4/02)

In 2001, more than 40 percent of all employee training at IBM was done via distributed learning, avoiding more than $395 million in cost.  IBM estimates that for every 1,000 classroom days converted to distance learning, more than $360,000 in costs can be avoided.  (4/02)  

31

7. ORGANIZATIONAL DETAILS

MISSION STATEMENT:

At IBM, we strive to lead in the creation, development and manufacture of the industry's most advanced information technologies, including computer systems, software, networking systems, storage devices and microelectronics. We translate these advanced technologies into value for our customers through our professional solutions and services businesses worldwide.  

Business Goals

Satisfied customers

Financial performance

A well managed business

Satisfied people

Business image

Values at IBM

Dedication to every client’s success.

Innovation that matters to the company and to the world

Trust and Personal responsibility in all relationships.

32

Values at IBM

33

8. ORGANISATIONAL STRUCTURE

Add Value To Customers

Provide CapacityFor Growth

Lower Cost

Create Strategic

Advantage

Better Process Delivery

Move To Variable Cost

VirtualCo-Location

The structure of an organization determines the ease with which the work

flows through it. As a result many a times it is the structure of an

organization that makes or breaks the company. A well tuned structure

imparts stability to the organisation and also brings in improved clarity in

communication and reduces the role conflicts that may arise.

The organisation structure gives definite shape to the organisation. It

specifies division of work activities and shows how different functions are

linked to each other. The structure also indicates the organisation’s

hierarchy and reporting relationships.Gleaned from a list of Directors and

Senior Mangers there are eleven ‘divisions’.

Directors

Senior Management

Corporate Headquarters

IBM Global Services

Sales and Distribution

IBM Global Financing

Server Group

Software Group

Personal and Printing Systems Group

Technology and Manufacturing

Storage Systems Group

34

A. KEY EMPLOYEES

The IT market is a dynamic and exhilarating environment -- fast-moving, global, and intensely focused on customer value. Network computing is driving new ways of doing business, spurring dramatic improvements in productivity, changing the competitive landscape of whole industries, and creating entirely new markets.

As profound as IT’s impact has been to date, we’re on the cusp of something even more profound. Network computing is propelling us toward a world of on demand e-business, where enterprises will be able to respond "on demand" to anything the world throws at them: changes in supply, demand, competitors' moves, customer preferences, capital markets, labor supply. In short, everything from hackers to hurricanes.

In the on demand era, the enterprises that thrive will be those which successfully achieve totally new levels of integration: of processes, applications and employees inside; of suppliers, distributors and customers outside. Make no mistake, this kind of integration is hard work, but the rewards are well worth the effort -- an enterprise that is responsive to changes in its environment, flexible in its operations, focused on its core competencies, and resilient to all manner of challenges and threats.

IBM has been a part of the IT industry from day one, and we’ve never been more optimistic about the future. We’ve committed our entire company -- the energies and expertise of our global workforce, our unmatched leadership in innovation, and the industry’s deepest portfolio of technical assets -- to helping our customers become on demand businesses. It's been a fascinating and rewarding journey. And the best is yet to come.

SamChairman of the Board, and Chief Executive Officer

35

OTHER SENIOR MANAGERS

Nicholas M. Donofrio

SeniorVicePresident

Technology & Manufacturing

Doug T. Elix

Senior Vice President & Group Executive

Sales and Distribution

J. Bruce Harreld

Senior Vice President

Strategy

Dr. Paul M. Horn

Senior Vice President &

Director of Research

Dr. Paul M. Horn

Senior Vice President &

Director of Research

36

Jon C. Iwata

Senior Vice President

Communications

John R. Joyce

Senior Vice President & Group Executive

Global Services

Dr. John E. Kelly, III

Senior Vice President & Group Executive

Technology Group

Abby F. Kohnstamm

Senior Vice President

Marketing

Edward M. Lineen

Senior Vice President &

General Counsel

Mark Loughridge

Senior Vice President &

Chief Financial Officer

J. Randall MacDonald

Senior Vice President

Human Resources

37

Steven A. Mills

Senior Vice President & Group Executive

Software Group

Robert W. Moffat, Jr.

Senior Vice President

Integrated Supply Chain

Samuel J. Palmisano

Chairman of the Board &

Chief Executive Officer

Harriet P. Pearson

Vice President, Corporate Affairs & Chief Privacy Officer

Linda S. Sanford

Senior Vice President

Enterprise On Demand Transformation

Stephen M. Ward, Jr.

Senior Vice President & General Manager

Personal Systems Group

William M. Zeitler

Senior Vice President & Group Executive

Systems Group

38

B. Operations- Hierarchy

VP Operations

Transition Manager

Service Delivery Leader

Operations Manager

Asst. Operations Manager

Team Leader

Sr. Customer Service Associate

Customer Service Associate

.

