Strategic Management Report: IBM's Business Level Strategies Analysis

This report provides an in-depth analysis of IBM's strategic management, examining its functional and business-level strategies. The report begins with an executive summary and introduction, outlining the scope and limitations of the study. It then delves into IBM's functional-level strategies, including efficiency, quality, innovation, and customer responsiveness. The report also explores IBM's generic strategies model, such as cost leadership and differentiation, and how these strategies contribute to its competitive advantage. Furthermore, the report analyzes IBM's business-level strategies, including lowering costs, differentiation, and the concept of Blue Ocean Strategy and Value Innovation. The report concludes with recommendations and conclusions, summarizing the key findings and insights into IBM's strategic management practices. The report also includes a SWOT analysis and references to support its findings.

Running head: Strategic Management
STRATEGIC MANAGEMENT
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EXECUTIVE SUMMARY
The paper examines the business success as contributed by the strong strategic
management model. IBM is an American multinational information technology company has
been successful since 1911 with operation in over 170 countries worldwide. Every single unit of
the company has one general aim of vision achievement since both employers and employees
cooperate for the company’s success. The company has a creative and innovative daily operation
that lead to the production of more useful goods and service hence good company reputation.
IBM Company produces and sells computers hardware, middleware, and software. The company
ensures efficiency and quality on their product to make sure customers satisfaction hence
resulting in customer's loyalty. The company uses low cost and product differentiation strategies
to help in attaining a competitive advantage in the competitive market. The company has
strategies that help the company to enjoy a larger market share and producing more superior
goods. The company’s website makes it easy for customers to get information about the
company and its products. This help the potential customers to get access to information about
the company of the product they are consuming all this help in creating trust between customers
and the company resulting in good company reputation.

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Table of Contents
1. INTRODUCTION...............................................................................................................................4
1.1 Authorization.....................................................................................................................................4
1.2 Limitation...........................................................................................................................................4
1.3 Scope of the report............................................................................................................................5
1.4 Manufacturing and marketing units of the IBM Company................................................................5
2. FUNCTIONAL LEVEL STRATEGIES FOR IBM.............................................................................6
2.1. Efficiency.........................................................................................................................................6
2.2. Quality..............................................................................................................................................6
2.3. Innovation.........................................................................................................................................7
2.4. Customer Responsiveness.................................................................................................................7
2.5. Generic Strategies Model..................................................................................................................8
Broad market versus Narrow market...................................................................................................8
Efficiency versus Quality....................................................................................................................8
Cost Leadership...................................................................................................................................9
Differentiation.....................................................................................................................................9
Focus cost leadership...........................................................................................................................9
Focus differentiation..........................................................................................................................10
3.0. BUSINESS LEVEL STRATEGIES FOR IBM..................................................................................10
3.1. Lowering Cost................................................................................................................................10
3.2. Differentiation................................................................................................................................12
3.3. Discuss the concept of Blue Ocean Strategy & Value Innovation..................................................13
4. Recommendation..................................................................................................................................14
5. Conclusions...........................................................................................................................................14
5. References:............................................................................................................................................15
Appendix I: IBM SWOT Analysis.................................................................................................................19

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1. INTRODUCTION
Businesses do invest mostly in the important business aspect just to attain succession which
includes financial and management aspects. Strategic managements are part of the company plan
of its various functional units to ensure proper operation for success purposes. Every business
aims are to minimize production cost for the result of maximizing the profit for visions
achievement. That strategic management is formed on three major levels which include personal
level, research level and development level which are the main keys for business success. IBM is
one of the Australian IT companies that have succeeded by using strategic management in its day
to day operational units toward vision achievement.
1.1 Authorization
Success is the main objective of every business/firm. Since every business involves in
day to day activity toward goal achievement, it's important for progress evaluation to determine
where there should be an adjustment and for objectives achievements. The company uses product
differentiation and low cost in the production department and marketing department respectively
to help in attaining a competitive advantage in the market place. The main reason for this report
was to examine the company strategic management progress for better performance.
1.2 Limitation
Every company has its terms and condition which should be respected by everyone hence
there was a limit in conducting the research due to the company term and condition. Also, the
company secret cannot be available to anyone due to security purposes hence limiting the
research area.

