Business diversification in various industries
Name: ____________________________________
Company Name: ____IBM_Corporation________________________
SWOT Analysis
Strengths
Opportunities
Internal
External
Business diversification in various industries: The opportunity for the firm to diversify its business in different industries is directly connected to the weakness of the company of having a low degree of diversification. To exploit this opportunity, the company can utilize its strength to penetrate other markets.
Partner with companies from other industries: This opportunity is based on the advancement and integration of technology in various industries. For instance, the automotive industry is highly dependent on computing technologies.
The innovation of new products: The opportunity to innovate new products and services is influenced by the desire of the firm to improve its competitiveness. Additionally, IBM can be able to support its business objectives.
Move to cloud computing: In 2007, IBM moved to cloud computing and named its program “Blue Cloud.” The program was designed to offer both hardware and software solutions to firms that need a private cloud.
Strong competency in acquisition: The firm has acquired more than 140 companies in the last thirteen years in strategic areas such as security, cloud, analytics, and commerce. This has led to the growth of the software sector; hence, the company has become the leading software and consulting provider.
Integration of products and services: The company offers hardware (servers and storages), software (enterprise content and information management), and services (cloud and consultation) that are all related to each other.
Brand reputation: IBM has a broad market in all the different parts of the world it operates. In addition, it has received many awards, such as the leading green company worldwide, the most respected company, and the most admired company.
Diversified business: IBM divides its business into four segments: hardware, software, financing, and services. In 2000, approximately 35% of the company income was through the sale of hardware. With time the profit margins began to reduce, and the company had to diversify from hardware to software business.
Weaknesses
Threats
Internal
External
Imitable products: The weakness of IBM is that it applies minimal emphasis on the uniqueness of its products. The problem with this is that it is easier for competitors to produce technological products that are similar to those developed by IBM.
Shrinking product mix: This internal factor is attributed to the recent strategic changes that aim to focus on significant business operations that are highly profitable. For example, in 2005, IBM sold its personal computer business to Lenovo.
Low degree of diversification: This weakness is as a result of the few business operations that IBM participates in the information technology industry.
Focus mainly on customized products: The main focus of IBM is to provide customized products and services to large and medium businesses. This approach is very profitable for IBM, but it only captures a small share of the market. The needs of the rest of the market are satisfied by off-the-shelf software and hardware products.
Litigations: IBM has been involved in several litigations and disputes in its business operations. For instance, in 2014, IBM was sued by Lusacell for claims of fraudulent misrepresentation that made Lusacell get into an agreement with IBM branch in Mexico. These forms of litigations put the organization in bad faith and also harm the brand reputation.
Imitation of products: This is a big problem facing IBM. This threat is as a result of the weakness in the uniqueness of the products. As the company focuses on reducing the cost, it is failing to improve the uniqueness of its products, thus making it easier for other firms to imitate its products.
Competition: Cloud computing is a new technology that has a lucrative market with a high potential for growth. The possible profit in this technology attracts new organizations that threaten to take up the market share from IBM.
Global economy: For IBM to keep its prices competitive, it has to keep track of the cost of raw materials, labor, and shipping fees. Also, currency may fluctuate in different countries, which may affect the revenue earned by the company.
Cybercrime: Cloud computing system may expose IBM and its customers to potential cyber-attacks.
How the above information will be used:
The SWOT (Strengths Weaknesses Opportunities and Threats) analysis of International Business Machines (IBM) corporation identifies some of the crucial strategic aspects that promote the survival of the business in the competitive world. For instance, the firm has an extensive integration of products and services such as hardware, software, financing, and services that build the competitive advantage of the company against other information technology companies such as Microsoft, Oracle, Cisco, and Dell. Additionally, IBM has a good brand reputation that improves its competitiveness against other firms and new entrants. This strength can be used by the company to diversify its operations and also enter other industries such as the automotive.
Despite the strengths possessed by the firm, IBM also has some weaknesses that expose it to various threats in the external environment. For instance, competition and imitability of products are the major threats facing the company. Understanding these threats will help the firm to develop new strategic approaches that are in line with the mission and vision of the company that emphasizes on the technological innovations. Implementing new changes that will eliminate the threats will be essential in promoting the growth and the competitive advantage of IBM. Therefore, based on the SWOT analysis, it can be recommended that IBM should ally with other firms to exploit technological opportunities, diversify the business to reduce the threats, and also encourage innovation to improve on the uniqueness of the products.