1. SWOT Analysis
Strengths
IBM’s core strength lies in its System/360 and System/370 mainframe series. These mainframes have become the industry’s benchmark that competitors try to match. Moreover, IBM’s high-priced lease strategy, supported by excellent customer support, enhances the company’s fortunes. Over the years, IBM’s excellent service, along with a successful sales team has given it an advantage over the competition. IBM’s successful ventures with computer, software, and marketing companies such as Intel and Microsoft give it a competitive edge.
Weaknesses
IBM’s major weakness is it focuses too much in protecting its mainframe market because they think that nothing can beat mainframes and that ‘big machines mean big revenues’. This in effect, obscured their vision from threats emerging from the emergence of new kinds of computer technology. Moreover, they incur significant amount of costs, especially advertising costs, before they even become a key player in any developing markets, hoping for high profits. With high costs, and high profit margins, it comes as no surprise that the company’s products are high-priced as well, hence, it proves to be a setback when low cost products enter the market.
Opportunities
The major opportunities for IBM come with the frequent changes in technology. In a technologically driven society, new products are launched frequently. These open new markets for the corporation to develop and thus increase revenues. As it has huge strength in its innovation and development the opportunity is rife for IBM to enter these markets.
Threats
The main threats to IBM are its competitors and the industry IBM is in. As with the growth of any industry, the competition seems to grow as well. What makes matter worse for IBM is that often the completion offers low cost solutions to the high end products sold by IBM. Moreover, the technology industry is extremely competitive when it comes to innovating.
2. PESTEL Analysis
Political/Legal Factor There are some regulations for cross-country operations and labor laws IBM have to comply with. IBM should consider patenting some of their inventions. Economic Factor The emergence of low cost and better quality products from Japan China Korea and Taiwan has marginalized many industries in the US. The computer industry is a feasible one for new entrants with cost effective techniques to enter and quickly grab chunks of market shares from the leading companies today.
Socio-cultural Factor
A number of employees were laid off by IBM in an effort at reorganizing This has produced a negative image of IBM to the workers. With the society’s constant demand for technological breakthroughs and customers focusing on prices, IBM has lost out in the recent past. Moreover, their strategic change of ending its leasing system has also severely affected its revenues.
Technological Factor
With a growing demand of continuous technological innovation, comes the risk of obsolescence. It is both a boon and a curse for IBM which it can exploit by reducing costs and continuously innovating newer technologies.
Environmental Factor
The materials used to manufacture these products are not environmental friendly and are rarely recyclable. Hence, if not disposed correctly it may harm nature. Wastage is a side effect in the industry which has a huge demand for continuous development.