39

C. H.R. PRACTICES

Rewards and Recognition at IBM

1. Individual Performance Awards:

On the spot award

Achiever award

Leadership excellence award

Star of the month award

2. Team Performance Award:

Champion

3. Knowledge Advantage Award:

Quality Edge

4. Thank you Award

Process transition/transformation lifecycle:

The process transition/transformation lifecycle involves three phases:

# Cost Arbitrage

# Process Improvement

# Consolidation

40

Transformation lifecycle

41

Phase I(0-6 Mnths)

Cost Arbitrage

Phase II(6-12 mnths)

Process Improvement

Phase II(18-24 mnths)Consolidation

Time

Savings

Benefits for employees:

Annual variable pay/company bonus schemes

Awards and recognition

Employee stock purchase plan

Health insurance plan

Flexible leave option plan- this is not applicable to the BTO unit,

though.

Employee product purchase plan - discount on IBM products

Channels of Recruitment at IBM

1. BPFJ+ (BEST PERSON FOR THE JOB)

The professional development of employees in IBM has been one of the

cornerstones of IBM's approach to people and people management. The

objective is to realize everyone's full potential for the benefit of IBM and its

customers. "Best Person for the Job" (BPFJ+), underpins IBM’s principle of

giving first preference to internal candidates, before going out to hire the

best from the market. This is an important step forward in increasing the

focus on people development and developing opportunities people.

42

OBJECTIVE of the process:

1. To facilitate that the best qualified person in IBM is found for a given

position

2. To have more transparency of available opportunities for non-managerial

regular positions in IBM

3. To ensure thereby the best possible resource deployment and balancing in IBM

2. BLUE AMBASSADOR

Blue Ambassador is essentially an Employee Referral Program whereby

employees at IBM are encouraged to refer their friends, relatives and

former colleagues as prospective employees to IBM and once an applicant

joins IBM, the referee is rewarded.

In fact, the Referral Program is a classic example of a "Win-Win" situation

for both the employee and the company.

3. WEB RECRUITMENT

The most exciting and technologically challenging recruitment channel is

recruiting through the web. The strategy to recruit through the web clearly

projects IBM as a true e-business organization.

43

The web site has been designed based on a useful study on web

recruitment trends, valuable feedback from prospective candidates and the

practices adopted by competitors too have enabled IBM in launching the

employment pages successfully.

A few notable features on the web site are 'forward to a friend-button'.

IBMers can forward the position to a friend whom they think will be suitable

and also earn an employee referral reward bonus if the candidate is hired.

Also, prospective candidates can send the position to their

friends/contacts who in their opinion may be suitable candidates.

The job opportunities page also provides IBM's approved recruitment

partners to have a better understanding of the positions/descriptions

thereby targeting prospective candidates with clinical precision.

Approved Job Boards will also have links from their site, bouncing

potential candidates to the IBM employment page for detailed information

on organization/opportunities. In the long term this will ensure IBM

employment page gets target audience eye-balls increasingly.

HIRING THROUGH PLACEMENT/RECRUITMENT AGENCIES

Hiring through agencies has enabled IBM to save time and effort on pre-

screening and some part of the interview scheduling and post offer follow-

up tasks. Most often this channel has delivered good candidates spread

44

across geographies as well as targeted competition to get their best

people. Nevertheless, this is an expensive channel. For agencies to get

empanelled, IBM has a detailed empanelment process based on which IBM

decides to sign a service agreement for a specific duration.

CAMPUS RECRUITMENT

Campus Recruitment in IBM India operations is an important and strategic

initiative aimed at recruiting the best Talent to meet the present and future

business requirements of IBM. At IBM-BTO, however, the campus

placements would be started from the coming Year (2005).

Campus Relations:

Campus Relations forms a crucial factor in the hiring of the Top Talent.

This involves long term IBM - Campus Association with the objective of

essentially ensuring communication to the potential students about IBM so

that they are well informed to make the decision about their future career,

and are also convinced about IBM being the Employer of Choice in the

Market.

45

IBM's Campus Relations Program consists of the following:

Participation in relevant Events and Seminars

Visit by IBM Executives to Campus for Presentations

Association of Team Champions (Alumni) with important Campus

Active association with Placement Committee

Close interaction with Faculty

Offer of internship and Projects/Summer training

ADVERTISING

Recruiting through Advertising has proved to be the most cost effective

hiring channel. Some of the many benefits for the employer is an enhanced

image in the job market and a step towards emerging as the most preferred

employer.

In order to make a mark and stand out in the recruitment advertising

clutter, IBM announces 'Walk-in' interviews. This is a quick and proven

method to announce a particular date, time and venue of the interview in

the advertisement. On the day of the interview, required number of

technical panelists, staffing personnel and other support personnel are

present. Candidates are screened and interviewed. The recommendation

to hire or not to hire is sent to the concerned people manager who makes

the hiring decision and subsequent offer roll out that is done on the same

day (where ref. check is not mandatory).

46

Decisions regarding release of the advertisement is taken based on the

number of open positions, skills, candidate profile, budget and panelists

availability.

On approval of the advertising process an advertising agency is engaged

to work on the creative concept. The agency will comply with the laid down

AP wide agency guidelines campaign to ensure that the Talent Value

Proposition of IBM is conveyed in the most undiluted manner.

