Ibm Case Essay

History By the 1950’s, IBM became the dominant vendor in the computer industry with the release of the IBM 701 along with many other series of mainframes, which are large central processors. Then in the1960’s and 1970’s, the company had to diversify to get on the same level as smaller companies, such as Digital Equipment Corporation, who were introducing microprocessors. This threatened IBM’s position in the computer industry. Their response was coming put with a personal computer, software, and services. In 1981, IBM officially introduced the IBM PC with a compatible hardware platform. This was a large accomplishment for the company. A few years later, on May 1st, 2005, IBM sold its PC division to the Chinese company Lenovo for $655 million in cash and $600 million in Lenovo stock. Then on January 25, 2007, IBM sold their printing systems division for $725 million to Ricoh and created a new Ricoh subsidiary called InfoPrint Solutions Company. Ricoh will now own a 51% share and IBM will own a 49% share. Also in 2007, IBM’s yearly revenue was $98. 8 billion and they had a net income of $10. 8 billion dollars. IBM is run by about 427,000 employees. There are three main people who keep the business running smoothly. The most important one is Samuel J. Palmisano, who is the Chairman, President, and CEO. Another important associate at IBM is Mark Loughridge, who is the SVP and CFO. And lastly, Douglas Elix, who is another SVP, a Group Executive, and is in charge of Sales and Distribution. These three men are vital to the company’s success. Besides them, most of the employees at IBM are IT Specialists, Application Services Consultants, and Managing Consultants. Every company has to have competitors. Competition makes a healthy industry. Some of the top competitors IBM runs against are EDS (Electronic Data Systems Corporation), Hewlett Packerd, and their biggest competitor, Microsoft, whom they are ranked right behind in second place in their industry. IBM has many recent accomplishments within that last few years. One of the major ones was the development of the world’s tiniest nanophotonic switch, which is a device for routing light on a chip scale. Another project they have completed wasweb 2. security concerns with â€Å"SMash,† which is one of their development tools. Another very large project they completed was the design of the microprocessor for the Xbox 360, Playstation 3, and Nintendo Wii. All three of those were a good addition to the list of products they already design. This opened up their age range of consumers as well since a lot of children play these video systems. Besides recent accomplishments in their elec tronic field, IBM also had many of their employees win multiple awards for their achievements. They have had three of their employees win Nobel Prizes, which are achievements in either physics, chemistry, literature, peace, economics, medicine and physiology; four have received a Turing Awards, which are awards for technology; five have National Medals of Technology; and five more have received National Medals of Science. These are all very big accomplishments that IBM is very proud of. IBM is currently working on many projects. One of its big ones is Eclipse, which is a platform-independent, Java based software framework. Another is developerWorks, which is a website run by IBM for software developers and IT professionals. It contains large numbers of how-to articles and tutorials, software downloads, code samples, discussion forums, podcasts, blogs, wikis, and other resources. Then there is alphaWorks which is IBM’s source for emerging software technologies. They are also working on more semiconductor designs and manufacturing for them. Open client offering is another project they are working on. It is to run on Windows, Linux and Apples. Used for word processing, presentations, Lotus Notes, instant messaging, blogging, etc†¦ UC2: Unified Communications and Collaboration is an IBM and Cisco joint project. It will offer numerous Eclipse applications developers a unified platform for an easier work environment. Examples of this would be click-to-call and voice mailing. SWOT on Management IBM holds more patentsthan any other U. S. based technology company. IBM’s Project Management Center of Excellence, or PM COE, is first-rate. PM COE is considered IBM’s â€Å"Think Tank†. It is a program that has been set up to define the steps needed to strengthen IBM’s project management capabilities. PM COE combines external industry trends and directions with IBM business, organizational, geographic requirements and insight. Using PM COE, IBM has developed project management policy, practices, methods, and tools (Wikipedia, 2008). For someone to be considered for a management position, they must complete IBM certification or accreditation. To be accepted in to the certification or accreditation process an individual must have done the following. Successfully passed PMI exam (i. e. be a certified PMP). Verifiable documentation and approval for mastery/expertise in a well-defined set of PM skills. Several years of PM experience spanning at least 3 verifiable projects within the immediate 5 years (including specific role, team size, and budget requirements). Verifiable documentation and proof of at least one area of specialty. Demonstrated the use of IBM’s Worldwide Project Management Method (_WWPMM_). Completed extensive classroom and online education and testing. To become a Junior Project Manager, you must go through self assessment and get supervisors authorization to be accredited. Becoming a Senior Project Manager requires going through the rigorous IBM certification process, which involves Candidate preparing a detailed package with proof of above requirements. Package review, approval, and support by at least two levels of Senior Management. Package review and re-verification by PM COE expert. Personal interviews with the PM COE Certification board. Candidates whose experience, skills, knowledge and education are deemed valid, verifiable and accurate, are certified