Strategic Analysis of IBM as a Virtual Organization

This report provides a detailed analysis of IBM as a virtual organization, examining its structure, strategies, and operational practices. The report explores the benefits of virtual organizations, such as cost savings, scalability, and employee satisfaction, while also addressing potential disadvantages like the lack of physical interaction. It highlights key features of virtual organizations, including the use of technology, SMS services, and mobile data for effective communication and business management. The report also discusses the challenges of managing virtual teams and emphasizes the importance of managing people, relationships, and work effectively. Through this analysis, the report offers insights into how IBM has successfully leveraged a virtual organizational model to achieve growth, innovation, and a significant market share in the IT industry, particularly in cloud computing and hardware manufacturing.

CONSULTANCY

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
In current business scenario, There are various threats as well as opportunities that are
lying within the business environment. Thus it is of paramount importance that right kind of
business strategies are being followed that will allow an organisation to grow as well as prosper
in the longer run. A virtual organisation is a co-operation that works mostly on digital structure
and thus the business will have the necessary implementation of digital tools and technology
which will further help in overall growth and prosperity. It has become possible only by
information and communication technology that a new era of Virtual organisation has been
developed in the recent past. IBM, is an international company which can be regarded as a big
virtual organisation and is operating since decades, established in United States, The company
has successfully able to grow and prosper in an efficient manner. The company operates in
around 170 countries with a net income of around 5 billion dollars (Camarinha-Matos ed., 2013).
The company is having avast number of employees of around 380,000 and is increasing quite
rapidly as well.
MAIN BODY
Virtual organisations plays a very important role in the overall growth as well as
development of any economy, thus it becomes even more important to implement right kind of
growth strategies so that these companies can prosper and generate a larger employment and
contribute in the overall economic growth. An industrial market consist of various organisation,
and every organisation has different business operations as well as business activities. There are
various benefits that can be derived by a virtual organisation in the longer run. These benefits
include cost saving by taking help of outside experts for the purpose of effectively performing
the necessary business activities in the longer run. The expenses of travelling, logging as well as
downtime can be reduced to quite an extent and thus eventually higher profitability can be
expected from the same. The dynamism within the team members, makes it possible for them to
switch from one project to another in an effective as well as efficient way. The various
employees of the organisation can be assigned to different or multiple teams very easily. The
virtual teams allows an organisation to expand their overall labour markets which would enable
them to hire the best possible people irrespective of their location where they physically exist.
The organisations also plays a very important role in developing the standard of living of people,
1

which further enhances the economic activity within the economy. IBM is a big IT Company and
is engaged in the business of manufacturing Hardware products like computers and laptops along
with their accessories and along with that it also offers IT Solutions to individual organisation
and government which has gained it reputation over longer period of time. The company has
been able to successfully establish itself in the business of cloud computing. This particular area
of the company is contributing effectively in the business growth of the organisation. IBM is
making sure that right kind of business opportunities can be developed, which will enable it to
grow and prosper and at the same time capture a higher marker share over its competitors like
Oracle and Intel (Huet, 2012). The company has seen a consistent growth in the overall profits
over the decades and thus is looking to make the same quantum of profits going forward as well.
The nature of business is such that its dynamism can not be ignored in any way and thus
planning shall also be made accordingly.
Benefits of a Virtual Organisation
These virtual organisations spends a hefty sum on the overall research and development
accounts for around 7 billion dollar a year, which is beneficial for the economy in longer run.
The need is to develop business opportunities for such kind of business organisations over long
haul, so that higher growth can be achieved. The information and technology is basically oxygen
for a virtual organisation, it can not survive for a longer period of time without having adequate
information as well as Knowledge. There is a higher need that these organisations takes care of
their employees in a manner which will enable them to grow. Employees are a crucial part of any
organisation and virtual organisations is a no exception, in fact they are responsible for making
the whole business to grow as they posses the necessary knowledge and information that are
needed to develop an IT business. There are various disadvantages or limitations also, which
makes it difficult for a virtual organisation to effectively run and manage a business. These
difficulties can be a lack of physical interaction among associates, which stands out to be
negative for these organisation as there is a lack of synergies and face to face interactions. The
members usually does not even meet each other and work sitting miles apart by never really
seeing the face of each other. Thus, it is quite necessary that a reduction in these disadvantages
are sought by the managers of virtual organisations, which will be positive for the company
(Sandhu, 2012).
2