EVENTS:

Events are driven by advertising. Events can be classified as Career/Job

Fairs organized by an agency with a good track record or directly

organized by IBM. Some of the activities that go into an event are:

Stall Design & Branding

Controlled area for conducting tests and evaluation

Interview rooms

The rest of the process is as per the walk-in.

This again will rate as a cost effective hiring option. Apart from this IBM

has been able to capture a sizable mind share among potential employees

who work for competition.

This channel has not yet been adopted by IBM.

47

Personal Business Commitments (PBC)

IBM believes that performance is a differentiator between people. This is an

approach to high performance at IBM. IBM's success depends on how well

employees achieve their individual goals and contribute to the company's

strategic objectives. The PBC program is the means by which all IBM

employees worldwide set their goals for the year, receive feedback on their

performance and development needs, and get evaluated on their

performance.

At the start of each year, all employees are expected to set personal

business goals that align directly with IBM's overall business goals and

values. The goals guide the employees throughout the year. Then, at the

end of the year, the manager evaluates how well the goals are achieved and

gives the employee a PBC rating to reflect his/her performance. This rating

will be a key factor in determining the performance bonus, pay increase,

and career opportunities.

The entire PBC framework is designed to reinforce IBM's high-performance

culture and effectively differentiate employees based on their contribution

to the company. The PBC program is the best way to recognize top

contributors, motivate above average and solid contributors to perform at

their peak, and identify low contributors who need to improve. Employees

who make the biggest contribution to the company get the biggest

rewards, and those who are the lowest contributors will know exactly

where they stand.

48

There are three steps in the annual PBC process.

Step1: Set Your Goals

Step2: Document Your Results

Step3: Ratings and Assessments

The PBC Rating Scale

The PBC rating is characterized in terms of an employee’s relative

contribution to IBM's success for the year and reflects the degree to which

he/she supported IBM's goals and lived the company's values.

It is important to remember that no matter how impressive the results may

seem, if they did not link to the company's success or if were achieved in a

manner that does not reflect highly on IBM, the employee’s rating will be

affected accordingly.

1 Among the top contributors this year

Achieves exceptional results; as a 1 performer, clearly stands out

from the rest; is a role model for the IBM values.

2+ Above average contributor

Goes above and beyond job responsibilities; outperforms most

peers; finds ways to grow scope and impact.

2

49

Solid contributor

Consistently meets job responsibilities; is reliable in doing

job; demonstrates appropriate level of knowledge, skill,

effectiveness and initiative.

3Among the lowest contributors this year, needs to improve

When compared to others:

does not fully execute all job responsibilities, or executes

responsibilities, but with a lower degree of results, and / or

does not demonstrate as high a level of knowledge, skill,

effectiveness, or initiative

Consecutive ratings at the PBC 3 level are unacceptable in IBM's

high performance culture and require improvement.

4 Unsatisfactory

Does not demonstrate or utilize knowledge and skill required; does

not execute against job responsibilities, and/or shows no

significant improvement after consecutive ratings at a PBC 3 level

Immediate, significant and sustained improvement has to be

demonstrated, otherwise separation from IBM will result.

50

Relative Contribution

The manager will consider many factors in evaluating the employee’s

performance, but in the end the "relative contribution" to IBM's success

will determine the PBC rating.

The manager will evaluate how much the employee contributed to IBM's

overall success for the year relative to his/her peers in the same band and

similar job roles. Individuals who made the biggest relative contribution

will get the highest rating and top rewards.

Essentially, the "relative contribution" factor allows managers to determine

who has truly performed at the highest levels for the year. Given the caliber

of IBM's workforce, there are many employees in every band who meet

their goals, show results, and perform at a high level. But when compared

to one another, it becomes evident that some of these individuals clearly

outperformed their colleagues and contributed more to IBM's success --

and they deserve the highest recognition.

The bottom line is that in order to get a top PBC rating, the employee

cannot just meet his/her goals and show results. They must do so in a way

that makes a bigger contribution to IBM than their peers.

In the end, this is the fairest way to ultimately recognize and reward top

performers in a company that is filled with smart, talented high-achievers.

51

Ratings Distribution

When it comes to performance, there is a natural distribution of

achievement levels. During the assessment process, IBM provides

guidance to senior management on the distribution of ratings.

Without distribution guidance, there can be a tendency to put too many

people in the top category. That diminishes the whole idea of being at the

top and dilutes IBM's ability to properly recognize and reward its best

people. Generally speaking, in a large population like IBM, as many as 10-

20% of employees might be a PBC1, 65-85% might be PBC 2 or 2+, and as

few as 5-15% of our people could receive a PBC 3. These ranges are only

meant as general guidance to managers, not prescribed outcomes. This

guidance helps ensure that a top rating really means something.

At the other end of the spectrum, there is also a tendency to avoid

addressing the lowest contributors. This is counterproductive to creating a

high-performance workforce that continues to raise its level of

performance to meet ever-changing marketplace demands. Even in an

organization filled with many talented people, there are those individuals

whose contributions are weak relative to others. Management is expected

to identify those who are among the lowest contributors who need

improvement.