by the board as either Certified Senior Project Manager (CSPM) or Certified Executive Project Manager (CEPM). Senior Project managers must validate their skills and expertise against IBM’s worldwide standards. It is a deliberately long process with multiple checkpoints designed to ensure the integrity, fairness and legitimacy of the certification. This helps IBM maintain customer confidence in their products (Wikipedia, 2008). Since IBM is such a large, diversified, and established company they do not have many weaknesses. One weakness is they have a tendency to â€Å"strong arm† clients that are highly dependent on IBM products (Bradley, 2004). In the future this reputation could lead companies to be hesitant to rely on IBM’s merchandise. This reputation could also create bad enough relationships with current clients to make them transfer to a competitor’s product. IBM has also been known to â€Å"over promise† (Bradley, 2004). Since they are such a large corporation, with many capabilities, they tend to promise unrealistic deadlines to their customers. Businesses don’t like losing money, and opening later then planned is a good way to do that. These delays in their customers start-ups, could also lead to unfavorable relationships that could cause clients to move their business elsewhere. IBM is constantly looking for new opportunities to expand their share of the market, or start a new market. IBM is looking into revolutionizing the prevention of traditional and online fraud and Identity thefts. They are working on a comprehensive anti-fraud program that is going to help banks protect themselves and their customers, while continuing to offer their products and services (IBM, 2006). IBM is also conducting case studies for the automotive industry. The case studies are going to help them change the industry, and become more innovative (Lunani, 2006). Hopefully, the innovations will alleviate some of the stress the industry is under. Management Practices ; Theories SWOT analysis is a very important part of finding out a lot of information pertaining to current management functions within the company. However, it is what the management does after they find their strengths, opportunities, weaknesses, and threats that are the most relevant part of determining a company’s success. The theories and practices the company uses to take advantage of their strengths, try to combat their weaknesses, use opportunities to their best interest, and to defend themselves from threats are the key determinant on what the company’s future looks like. IBM as one of the top companies in the world clearly knows what they are doing. They have taken into careful consideration their SWOT analysis and their management theories and practices are derived from their analysis. Being involved in competitive global competition, the company’s workforce is an essential part to IBM’s success. In knowing of this, IBM has created a list of seven key core workforce capabilities. These capabilities include: Understanding the demographics and capabilities of the workforce, predicting future labor supply and demand, utilizing social networks to increase the visibility and application of knowledge across the organization, enabling individuals to perform work regardless of location, facilitating collaboration across traditional organizational boundaries, driving the rapid development of skills and capabilities to meet changing business conditions, and evaluating employee performance and providing appropriate feedback. IBM has implemented these guidelines so their workforces can constantly adapt to the ever changing global business environment. In addition, workers are paid incentives for their input to keep the employees with a sense of involvement which is important to keeping them excited about IBM. At IBM, the managers believe and in a workforce that is diversified. According to Ron Glover, VP for Global Workforce Diversity at IBM, focuses on what it means to retain a true culture of diversity is IBM’s greatest competitive advantage. From all the way back to World War I, IBM has romoted workforce diversity when they hired disabled veterans to work for the company. Even when no one was using diversity IBM was. Way back in 1953, CEO at the time Thomas Watson sent out a very controversial stating that IBM needs to hire the best people, regardless of their race, ethnic origin, sex. In addition, the company added sexual orientation in 1984. He knew that this would give IBM a competitive advan tage because IBM would then be able to hire talented people the it’s competitors would turn down. (hrmreport. com, 2008) Another way IBM tries to get the best workers is using their program called Extreme Blue. This is an internship program for graduate and undergraduate students. This internationally known program is great for getting students prepared to work for IBM. IBM believes this will give students interested in working for a IBM a realistic perspective on what it would be like to work for them. IBM runs this diverse workforce under a classical management perspective. Money is assumed to be the primary motive and have a traditional compensation plan. The main forms of pay to employees are base pay and valuable other forms of benefits such as retirement plans and insurances. According to the company’s website, â€Å"cash compensation opportunities include base pay, commissions, performance bonuses, awards and other forms of earnings. † In addition to these forms of pay, IBM also offers generous paid vacation and holidays. There are also some benefits to relieve stress and just get away from the company for a little while. These benefits include reduced-prices, cooking lessons, and fitness centers. This management style has worked for them and we think they should stick with the classical approach to management and not move to a behavioral perspective. IBM uses an analyzer strategy which most large companies use. An analyzer strategy is a strategy in which the firm attempts to maintain its current businesses and to be somewhat innovative in new