IBM: A Multinational IT Company Driving Innovation and Digital Transformation

Running Head: MANAGEMENT 0
IBM

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Introduction
IBM was founded in 1911 by Charles Ranlett Flint. It is an American multinational IT
company headquartered in New York. The company is having operations in more than 175
countries all over the world. IBM is helping their clients to move in the digital era by
bringing together innovative technologies and industry expertise. This delivers long-term
value to the shareholders.
For evaluating various macro-environmental factors of the company, PESTLE framework is
used that help the management to predict those environmental aspects that are having
significant impact over the organisational performance.
PESTLE of IBM
 Political Factors – This element of PESTLE analysis deals with the effects of
government and political organisations in extent with macro-environment of the
technology industry. Various political factors include –
1. Relation with Trump administration – The Company had maintained close
relations with various political administrations and has worked with every
president of U.S. since Wilson. Ginny, the current CEO of IBM has also close
influence in the administration of Trump and thus never criticized the Trump
policies unlike other CEO of Amazon and Apple (Sharwood, 2017). From last
decades, the company reveals that they got $7 billion in terms of government
contract and this shows their growth and diversification considering various
policies (McLean, 2016).
2. Trade war with China – The Trump decision to put impose of trade tariffs on
products imported from China will backlash IBM in the form of reduced
contracts (Detrick, 2018). This signifies negative impact over IBM interest to
expand their business in overseas markets.
 Economic Factors – These factors can bring various opportunities and threats that
can have a major impact on IBM. Some of these factors are –
1. Overhauling of H1B work visa programme by Trump – The signed order by
US President in order to overhaul work visa programmes like H1B type
creates difficulty for various firms including IBM. Nearly two-thirds of H1B

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visa applicants are Indian, and the bill would likely put Indian outsourcing
firms, outfits that specialize in supplying cheaper visa workers to larger firms,
at a specific disadvantage (Ruiz, 2017). However, it will cause negative
impact for IBM due to their higher dependence on H-1B workers to stay
competitive.
2. Strong economy in developing countries – The emerging nations of Indian,
China, Brazil and Russia together projected five per cent of IBM second-
quarter revenue. These emerging countries are among the fastest growing IT
markets over the world mainly India helped IBM to expand their global
service operations with investment in vendor services (Timmons, 2014).
 Social Factors – These elements show social trends and changes that have an impact
on customer and employee interaction considering IT business and its products. One
of the major factors is increase in adoption of e-commerce by consumers. IBM as a
leader in digital transformation and thus have various solutions including B2C and
B2B commerce platform – IBM WebSphere Commerce. This helps many businesses
to take effective decisions faster with integration to Watson AI (Levine, 2015). Over
the past few decades, CRM has grown from full fledge services into thriving global
industry. The industry is also currently expecting rapid growth as in last year it was
valued at $36 billion (Srivastava, 2015). This will brings various opportunities for the
company. Moreover, the increasing use of online services is also an opportunity for
IBM as it offering more cloud-based platforms to customers can increase the revenue
with application of high-quality customer service standards.
 Technological Factors - Technologies and related changes explore the business tools
and equipment presented in the information technology industry. It includes factors
like -
1. Technology integration initiatives across industries – The year 2018 presented
various emerging technologies to go mainstream and change the business
landscape of many companies. Many large numbers of enterprises are no
tapping for integration of technologies rather than to stick with traditional IT
system. IBM “did not wait” to bring about the change and thus managed to
give new directions to business firms by investing in emerging technologies
such as AI, cloud computing and many more (Mitter, 2018). This integrated
technology will lead the business to achieve distinct position in the market.