PBC Ratings for People Managers

IBM believes that people management is so vital to the company's success

that if a person is not excelling in the people management role, he/she

52

cannot reasonably be performing at a top level overall. Managers can get a

top overall PBC rating of 1 only if they are above average in performing

their people management responsibilities.

A person is considered to have people management responsibilities if

he/she is responsible for direct supervision of two or more individuals,

including conducting their annual performance evaluation.

The Rating and Review Process

The manager will base the PBC rating in large part on the results achieved

by the employee. The employee must document his/her results in the PBC

tool themselves and then the employee and the manager will review the

achievements together. The manager may modify the documentation or ask

the employee to do so, where appropriate, for accuracy or clarity.

After considering all relevant information, the manager will give the

employee a rating and provide a rationale for the rating. The candidate will

be asked to acknowledge reviewing the assessment and rating, and two

levels of management will sign the final rating form.

Each year, the employee will earn a new rating based on an overall

assessment of the performance for that year. With each passing year,

however, the expectations for the employees’ performance will rise, which

means they’ll have to perform at a higher level to achieve the same rating

as the year before.

53

Appeals

If the employee disagrees with the overall assessment and rating or if

he/she believes that he/she has been unfairly treated as a result of an

incorrect administration of the PBC process, the employee may appeal.

The employee should first speak with the second-line manager, who must

review and sign the PBC. If the second-line manager is unable to resolve

the issue, the employee may use one of IBM's internal appeal channels.

The nature of the appeal will determine who addresses the concern and the

timeframe for resolving it.

Information regarding these appeal channels, including the Open Door and

Panel Review, is available on the intranet.

Careful consideration should be given to the appeals process selected. A

Panel Review decision cannot be appealed using the Open Door process

and an Open Door decision cannot be appealed via a Panel Review.

Roles and Responsibilities

The PBC program is the foundation of IBM's performance management

system, so it's important that all employees and managers understand and

follow through on their PBC-related roles and responsibilities. By fully

participating in the PBC process, they’ll help IBM build and maintain the

best workforce in the world and ensure that every employee is fairly

recognized and rewarded for his or her performance each year.

Participation of the PBC program is a condition for continued employment

for regular employees at IBM.

54

All employees are expected to:

Have your business goals and development goals in place by March

31. The final goals are subject to the manager's input and approval.

Seek informal feedback on the performance throughout the year.

Document the final results.

All people managers are expected to:

Have the people management goals in place by March 31, and

document the final results at the end of the year.

Communicate IBM's annual business goals, as well as unit and

department's goals, to all their employees.

Assist employees with their goal setting and approve/modify their

goals as necessary.

Provide ongoing feedback, guidance, and counsel to employees.

Ensure that their employees' final documented results are accurate.

Determine and communicate each employee's overall assessment

and rating.

Discuss plans for expected improvement with their employees, as

needed.

All reviewing managers (second line managers and above) are expected to:

Implement the PBC program.

Ensure fair and equitable administration of the PBC process across

the organization.

Review employee goals to ensure alignment with IBM's business

goals and values.

Review overall assessments and ratings

55

9. SWOT ANALYSIS

IBM is the world’s largest integrated vendor of information technology solutions. IBM is a highly diversified company with strong capabilities in the IT sector but it faces tough competition from specialized players in each of its divisions.

Strengths

World’s largest information technology company.IBM is both the world’s largest information technology company and the largest business and technology services provider and the largest IT financier. IBM benefits from cost reductions as a result of its market leading position and has the ability and power to attract specialized staff. IBM is a globally recognized brand with well diversified operations across product categories and geographical segments. In the software market, IBM is second only to Microsoft and is the leader in the server segment. The company is also the third largest vendor in the worldwide PC market.

Diverse capabilities:IBM has numerous business divisions providing synergy to one another. The company operates at three levels; component value, infrastructure value and business value, in that order. Each lower level provides support to the next level. In component value, the company is engaged in advanced semiconductor development and manufacturing for IBM’s server and storage offerings, and services, technology and licenses provided to OEMs. The company has the capability of manufacturing customized semiconductor products for clients, an advanced foundry and standard products and custom microprocessors. In infrastructure value, the company’s capability ranges from software for infrastructure management, personal computers, servers, commercial financing, storage products and outsourcing. All of these capabilities ultimately enable the company to get a competitive edge in its business consulting services, providing engineering and technology services to clients and in its On Demand Innovation Services.

56

Large number of patents:

For the tenth consecutive year, IBM received the more US patents over any other company; 3288 US patents (in 2002), nearly double the number of the next closest company. Over the past decade, the US Patent Office has issued IBM 22,357 patents; more than that for ten of its top US competitors combined. The stringent protection of intellectual property increases the competitiveness and growth potential of the company.

Improved free cash flow:The improvement in financial performance combined with lower pension funding drove cash flow from continuing operations to $14.6 billion in 2003 compared with $13.8 billion in 2002. As of December 2003, IBM had about $7.6 billion in ’cash & marketable securities’ as compared to $6 billion in the previous year. Free cash flow improved to $10.6 billion in 2003 compared with $9.2 billion in 2002. Free cash flow could be used for acquisitions, buy back of shares and for new product development.

