Strategic Analysis: Comprehensive SWOT Analysis of IBM Corporation

This report provides a comprehensive SWOT (Strengths, Weaknesses, Opportunities, and Threats) analysis of International Business Machines (IBM). It begins with an introduction to the strategic importance of SWOT analysis in assessing an organization's internal and external environments. The report then delves into IBM's strengths, including its strong brand image, expertise in production, extensive intellectual property portfolio, economies of scale, effective business strategies, commitment to updating services, and robust research and development capabilities, particularly in data analytics. Weaknesses identified include litigations and a lack of product diversification. Opportunities for IBM are highlighted, such as alliances with Twitter, acquisitions of new businesses, and investments in cloud technology. The threats to IBM include the potential loss of competitiveness due to product imitation and increasing competition within the IT industry. The conclusion summarizes the key findings, emphasizing IBM's strengths in brand image, intellectual property, and R&D, while also acknowledging the limitations posed by weaknesses and external threats. This report aims to provide a clear understanding of IBM's current market position and strategic challenges.

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SWOT Analysis of IBM (International Business Machine)

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Introduction
The strategic objectives of an organization are developed based on the external and
internal environment of an organization. The SWOT analysis is a strategic management tool
which assesses the external and internal environments of an organization. The SWOT analysis
meaning is identifying the strengths, weaknesses, threats and opportunities of a business.
Identification of strengths and weaknesses is effective to evaluate the internal environment
(Daman, Tripathi, & Mishra, 2016). It enables the organizations to get an idea on how the
resources could be used to meet the business goals. The SWOT analysis also reveals the areas
which are limiting the growth of the business and need to be improved. The forces in the external
environment influence businesses in different ways. From SWOT analysis, the businesses know
the factors which are favourable for the growth. It also indicates how the external environment
might restrict the business from achieving its goals.
The current assignment deals with SWOT analysis of IBM (International Business
Machine Corporation). IBM is a US-based multinational IT company. It started in 1911 and
expanded the operations in 170 countries (Research.ibm.com, 2019). IBM serves the clients from
a diverse range of industries including banking, automation, chemicals, oil and gas, and
education. The key marketplaces where IBM operates range from blockchain, analytics, Internet
of Things to IT infrastructure, health, security and talent management. However, the IT industry
is highly dynamic because of continuous advancements. The new trends emerge in the industry
continuously and the organizations require adjusting their activities to cope with the trends. IBM
also needs to deal with a highly diverse environment because of its globally expanded

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operations. Therefore SWOT analysis is needed to obtain a clear view on the changing external
and internal environment.
SWOT Analysis
Strengths
The strengths of IBM are—
1. High Brand Image-- The brand image enables an organization to attract the customers
easily. As an effect, businesses with a high brand image can attain sustainable growth in existing
and new markets (Minocha & Singh, 2016). IBM has long experience of working in the IT and
technology industry. It helped the organization to improve the brand image. The range and
quality of product and services are the other factors which improve the brand value of the
organization and helps it to retain and attract the customers.
2. Expertise in Production-- Expertise in production helps the organizations to design
unique and high-quality products (Akter, Wamba, Gunasekaran, Dubey & Childe, 2016).
Expertise is also necessary to increase the productivity of the organization. IBM acquires the best
talents and advanced infrastructure. It helps the organization to enhance the expertise in
production.
3. Intellectual Property Portfolio— intellectual property is necessary to protect the unique
products of the organization from being copied. So, the businesses can retain a competitive
advantage by offering customers with highly innovative products. IBM possesses more than
10,000 patents in 2019 (Research.ibm.com, 2019). The vast portfolio helps the organizations to
retain the customers with its unmatched products.

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4. High economies of scale— Production in large volume provides higher bargaining
power to the suppliers. As an effect, the businesses can get raw materials from the suppliers at a
lower cost. The businesses can also obtain higher value from the available infrastructure. The
high economies of scale help businesses to reduce the cost of production (McNeill, 2015). As an
effect, businesses can increase their profitability.
5. Business Strategies— IBM focuses on two aspects of the growth strategy. Firstly, it
focuses on using innovation to make the products more efficient and competitive. Use of
innovation helps the organization to strengthen its position in the existing market and enter the
new markets (Appleyard & Chesbrough, 2017). Secondly, the organization also focuses on using
its capabilities, to create quality products. It helps the organization to retain the profitability and
create long-term value for the shareholders.
6. Updating services-- The businesses need to improve their products and services
continue to meet the changing demands of the customers (Bashir & Verma, 2017). It is even
more important in the technology industry due to new developments. Incorporating the new
advancements helps the organizations to keep the products updated and meet the new demands
of the customers effectively. IBM focuses on keeping the products and services updated by using
the new technological advancements. So, continuously updating the products is the strength of
the organization.
7. Research and Development and Use of data analytics—

