Ibm Case Study
IBM’s Decade of Transformation
Assignment Questions
1. What factors led to IBM’s success during the 1960s and 1970s and its problems during the late 1980s and early 1990s?
The factors led to IBM’s success during the 1960s and 1970s including: 1. The launch of System 360 mainframe computer family. It covered a wide range of applications that suited the significant needs of the customer. It was a dominant design in computer industry at that period and was extremely successful in the market. 2. From 1970s to 1980s, IBM kept on introducing a series of IT innovations including hard disk, floppy disk and the IBM PC in the early 1980s. These products fit the customer needs perfectly at that period and soon dominated the market.
The factors led to IBM’s problems during the late 1980s including: 1. The wrong strategies made by IBM against changes in the needs of the customer. At that time, the customers increased the need of mobile personal computers with distributed data sources and applications. This decreased the revenue of the sale of IBM mainframe directly. Instead of dealing with the changes of the need of customers, IBM started changing the selling model from leasing to selling the mainframe to customer directly in order to increase revenue. This strategy could not increase revenue sustainably in long term. 2. IBM began to lose the market of PC as their competitors raised. But IBM didn’t pay attention to this. Instead, they kept focusing on mainframe computer product and let third party retailers sold the IBM PC. 3. The product complexity of IBM was evolving. However, the executives were isolated from these growing problems because of the complex organization structure, reliance of other staff and the consensus-driven decision making structure.
2. What did Gerstner do when he assumed the role of CEO in April 1993? Evaluate Gerstner’s approach to crisis management. What challenges did he face as he attempted to position the company for growth?
Assignment Questions
1. What factors led to IBM’s success during the 1960s and 1970s and its problems during the late 1980s and early 1990s?
The factors led to IBM’s success during the 1960s and 1970s including: 1. The launch of System 360 mainframe computer family. It covered a wide range of applications that suited the significant needs of the customer. It was a dominant design in computer industry at that period and was extremely successful in the market. 2. From 1970s to 1980s, IBM kept on introducing a series of IT innovations including hard disk, floppy disk and the IBM PC in the early 1980s. These products fit the customer needs perfectly at that period and soon dominated the market.
The factors led to IBM’s problems during the late 1980s including: 1. The wrong strategies made by IBM against changes in the needs of the customer. At that time, the customers increased the need of mobile personal computers with distributed data sources and applications. This decreased the revenue of the sale of IBM mainframe directly. Instead of dealing with the changes of the need of customers, IBM started changing the selling model from leasing to selling the mainframe to customer directly in order to increase revenue. This strategy could not increase revenue sustainably in long term. 2. IBM began to lose the market of PC as their competitors raised. But IBM didn’t pay attention to this. Instead, they kept focusing on mainframe computer product and let third party retailers sold the IBM PC. 3. The product complexity of IBM was evolving. However, the executives were isolated from these growing problems because of the complex organization structure, reliance of other staff and the consensus-driven decision making structure.
2. What did Gerstner do when he assumed the role of CEO in April 1993? Evaluate Gerstner’s approach to crisis management. What challenges did he face as he attempted to position the company for growth?