Weaknesses

Impact of pension and benefit costs:IBM has a variety of pension and benefit programs for its employees, including defined benefit plans for its US employees such as the Personal Pension Plan (PPP) and the Supplemental Executive Retention Plan (SERP); and defined contribution plans such as the IBM Savings Plan. In addition to pensions and retirement plans, IBM maintains nonpension postretirement benefits such as the Future Health Account (FHA), mainly for its US employees. At more than $70 billion, the benefit obligations for these plans are enormous, and small changes in investment performance or the accounting assumptions used to calculate the cost of these plans on an accrual basis can have significant effects on cash flow and reported earnings. For instance, in the fourth quarter of 2002, IBM fully funded the qualified portion of its PPP, as measured by its Accumulated Benefit Obligation (ABO), requiring a contribution of $4.0 billion. Operating cash flow in 2002 from changes in pension assets was a negative $2.5 billion.

High debt issued by IBM financing:IBM’s financing business, having issued $24 billion of debt, has significant customer non-payment risk. The Global Financing segment’s debt equity ratio is in the range of 7:1. 57Revenues sensitive to foreign exchange rates:

In 2003, IBM earned approximately 56% of revenues from the international markets. Though the company maintains hedging programs, the impact of currency changes cannot be eliminated. The company remains extremely sensitive to any change in the rate of exchange of the US dollar against the currencies in these markets.

Opportunities

Growth drivers in hardware, software and global services:The market for hardware, software and IT services is estimated to reach $1 trillion by 2006, up from $867 billion in 2003. The projected annual growth rate for the combined market opportunity averages 6%. The company is well positioned to benefit from drivers in each of its business segments: in Hardware, investment in new data centers and PC replacements; in Software, Linux and the On Demand strategy; and in Global Services, outsourcing and managed services. In Hardware, IBM is expected to continue its market share growth in the Server market through On Demand data-center projects. Server segment is currently estimated to contribute 32% to total revenues. Growing corporate demand and new products are expected to increase server revenues. High-end hardware sales also help drive services, software and financing sales.

Growth in international markets:International markets present a promising opportunity for computer hardware vendors in the years ahead. Since 2000, Asia Pacific, Japan, and Latin America are leading worldwide unit growth. For instance, in 2000, the United States grew just 8%, while the Asia Pacific region surged 38%. In 2001, according to IDC, Asia-Pacific (excluding Japan) was the only region to sustain shipment growth on a yearly basis. In 2002, Asia Pacific’s 10% growth again out-paced other major regions; Europe grew units by 1.8% for the year, and the United States saw 3.2% unit growth. For IBM, in 2003, revenues from Europe/Middle East/Africa grew 20% over previous year while revenues from Asia Pacific grew 12.6% over 2002.

Leveraging the microelectronics business:In 2002, action was taken to redirect the microelectronics business to high-end foundry, ASICs and standard products. In February 2004, there was an announcement of a $325 million payment by Sony to secure foundry capacity at IBM’s 300mm Fishkill fab. IBM is now expected to produce for Sony, beginning the first half of 2005, a jointly developed microprocessor code-named "Cell", based on IBM 64bit "Power CPU" architecture and 58intended both for the next generation Playstation as well as other consumer electronics products such as media center PCs. In light of recent

developments, a turnaround is expected at the Microelectronics division through 2004 and 2005, driven by cyclically rising OEM ASIC sales, risingfoundry volume ramp for strategic customers and Power MPU market share gains. The Power MPU gains in turn stem fromIBM’s internal CPU requirements for its server hardware, which has been gaining market share, 64bit MPU shipment ramp to Apple and dominant market share ahead of game console market, including current design wins at Nintendo and now Sony. Expectations are that Microelectronics alone could contribute as much as 50% of earnings growth in 2004.

Threats

Low future growth for professional services and PC hardware segments: Approximately two-thirds of IBM’s revenue comes from markets forecasted to grow less than 5% over the next five years. The Professional Services subsegment of Global Services was 36% of IBM’s total revenue in 2003. This business segment is forecast to grow at 4% over the next five years. PC and server hardware, which comprised 29% of IBM’s 2003 revenue, is forecasted to grow at 3.6% over the next five years. IBM continues to be the subject of an SEC investigation, disclosed in February 2003. The investigation relates to revenue recognition in 2000 and 2001. A finding of wrongdoing could cause restatements and possibly erode the value of the shares. The SEC issued a Wells Notice to the company on a related investigation, alleging it aided Dollar General in misstating its 2000 results; consequently, the company may face a civil action for violating securities laws.

Intense competitive pressures:Unlike most of its competition, IBM has a portfolio of businesses and must allocate resources across these businesses, while competing with companies specializing in one or more product lines. IBM faces tough competition from many large global companies such as Dell and Microsoft, many of which have similar resources at their disposal or even more. The services business is under competitive pressures from other well-financed competitors who also possess certain critical intellectual capital, which may hinder IBM’s foray into the high growth business process outsourcing (BPO) market. With the propensity to use cheaper offshore labor increasing, the IBM’s ’flagship’ services operations will face additional margin pressures and obstacles to revenue growth.