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1.3 Scope of the report
The research was to examine the company's strategic management progress toward vision
achievement. The company uses the two main functional levels strategic which include low cost
in the marketing department and product differentiation under the production department to gain
a competitive advantage in the market place. The strategies have an advantage to the company's
development performance. Also, the report has discusses some issues of value creation and
innovation which is so crucial to the company and the product consumers.
1.4 Manufacturing and marketing units of the IBM Company
Business success relies in the production and marketing strategy since they are the heart of every
business for vision achievement. It is important for business to focus more in these two units by
providing more resource to enhance their performance. Differentiation is a business strategy used
to attract customers by providing more useful goods and services or producing non matching
product just to convince consumers that the product is the best. It’s a strategy used by the
manufacturing department of every business in production of good and service. The strategy has
both competitive advantage and disadvantages to the business unit in the market place. Low cost
is also a strategy used by firm to attract customers in the market place. It’s a strategy used by the
marketing unit to enhance sales volume which also act as a marketing strategy. It has competitive
advantage sine it act as barriers to new entry of new firm into the market. It also has it
disadvantages to the business in the long run of the business function.

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2. FUNCTIONAL LEVEL STRATEGIES FOR IBM
Since all business has a long and short term objective, its everyday operation activities should be
determined by its vision. Every business vision describes what the business would like to be in
the future. Hence, the business everyday operational activity should focus on the vision. All
these are meant to ensure a good company image and to add on the competitive advantage
(Nordqvist 2014).
2.1. Efficiency
A company's efficiency can be determined by the volume of inventories used to produces its
products and services or environmental affairs. Like in the production unit of the IBM Power
System servers produces material improvement in the efficiency of data center operation. It also
has the Power8 platform which reducing the number of servers to support the workload by 50%
which interns reduce the energy consumption. All are meant for product effectiveness (DeWitt
2011).
2.2. Quality
Every customer needs full satisfaction of the products used, hence all company needs to
consider customers needs and specification in product production for customer’s satisfaction.
The production department of the IBM Company improves its quality management in
manufacturing level. Its visual insight and acoustic insight solution are designed to integrate
seamlessly with other cognitive analytic tools and management assets system. Also as data
expand the cognitive nature of the tools means that they can become predictive and alert to
condition before a defect occurs. (Ha 2014)

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2.3. Innovation
Innovation is the process of transforming an idea/invention into goods or service that creates
values which a consumer will pay for. It can involve product innovation or process innovation.
Every company needs to grow which can only take place by employee's creativity and innovation
with the aims of company success. Like in the IBM Company employees are being engaged by
encouraging them to share their new creative ideas to help in solving the company problems.
Both the production & manufacturing unit should be very creative and innovative in their day to
day activity since through that they might bring in new creative ideas to help in production cost
in their respective departments mostly in the manufacturing units. According to (Cameron 2014)
innovation is essential for any business success. The author argues that maintaining an open
dialogue between the business supervisor and employees or within departments always results in
a creative solution for the problems affecting the business entity. In addition, department or
employees who do not freely communicate blames others when problems arise.
2.4. Customer Responsiveness
Customers are essential to business since without them the business could not exist. Every
customer needs fully satisfaction after product consumption hence every business should
consider the customer's needs and specification while producing goods and services which
should be done at the production unit. A customer always desires is to be able to learn about the
product they consume and the producing company. The IBM Company ensures customers
responsiveness by providing a company blog. The marketing unit of the IBM company ensures
all information regarding product and services, company trends and other types of posts are
available in the company blog hence all customers can get information from there. Through all

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these customers knows about the company and its products hence much likely to buy the
company's product and also build trust in the company too (Cameron 2014).
2.5. Generic Strategies Model
It’s the way of business competition in the market place. There different ways of
business competition like the low cost, differentiation. Businesses do compete to ensure profit
maximization in the business long run.
Broad market versus Narrow market
The broad and narrow market is a strategy used for the aim of company market shares. For
instance, IBM aims at maximizing its market share globally. The cost leadership generic strategy
used by the IBM marketing unit helps in empowering the company to enjoy a worldwide market
share using its intensive strategy. This results in the company success by facilitating the market
penetration building on the larger economy of scale in the market place (Vanian 2016).
Efficiency versus Quality
Efficiency is the ability to spread fixed costs over a large production volume and produce in
large volumes to achieve a greater division of labor and specialization. The marketing unit of the
IBM uses its efficiency strategy to gain economies of scale. Also by providing effective goods
and services under the production unit which help in building the company reputation in the
market place, it provides superior service and charging customers a premium for their
mainframe. Both the efficiency and quality strategy models are used to attract customers in the
market (Cameron 2014).