A virtual organisation makes it easy for the company to do business in a very easy as well
as effective manner. It provides business solutions to clients virtually and thus saves a
considerable amount of cost along with making necessary impact on the overall economy in
general (Saetta, Tiacci and Cagnazzo, 2013). The various other benefits of virtual organisation
are:
Lower Overhead Cost: The overall cost can be reduced to an extent and higher profits can also
be achieved. The cost of operations are low and thus a virtual organisation does not occur
expenses on the basis of a manufacturing organisation, This is because, the maintenance cost of
employees are very low, they possessed all the work that needs to be done virtually. Thus, it
essentially reduces the overall cost of the business over longer period of time.
Easy Scalability: When the businesses of an organisation is taking place from a real tangible
office, then for the purpose of scaling the business it requires a lot of efforts to find the right kind
of business space and then making necessary arrangements to conduct business operations
electively over longer period of time. The cost can be reduced to an extent like, there is no need
for a virtual organisation to think about extra air conditions cost or for that matter extra office
space etc. They can manage and run business virtually with minimum possible efforts as well as
cost. Thus, it is far more easier for a virtual organisation to build a business model, which can be
raised to beyond a point very easily in an efficient manner (Durugbo and Riedel, 2013).
Satisfied Employees: The current economic scenario is such that it is becoming even more
important for the organisation to provide a flexible hour system to its employees, which will
further boost the sentiments of employees and they are more likely to retain with the organisation
in the longer run. Due to its work structure, a virtual organisation can give work from home to
employees and thus it enhances overall profitability of the company over longer period of time.
Features of a virtual Organisation
There are various features that are possessed by the virtual organisations and those can be
laid down as follows:
Technology: The overall development of technology has opened up various doors of
opportunities for organisations in the longer run. Specifically speaking Computer Telephony
Integration is one of the main aspects that has further boosted the growth of virtual business, a
big example can be of call centre that runs on this system and is growing quite rapidly in every
business sectors. Every business organisations usually puts a team that will be serving customers
3

through virtual assistance over phone. The assistance can be related to customer care or
informing clients about various benefits as well as offers that company is giving to its customers
etc. A virtual organisation would be using a lot of technology in order to execute its business task
effectively, this is because the company's business model would involve a higher quantum of
technology in performing their business task in an efficient manner (Khan and Haleem, 2012).
SMS Services: Short message services has made it easy for the business organisations to
communicate in an effective manner to its clients as well as customers. Messages can be sent to
individuals to inform regarding the various business schemes and its potential benefits to clients
over period of time. These services are being used by IBM to make sure that necessary
knowledge of company and its business operations are intimated to customers over period of
time in an effective manner. SMS Services makes it even more easier for an organisation to
remain in touch with its clients as well as customers over longer period of time. Employees can
be informed about their duties, and how the same can be managed in an efficient manner
(Bachmann, 2012).
Mobile Data: It makes it easy for any organisation to effectively manage the business by making
necessary tasks of the business through accessing internet with the help of mobile data at
anywhere and at anytime. Mobile data can be accessed by the employees of the company for
treating customer in a less time and within the deadline that are being set for particular tasks.
IBM has been consistently using these digital tools for the purpose of enhancing their business
operations. Mobile data is a important part of any business, especially virtual business
organisation, Mobile data can be used by employees in running and managing the business by
gaining various contracts as well as order over internet. A bidding process takes place through
internet and the same is used by IBM for winning a lot of government contracts to conduct
business effectively as well as efficiently (Mitev, 2016).
IBM is an organisation which has focused on a continuous research and development
model, in order to boost the innovation within the company, it has organised necessary training
as well as development programmes to train its customers for proper and effective treatment of
customers and a better and an innovative team work. Employees are the real assets of an
organisation and it is quite necessary to mange them in a manner, that they will be able to
effectively manage a virtual organisation. Virtual organisation are a dominant pillar in the
current IT Industry and is expected that the same will lead the world in 21st century. Thus, a
4