businesses. They use this strategy because they want to produce some new product opportunities while protecting their base of operations. (Griffen, 2007) Management Structure â€Å"The management structure that IBM maintains is an effective internal control structure. This structure has clearly defined lines of responsibility, as well as comprehensive systems and control procedures. This structure is beneficial because it assures customers that their transactions are put through correctly and efficiently. â€Å"(http://sec. edgar-online. com) An important part of IBM’s management structure is a good internal audit program. IBM takes a good amount of time to train its workers correctly. Each employee receives written policies and procedures to ensure that each employee knows exactly what to do under any circumstance or problem that may arise. By doing this everyone is on the same page and everything is done the way they want it done. IBM is now thinking about cutting 13,000 jobs most of which should be mostly in Europe and other headquarters around the world. Ethics With all of the diversity that exists within the company it would be hard for IBM to conduct any work without ethics on their minds. As in any large company there is some sort of unethical behavior going on, however these behaviors have not been detrimental to the company thus far. So far it is obvious that IBM won’t make any large scale unethical decisions such as the like of Enron. The ethics are very important in the business process and will be discussed more in an interview with a former employee. Interview With a Former Employee Flat or tall management structure? â€Å"The structure tends to be taller than most companies, especially within the consulting group. † Management Style? â€Å"The managers take a very classical by the book style to their decisions. Everything that had happened before was documented and later considered protocol, if there was success. † What ethics does IBM use in decision making? â€Å"IBM has well defined guidelines on many ethical issues, and it is required that all new employees review these guidelines. Employees are also required to take an annual review test to comply with IBM corporate policy. In my experience IBM relies on individual managers to make judgment calls on grey areas, and the managers I worked with all took ethic approaches to handling the issue. † What are the area’s for improvement? â€Å"IBM has had difficulties integrating its consulting division, since the acquisition of Price Waterhouse Coopers consulting in 2002. Much effort has been focused on getting full value from this acquisition, and at least initially the purchase was viewed as a misstep. With changes over the last few years, the consulting division has become the bulk of IBM revenue, but there are still opportunities to better leverage the consulting division in light of other IBM business units. IBM has also been severally criticized for its outsourcing practices, and has taken very proactive measures to combat this public criticism. † Any alliances? â€Å"IBM has numerous alliances with companies, all the way from suppliers to working with competitors. The number of alliances in likely in the thousands. † What makes IBM so successful? The ability to solve large scale business problems, especially in the IT sector, by combining various internal specialties and partnerships to create and implement end to end solutions. † Have you witnessed any unethical behavior throughout the company? â€Å"I have not personally witnessed any unethical behavior, but have spoken to a former VP who was put in a position to take an unethical action by someone who wa s very senior in the organization. † Hiring procedures? Promotions procedures? â€Å"Hiring is done at the group level, based upon target numbers that are established at the top of the organization. Final hiring decisions are made at the senior manager level. Promotion decisions occur annually with promotions and compensation based upon the outcome of the decision. Promotion is granted if the employee can show sufficient evidence that he/she is operating at the intended promotion level, and that the results are sustainable (ie. , results must be shown for a relatively long time and consistent time period, in various situations) . The implementation of the corresponding compensation typically occurs six months after promotion decisions are made. The timing of promotions and compensation increases are an area which many employees feel needs to be corrected, and IBM has stated it intends to reduce the total time of the process. † Relationship between managers and subordinates? â€Å"Varies greatly based upon individual relationships. IBM offers many channels to discuss issues, but the design of the promotion/compensation/staffing structure makes it imperative to have a successful working relationship with direct and next level management. † Is there a lot of management restructuring? Yes, at the lower levels, especially in consulting, management roles are very fluid and change frequently in comparison with other companies. Some of this is based on market changes, some on promotions/exits, and some on business results. † What kind of fringe benefits do workers receive? â€Å"Discounts with partner companies, cell and broadband reimbursement, 401k contribution, pension (eliminated in 2006), corporate educatio n, annual bonus (consulting division), extensive health care coverage at low rates. † Is there a lot of communication between the different headquarters? Conclusion It is obvious that IBM is successful because their values and the way they conduct business. This is a direct reflection upon their management structure, style, and practices. They will surely stay on the same track of success for many years to come. As they push forward in their business they are becoming one of the most well known businesses whether it be for technology or consulting around the world. No matter what kind of work a person is in one thing is for certain, everyone can learn from the way IBM conducts their business.