59

Pending lawsuits:The company faces litigation from competitors, mainly over disputes concerning intellectual property rights. Lawsuits in this area include patent and copyright infringement suits against and from Compuware and the SCO Group. IBM is also defending numerous class-action suits, mainly workers compensation and healthrelated suits, and the company is being sued in a class-action lawsuit over alleged health violations at its Fishkill manufacturing site.

60

10. STRUCTURAL DILEMMAS

Differentiation Vs Integration:

A large organisation requires many complex roles to be performed.

There is a need to integrate all these actions to add focus to their tasks

and aid the enterprise as a whole.

This can be done by creating coordination strategies.

Differentiation Vs Integration – IBM:

As a part of Sales, there are many different lines that are sold to the

public.

Each of these have support staff specific to them eg. Thinkpad specific

tech-support.

To save on having to recruit and train these people within each market

country, support calls are redirected to central offices often outside of

the country (in one case New Zealand).

This is an example of how the company uses it’s communications

infrastructure to provide a more consistent and easily maintained

service that’s available across the organisation.

61

Gap Vs Overlaps:

Based around the miscommunication of task allocation and

responsibility.

Important tasks can be missed or repeated by different people to create

redundant results and wasted effort.

Gap Vs Overlaps – IBM:

A specific example with a customer query posted via e-mail.

Sometimes the wording is ambiguous and it is unclear whether it is a

matter to be dealt with direct technical support or management/service

support.

In this case, the e-mail is filtered to all possible divisions that may be

concerned, and often the client will receive a reply from each, a case of

overlapping responsibilities.

62

Underuse Vs Overload

Consider two divisions with interchangeable skills and tasks.

One becomes overloaded with work, the other has too little to do, both

of these situations contribute to impediments towards organisational

efficiency and effectiveness.

A solution would be to transfer work loads to even out the effort being

done.

Underuse Vs Overload – IBM

With the introduction of new lines IBM didn’t consider the extra weight

on the support mechanisms.

It took a long time to realise there was a need for improved service.

Various points of information was gathered (such as phone statistics,

wait time, hold time, service time etc).

Eventually the recruitment of more team members was the solution to ease

the load.

63

Lack of Clarity Vs Lack of Creativity:

Difficult to define.

When an employee lacks direction in terms of their job task, then they’ll

tend to make up their own prerogatives based on their weak

understanding.

Alternately if the tasks are too well defined, then they will be carried out

regardless of the detriment to the company.

Lack of Clarity Vs Lack of Creativity – IBM:

There are company defined protocols as to how to deal with clients on

the phone for example.

But greater emphasis is placed on getting the job done over how it is

done.

There are monitor systems in place to ensure the right things are being

conveyed to the client.

Team leaders are often amongst the operators as an authoritative

presence.

There are instances where operators are so entrenched in their

perceived obligation to the client that calls will go unanswered whilst

less pressing matters are still being addressed.

64

Excessive Autonomy Vs Excessive Interdependence:

People feel isolated or unsupported when left too much to their own

devices.

With too tightly linked divisions, there is more time spent coordinating

efforts than efforts in doing the task at hand.

Innovations are slow to move through the levels of bureaucracy and the

window of success becomes smaller.

Excessive Autonomy Vs Excessive Interdependence – IBM:

In the case of receiving recruitments (as mentioned earlier).

It was 3 to 4 weeks from the time the team ‘caught wind’ of new

members coming to help and when they actually arrived.

It may seem fast but that was aided only by the demand for this kind of

work at the time.

The request for more help went so far up the chain of management, our

source has no idea exactly which department approved the request and on

who’s word – we assume a Human Resources division.

65

Too Loose Vs Too Tight:

Focus on policy.

If there are no set protocols then the organisation will perform poorly as

a result from a disorganised work force.

Too tight a policy and people will find ways to circumvent the system to

achieve the freedom they desire, thus destroying the control an

organisation needs over it’s operators.

Too Loose Vs Too Tight – IBM:

With only a few employees, supervision was loose and it was a relaxed

environment.

With the introduction of new members and consequently a larger team,

supervision became more strict and the compliance with rules became

more important.

One benefit was the work done was more accurate – less mistakes were

made.

However with the stifling environment, the old team members had to

sneak in their games of Quake when the manager was absent.

66

Diffuse Authority Vs Over centralization:

Not knowing where authority is derived from.

Or where to direct issues to authority figures means that initiatives

maybe lost in the confusion.

Too many layers may create a mechanism by which the implementation

of decisions becomes slow and laborious.

Pushing the decision-making more towards the front lines will avoid

this.

Diffuse Authority Vs Over centralisation – IBM:

There are always higher managers along the chain that can deal with

most situations, that is, there is always an avenue for query resolution.

Learning this precise structure is time consuming as it is rather

complex.

Most decisions are made by the team manager, rarely will they go

further up the chain (excepting of course in issues such as hiring or

firing).

The majority of decisions in this case are made quickly without

unnecessary overhead.

67

Goalless Vs Goalbound:

Very Clear.

Either people know what their personal (or organisational) goals are.