proper framework as well as plan will enable an organisation to lead within the current market
and achieve a higher market share.
Managing a Virtual Organisation
There are various issues involved in managing a virtual organisation over longer period
of time. These issues has to be managed by the management of such organisation in a better
manner. The different aspects of managing and running a virtual business are as follows:
Managing People: The people who are being hired within the organisation usually takes
decisions on the basis of their own judgements and hence they are quite liberal in their working,
managing them effectively would require a larger efforts in an effective manner. For the purpose
of Smooth working of an organisation, it is quite essential that a proper planning of time and
schedule is being done (Molloy, 2013).
Managing Relationship: Just hiring employees and asking them to work is not enough always, a
proper relationship among the same has to be maintained and this can lead to better growth and
development of the business In the longer run. A real distinction shall be made between personal
as well as professional life of individuals, this will make them feel more belonging towards the
firm and is going to benefit the company over period of time.
Work Management: Usually, In a virtual organisation there are various types of work that will
be allotted to individuals and thus, a lot of issues might be taking place in managing the whole
work, these issues related to work shall be managed in an effective as well as efficient manner by
the management of the organisation. Proper work management is an art and it shall be learned by
the managers to improve the overall position of business over period of time. IBM is involve in
managing the work of organisation by hiring capable managers from around the globe and who
do possess certain technical knowledge of running a virtual business over longer period of time
(Martin-Niemi, 2013).
Limitations of Virtual Organisational Structure
There are various kinds of limitations that exist in a virtual organisation and thus it is
essential to understand the same in an effective manner for better understanding the business of
information and technology over longer period of time. The various limitations can be laid down
as follows:
Lack of communication: As most of the task takes place on virtual basis, it becomes even more
difficult for the team members to communicate regularly and thus a miscommunication may
5

exist within the employees of organisation, which may impact the business and its productivity
in a negative manner. There are certain suitable measures that has to be taken for managing the
business and making sure that communication is being done within the employees. IBM makes
various policies and procedures to accomplish the same task in an efficient manner. The
organisation and its management shall make sure that the cases of miscommunication is reduced
to a considerable level, which will ensure that a harmony is maintained within the employees
along with efficient business organisation over longer period of time (Rinnekangas, 2017).
Language Barriers: There are people from different communities that exist within the
organisation and it becomes even more difficult for employees to understand each other because
they speak a different language which and a communication gap is thus developed. Management
of IBM is making sure that an effective training and development programme takes place which
will educate employees regarding different languages that people within the organisation speaks,
so that a harmonious working environment can be maintained over longer period of time.
Lack of bonding: The employees within the virtual organisation lacks bonding and they only
believes in delivering effective services to clients so that their performance and productivity can
be enhanced in the longer run. In a Nutshell, the level of competition within the sector reduces
the bonding and belonging with each other, thus it is a negative for the organisation and its
working. If there will not be proper bonding among employees, it will result in a decrease in the
overall efficiency and people will not be taking organisation seriously or as a crucial part of their
life and will restrict their job to professional level, which is not good (Riemer and Vehring,
2012).
Training and development: The training and development of various employees which belongs
to a different region at one particular place is a difficult task for the organisation, they can not
able to effectively managed and thus may lead to a decline in productivity as well as efficiency
of the organisation over longer period of time. The process of training can take place online but
the difficulties is that each employees belongs from a different region and thus it becomes
difficult for the management of IBM to assess exactly what is the need of employees and how
the same shall be given effective training (Jameson, 2013).
Reputation risk: There is a risk of reputation of a virtual company, this is because people will
frame a viewpoint that company does not have a real office and thus there is a chance that
company and its business may not sustain, there is no place where customers can meet to
6