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Cost Leadership
The strategy involves maintaining low costs in the business process to establish maximize
profit margins. The IBM marketing department uses this strategy to enhance its market
penetration, due to this the company has a large market share hence the company is capable of
minimizing cost in production platform and technology services. Hence the company can
implement competitive pricing for that product and services. (Zhexembayeva 2014)
Differentiation
Differentiation is a strategy of distinguishing a company's product from its competitor's
products by producing or offering non-matching goods and services. For instance, IBM
production department uses this strategy in manufacturing of new computers systems in addition
to the advantage of other products sales. IBM uses its superior reliability, branding and better
design to improves on its product function in the manufacturing units which interns help in
building on the company overall growth and increase in the market share (Spaniol
& Rowland 2018)
Focus cost leadership
The company can decide to focus on cost leadership for competitive advantages in the
market place. The marketing unit of the IBM Company uses its larger volume market share
which can play an important on the focus cost leadership since it's a global company. This help
in creating an added competitive advantage to the IBM Company in the market place. Also, the
nature of the target market varies across a business that uses a lowering cost for competition in
the market place since some market are defined by the demographic. IBM uses of focused cost
leadership strategy which has resulted in larger market share globally. Lowering cost business

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strategy helps the company to gain a competitive advantage, increasing market shares and also
increased in business profitability (Etherington 2014).
Focus differentiation
By focusing on the differentiation, it means the company needs more creativity and
innovation in goods and service production. Like in the IBM it is important in the manufacturing
unit to be more creative and innovation to bring more essential ideas to improve in its products
and services to customers. By providing a more useful good and services to the customers
results in fully customer's satisfaction hence company reputation too. All this contributes to the
company's day to day growth (Lunden 2016).
3.0. BUSINESS LEVEL STRATEGIES FOR IBM
The business level strategy is all about how a company/organization/ firm can compete in a
particular industry. All business has competitors even the worldwide one hence need for a
strategic model for competition. Lowering cost and focused differentiation is the major model
used by the company to compete in the market place by providing non-matching goods/ services
or unique product into the market. Porter, Hammond, and Barinka (2018) emphasis that
competitive dimension are firms source of competitive advantage. In addition, whether a firm
uses low cost to gain an edge of a rival or by producing unique products into the market place,
also whether a firm target a larger market share or targeting a certain market segment all are
strategy of competing in the market place (Vanian 2016).
3.1. Lowering Cost
Lowering cost is a strategy used by the company to attract customers. The strategy requires
competing based on price targeting a market niche. The firm uses this strategy by charging low

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prices relative to the business they compete within the target market. Also, the nature of the
target market varies across a business that uses a lowering cost for competition in the market
place since some market are defined by the demographic. Marketing unit of the IBM company
uses focused cost leadership strategy which has resulted in larger market share globally.
Lowering cost business strategy helps the company to gain a competitive advantage, increasing
market shares and also increased in business profitability (Franklin 2016).
Differentiation is a strategy meant to convince customers to pay a premium price for the
company goods and services by providing unique and desirable products. IBM company uses its
manufacturing units to produce more useful product to ensures customers satisfaction and to tell
customers that the company's product is more valuable than the competitor's product and will be
fully satisfied when the customers consumed the product. Differentiation strategy means that the
company uses this strategy based on the uniqueness rather than price seeking to attract a large
market. The low cost and differentiation are both business strategy used to attract a larger market
share. The main difference is that low-cost involves lowering cost as a way of attracting
customers while differentiation involves the production of more uses full product/ product
uniqueness as a way of attracting customers (Terdiman 2016).
Disadvantages of low cost and differentiation
Low cost can be more beneficial to a company but in the long run it can be disadvantage since its
minimize the advertisement, market research and development strategies are limited hence
making it more expensive.

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Over differentiation by firms can exceed the firm resource as the operation cost become too
costly to be covered by the premium prices, also when substitute hit the market at lower price it
affect the differentiating firm since customers will opt for the cheaper product
3.2. Differentiation
Differentiation is a business strategy used to attract customers by providing more use full good
and services with the aim of convincing customers that their product is the best. This also
involves communicating the values of the products and services to the potential customers all can
be done through advertising and product branding. By attaining the differentiation and low-cost
strategies IBM company can enjoy an added advantage through the following ways. According
to Kyung-Hoon (2014) emphasis is that by using a low-cost as a business strategy can enhance
profit-making since by using the internet to based technology to reduce value chain cost of
inventories. Through web inventory control system which reduce storage cost by providing real-
time ordering, customers can check the progress of the production process to reduce rework,
online ordering process to eliminate queuing for purchase. The manufacturing unit of the IBM
Company gain a competitive advantage in commodity markets since the produce affordable
goods, gaining a large volume of market share globally all these results into increase profit
making (Fuller 2018).
Differentiation also helps in adding a competitive advantage in the market place since
distinguishing one product from the competitor’s product and also communicating the same to
the potential customer will help in building company reputation maintaining customers loyalty
and also having a larger market share resulting into business success. All this help company