Or they are misguided and continue to uphold goals that are no longer

relevant.

Goalless Vs Goalbound – IBM:

Goals are always changing due to the introduction of new product lines

and customer demands

Old goals are constantly being identified and corrected by managers

Obliquely, the goal of providing accurate quotes can be violated when

outdated prices are used instead of new ones.

68

Irresponsible Vs Unresponsive:

Refers to the too tight vs to loose idea, except in this case include the

client also.

Sticking to rigidly to protocol and responsibility can leave the client

unfavourable about bureaucracy denying leeway

Being too accommodating to the odd ‘favour’ however can lead to

inconsistency and favouritism

Irresponsible Vs Unresponsive – IBM:

One can be accommodating in terms of a bulk buy discount, but even

these must be ratified by the team manager and can’t be at the

discretion of the sales person alone

IBM prefers adherence to a fixed price system or a base price for

commissionable services/goods

Personal service can be offered by which the sales representative (or

point of contact) may choose to become the only liaison the client will

have with the company

Tighter control in these matters will ensure that the company doesn’t

make small losses at point of sale

69

11. TOP COMPETITORS

The following companies are the major competitors of International BusinessMachines Corporation:

Apple Computer, Inc.

Dell Inc.

Gateway, Inc.

Hewlett-Packard Company

Microsoft Corporation

Wipro Corporation

70

12. LOCATIONS AND SUBSIDIARIES

Head Office

International Business Machines CorporationNew Orchard RoadArmonkNY 10504United StatesP: 1 914 499 1900F: 1 914 765 7382www.ibm.com

Other Locations and Subsidiaries

IBM United Kingdom76 Upper GroundLondonSE1 9PZUnited KingdomP: 44 2392 561 000F: 44 2392 221 14www.ibm.com/uk

Ascential Software Corporation50 Washington StreetWestboroughMA 01581United StatesP: 1 508 366 3888F: 1 508 366 3669www.ascentialsoftware.com

71Lotus Development1 Rogers StreetCambridgeMA 02142United StatesP: 1 617 577 8500

F: 1 617 693 1299www.lotus.comIBM Systems and Technology GroupNew Orchard RoadArmonkNY 10589United StatesP: 1 914 499 1900F: 1 914 765 7382www.ibm.com

IBM SoftwareNew Orchard RoadArmonkNY 10504United StatesP: 1 914 499 1900F: 1 914 765 7382www-306.ibm.com/software

IBM Japan3-2-12 RoppongiMinato-kuTokyo 106-8711JapanP: 81 3 3586 1111F: 81 3 3589 4645www.ibm.co.jp

72

Candle Corporation100 North Sepulveda BoulevardEl SegundoCA 90245United StatesP: 1 310 535 3600F: 1 310 727 4287www.candle.com

IBM Global ServicesNew Orchard RoadArmonkNY 10504United StatesP: 1 914 499 1900F: 1 914 765 7382www.ibm.com/services

Gluecode Software2321 Rosecrans AvenueSuite 2205El SegundoCA 90245United StatesP: 1 310 536 8355F: 1 310 536 9062www.gluecode.com

IBM Microelectronics2070 Route 52Hopewell JunctionNY 12533United StatesP: 1 800 426 4968www.chips.ibm.com

73

IBM Global FinancingNorth Castle DriveArmonkNY 10504United StatesP: 1 914 765 1900F: 1 914 765 6633www-1.ibm.com/financing

74

CONCLUSION

With respect to the economic environment, while it is always difficult to predict future economic trends, in 2004 the economic environment improved — shifting from a period of recovery to moderate expansion. Going forward, we anticipate moderate growth for the traditional IT industry. Several factors — including increasing complexity and globalization — are driving clients to transform their businesses. The year-to-year and sequential quarterly growth trend comparisons achieved by IBM are indicators of this improvement. With respect to business transformation and the continual conversion of the company into an on demand business, IBM’s supply chain initiatives are expected to allow continued flexibility to drive additional competitive advantages. The company will continue to focus on increased productivity and efficiency to accelerate the globalization and transformation of its global business model. Finally, with respect to technology, in 2004 the IBM has again been awarded more U.S. patents than any other company for the twelfth year in a row. The company continues to focus internal development investments on high-growth opportunities and to broaden its ability to deliver industry- and client-specific solutions. From a client-set perspective, the strong momentum in 2004 with respect to the Small & Medium Business sector should continue. IBM anticipates continued growth in the Communications, Distribution and Public sectors, however, the Financial Services sector growth may be moderate. IBM also will selectively pursue acquisitions, primarily in the Global Services and Software segments, where it believes.