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Figure 1: Key Research Areas of IBM
(Source: Research.ibm.com., 2019)
The research and development help organizations to improve their services continuously
(Akter et al., 2016). As an effect, the businesses can meet the expectations of the customers. IBM
focuses on investing in R&D for developing new products and improving its quality. Use of data
analytics is an effective way to get insight to the market trends and demands of the customers.
The view on the market obtained from data analytics is effective to predict the future
requirements of the customers as well. IBM invests a significant portion of its R&D budget on
data analytics. In this way, the organization becomes able to determine the present and future
market trends and act accordingly.
Weaknesses
The weaknesses of the organization are—
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1. Litigations— The legal issues damage the brand image. It also reduces the
trustworthiness of the organization. Therefore, getting involved in legal issues restrict businesses
from attracting customers. The legal issues also cause an interruption in business operations. As
an effect, the profitability of the organization is affected. In recent years, IBM has got involved
in legal issues several times. As an effect, the profitability of the business is affected severely.
For example, in 2014, Lusacell sued a legal charge against IBM. The organization claimed that
IBM misrepresented information and because of it, Lusacell entered into an agreement with the
organization (Pedersen, Gwozdz, & Hvass, 2018). In 2013, Bridgestone America filed a lawsuit
against IBM for a defective system (Cantù, Corsaro, Tunisini, & Sebastiani, 2015). Such legal
issues caused financial loss for the organization. The lack of organizational strategies to prevent
legal issues is a major weakness of IBM.
2. Lack of product diversification -- Product diversification is beneficial for the
organizations in various ways. The diversified products help businesses to increase sale rapidly.
The businesses in the competitive market places need to acquire new customers to retain
profitability. However, acquiring new customers is challenging in a competitive market. Adding
new products to the market helps the businesses to capture new markets easily (Tavakoli,
Schlagwein, & Schoder, 2015). The lack of product diversification prevents IBM from
enhancing profitability and remaining competitive. It is another weakness of the organization.
Product diversification also reduces the dependency of the organization on a few particular
products. With the help of the diversified product portfolio, businesses can attain sustainable
growth. In such cases, the financial performance of the organization does not depend on a few
products. So, the risk of loss reduces if the demand for a particular item drops.

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Opportunities
The new opportunities for IBM are—
1. Alliance with Twitter-- IBM recently made a tie-up with Twitter. Due to the alliance,
the organization can access Twitter data and know the market trends in detail (Butner & Ho,
2019). Use of the analytics might help the organization to respond to the demands of customers
proactively. Being proactive to the market trends is beneficial to boost the growth rate by
increasing sale and acquiring new customers.
2. Acquisition of new businesses-- Merger and acquisitions help the businesses to utilize
the talents and resources of the other organizations ((Pedersen et al., 2018). IBM acquires new
businesses. So, the organization becomes able to use talents and innovative ideas. It, in turn, is
advantageous for developing a unique product.
3. Investing in cloud technology-- Use of cloud technology helped IBM to reduce the
production cost and improve economies of scale (Akter et al., 2016). Cost-effective production is
beneficial for improving the profitability of IBM.
Threats
IBM is experiencing the following threats—
1. Loss of competitiveness due to product imitation— lack of diversification makes the
products and services vulnerable to imitation (Tavakoli et al.,2015). So, the products lose
uniqueness. Unique products are a source of competitive advantages. The higher risk of imitation
poses a threat of losing competitiveness to IBM.

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2. Increased competition-- The competition in the IT industry is increasing (Tavakoli et
al.,2015). The large organizations such as Oracle, Accenture, Hewlett Packard and Xerox are
operating in the IT industry. All of these organizations offer quality and unique products. All of
them focus on acquiring new technology and attracting new customer groups. of IBM. The
activities of these close competitors are posing threats of losing the market share to the
organization. The new businesses are also entering the IT industry with innovative products. The
economic products and services offered by small organizations also pose the threat of losing
market share.
Conclusion
SWOT analysis of IBM indicates that the brand image, intellectual property portfolio,
R&D activities, economies of scale and use of data analytics are strengthening the position of the
organization in the market. However, the business growth of IBM is limited by the weaknesses,
which are, litigations and lack of product diversification. The new alliance with Twitter is
creating the opportunities to get a deeper insight into the market whereas acquisitions and
investment in cloud technology are effective to create new profit channels. The imitation of the
products is threatening to IBM as it leads to loss of competitiveness. The increased competition
also is posing threats of losing market share.

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References
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