employees or the ultimate service provider. The need as well as demand of customers can get
affected because of the fact, the employees are remote and does not hold a real post within the
business organisation, thus may cause severe issues regarding the reputation (Alexander and
Miller, 2017).
Thus, it is quite essential that a proper business plan is developed that will be removing
these barriers for a virtual organisation, and will allow it to grow and prosper over period of
time. Management shall make sure that a proper programme is initiated to develop the overall
abilities as well as skills of employees, so that they will contribute more in the development and
growth of business. There are various issues that should be resolved by the organisation in a
manner, which will enable virtual companies to manage the whole business in a more efficient
manner (Little, 2014).
CONCLUSION
The above discussion regarding virtual organisation, has led us to conclusion that a
virtual organisation do differ from an organisation which will be conducting its business activity
on a tangible basis. Thus, it is quite important to develop as well as manage the whole business
in such a manner that overall growth of virtual organisation can be maintained. It is essential to
make sure that proper growth and development strategies are framed by the management for
managing the diverse workforce of a virtual organisation. Also, it is quite necessary that
workforce shall be knowledgeable and effective which will further boost the productivity of the
organisation. There are various benefits and limitations that are being faced by a virtual
organisation, the benefits includes low overhead cost, easy scalability, employee satisfaction etc.
The limitations include, risk to overall reputation, training and development, lack of bonding and
belonging among employees, which makes it even more difficult for the organisation to maintain
a diverse workforce in an effective manner over period of time.
7

REFERENCES
Books and Journals
Camarinha-Matos, L.M. ed., 2013. Collaborative Business Ecosystems and Virtual Enterprises:
IFIP TC5/WG5. 5 Third Working Conference on Infrastructures for Virtual Enterprises
(PRO-VE’02) May 1–3, 2002, Sesimbra, Portugal (Vol. 85). Springer.
Huet, V., 2012. Creativity in a cold climate: Art therapy-based organisational consultancy within
public healthcare. International Journal of Art Therapy. 17(1). pp.25-33.
Saetta, S., Tiacci, L. and Cagnazzo, L., 2013. The innovative model of the Virtual Development
Office for collaborative networked enterprises: the GPT network case study.
International Journal of Computer Integrated Manufacturing. 26(1-2). pp.41-54.
Durugbo, C. and Riedel, J.C., 2013. Readiness assessment of collaborative networked
organisations for integrated product and service delivery. International Journal of
Production Research. 51(2). pp.598-613.
Khan, U. and Haleem, A., 2012. Smart organisations: modelling of enablers using an integrated
ISM and fuzzy-MICMAC approach. International Journal of Intelligent Enterprise.
1(3-4). pp.248-269.
Mitev, N., 2016. Leveraging failure-practical lessons from the University of Very Hard.
Facilitating Technology Transfer through Partnership. p.372.
Molloy, F., 2013. Smooth operators. CIO, (May/Jun 2013). p.56.
Martin-Niemi, F., 2013. Developing new knowledge in organisations: Engagement with virtual
social networks in problem solving (Doctoral dissertation, University of Otago).
Rinnekangas, R., 2017. Knowledge Management in Small and Micro Organisations: Case Study
on Knowledge Retention in Arts Consultancy.
Riemer, K. and Vehring, N., 2012. Virtual or vague? A literature review exposing conceptual
differences in defining virtual organizations in IS research. Electronic Markets. 22(4).
pp.267-282.
Alexander, A.T. and Miller, K., 2017. University knowledge transfer: exploring organisational
structures to create strategic alignment. International Journal of Technology Transfer
and Commercialisation.15(4). pp.385-399.
Little, B., 2014. Virtual value soars for sales-related skills. Industrial and Commercial Training.
46(5). pp.265-269.
8

Jameson, J., 2013. e‐L eadership in higher education: T he fifth “age” of educational technology
research. British Journal of Educational Technology. 44(6). pp.889-915.
Sandhu, K., 2012. Case Study Findings from Human Interaction with Web E-Services:
Qualitative Data Analysis. In Virtual Work and Human Interaction Research (pp. 257-
276). IGI Global.
Bachmann, R., 2012. 13 Utilising repertory grids in macro-level comparative studies. Handbook
of research methods on trust, p.130.
9