75 ACKNOWLEDGEMENT

I would like to take this opportunity to express my gratitude to all the people who have been instrumental in guiding me during this organizational structure study.My sincere thanks to Rev. Fr. Thomas C.M., Principal, Christ college for his support. I would like to express my heartfelt gratitude to C.Poppen, Director, and Mr. C.K.T. Chandrashekhar, Co-ordinator, PGDM, for the guidance and opportunity given to learn through this experience of organizational structure study.I would like to acknowledge the support and guidance of Mr. Joe Joseph, Sales Manager E & C South India, IBM India Ltd., Bangalore , Mr. Sanjay Naidu, Client Manager, IBM Ltd., Bangalore, and thank them wholeheartedly for their able guidance and precise supervision, which has been instrumental in making this study an interesting experience. Special thanks goes to Mr. Faiz, Production Manager, New Wave Computing Pvt. ltd., Bangalore without whom this project would not have seen the fruits of success.I am pleased to and do sincerely record my gratitude to my mentor Mr. C.S. Dixit for his constant support and motivation during the study.A special mention goes to my family and my friends who have constantly extended their encouragement and support towards the completion of this study.

RECOMMENDATIONS

A large organisation like IBM requires many complex roles to be performed. There is a need to integrate all these actions to add focus to their tasks and aid the enterprise as a whole. This can be done by creating coordination strategies.

With the introduction of new lines IBM didn’t consider the extra weight on the support mechanisms. Various points of information needs to be gathered (such as phone statistics, wait time, hold time, service time etc). The recruitment of more team members could be a solution to ease the load.

There are company defined protocols as to how to deal with clients on the phone for example, but greater emphasis is placed on getting the job done over how it is done , so one recommendation for long term success in the market would be to consider the quality also. Calls made by the customers should be taken proper care of.

With too tightly linked divisions, there is more time spent coordinating efforts than efforts in doing the task at hand Innovations are slow to move through the levels of bureaucracy and the window of success becomes smaller. A solution for this could be to give more independence to employees in terms of how the work should be done. New and innovative ideas should be rewarded from time to time.

76

BIBLIOGRAPHY

www.ibm.com/ibm/in

www.ibm.com/in/ibm/history.shtml

www.34epnet

www.web16epnet

www.searchep.net.com

www.work911.com

www.1.ibm.com

www.34.ibm.com

www.64.ibm.com

www.65.ibm.com

www.morebusiness.com

www.themanager.org

www.ms114.mysearch.com

www.ftp.software.ibm.com

www.content.epnet.com

77SERIAL NO.

TITLE PAGE NO.

1.2.3.4.5.6.7.8.

8.A.8.B.8.C.9.10.11.12.

CERTIFICATEACKNOWLEDGEMENTS

EXECUTIVE SUMMARYHISTORY OF THE ORGANISATIONPRODUCT PROFILEIBM BUSINESS UNITIBM SUPPLIER CONDUCT PRINCIPLEFAST FACTSORGANISATIONAL DETAILSORGANISATIONAL STRUCTUREKEY EMPLOYEESOPERATIONS HIERARCHYH.R. PRACTICESSWOT ANALYSISSTRUCTURAL DILEMMASTOP COMPETITORSLOCATIONS AND SUBSIDIARIES

CONCLUSIONRECOMMENDATIONBIBLIOGRAPHYMANAGERIAL LEARNINGSTUDENTS LEARNING

14121721

243234353940566170

71

7576777879

CONTENTS

MANAGERIAL LEARNING

From this detailed study of an organization like IBM a manager can learn as well as gain a lot of insights which will be very valuable and beneficial in his due course of management. From this study he can get to know about the practical aspects- process, function and style of an organization.

He can very well look into the past of an organisaton and make himself aware of the milestones the organization has gained and also about the achievements and progress made by the organization since its inception and he can have a detailed analysis of the present condition too with which he will be able to predict the future with the healp of estimation and extrapolation techniques considering the rate of growth of the organization. This clear idea of where the organization structure is leading the organization to will also help the manager take decision provide the organization with all the inputs and productive resources needed for its steady growth. He can also take corrective and control measures for any loopholes in the organization leading to inefficiency or losses. He can even study the structure carefully and restructure in part or as whole the organization that will lead to productive and highly efficient use of scarce resources. A manager can also learn to identify the strengths of the organization and use it to overcome the weaknesses of the organsation and he can identify the opportunities lying before the organization and make complete use of it and even try to convert the threats into opportunities like an ideal manager.

78

STUDENTS LEARNING

As a student there is much for me to learn. This study has benefited me a lot by first of all helping me practically understand what exactly an organization is and how exactly it functions.

It has helped me know many facts about the organization which I earlier did not know. It has helped me know about the products and services the organization deals with and the extensiveness to which it functions. I have also come to learn its mission and objectives and the rules and principles that govern the organization and its work culture. I also learnt about the operational hierarchy in the organization. I have met different executives and managers in the organization and indirectly measure the quality of the organization from the personality, attitude and focus of the employees which it recruits. I have had the opportunity to see the organization from inside and thereby have a practical feel of the environment of the organization.

I have learnt about the strengths which acts as the pillars supporting the organization and the weaknesses eroding the structure of the organization and sometimes the structure itself being the weakness. I have also learnt about the opportunities lying ahead of the organization to be exploited and the threats faced by the organization. Overall it has greatly helped in gaining insights about how a perfect organization should be like and what are the requirements for an organization to perform efficiently.

Study conducted by Sony Antony [05PGDM0732]

Under the guidance of Mr. C.S. Dixit.

[Faculty Guide] Christ college, Bangalore.

79