Master of Commerce (MGT 510): Strategic Management of IBM Australia

This report provides a comprehensive analysis of IBM Australia's strategic management practices. It begins with an executive summary, followed by an introduction outlining the report's objectives, which is to examine IBM's strategic approaches, including global expansion, outsourcing, and differentiation. The report delves into the company's background, identifying key strategies such as acquisition and diversification, and evaluates their suitability. It assesses the implementation of these strategies, highlighting the network organizational structure and its divisions. Major issues, such as cash flow and skill gaps, are discussed, along with their impact on strategic implementation. The report also includes a SWOT analysis to evaluate strengths, weaknesses, opportunities, and threats. Finally, recommendations are provided to address the identified issues, aiming to improve IBM's performance and competitiveness in the global market. The report references various academic sources to support its findings and conclusions.

Running head: MASTER OF COMMERCE MGT 510
Master of commerce MGT 510
Name of student
Name of University
Author note

1
MASTER OF COMMERCE MGT 510
Executive summary
The services offered by IBM Australia include software, hardware, business consulting
and technology services to the business organizations, small or medium sized organizations and
people as well. The differentiation had not only make the customers understand and differentiate
the products and services of IBM from other competitors in business, but could also penetrate
new market segments and influence the buying behaviors of consumers too. The strategy of
differentiation facilitated the competitive strategies considered by IBM as effective to obtain
benefits through acquiring of small and medium sized business organization. IBM had managed
various functions related to the people, processes, functions and culture to facilitate the global IT
business and strengthen the areas of sales and distribution, research and development,
Intellectual property and management of supply chains as well. Few of the most important issues
that were faced by the company included improper flow of cash, less growth and sales revenue
and lack of skills among the workers during the outsourcing activities. The issues were overcome
by maintaining charismatic leadership and by utilizing balanced scorecard to monitor the
financial performance and strengthen the weak areas where the company had failed to achieve
success.

2
MASTER OF COMMERCE MGT 510
Table of Contents
Executive summary.........................................................................................................................2
Introduction......................................................................................................................................4
Background information of the organization...................................................................................4
Identification and evaluation of suitability of the current strategy of IBM.....................................5
Evaluating the implementation of the strategy................................................................................9
Major issues faced during strategic implementation.....................................................................11
Recommendations..........................................................................................................................12
References......................................................................................................................................15

3
MASTER OF COMMERCE MGT 510
Introduction
The report is designed to outline he various ways and approaches followed for
implementing the strategic management aspects considering the business organization IBM as
the case study. The various methods of implementing strategies to enhance organizational
capabilities, improve the structure, maintain good leadership and culture along with bringing
necessary changes and improvements. The topic will discuss the major aspects of how IBM has
implemented its strategies to adopt changes and make improvements through consideration of
leadership skills and improvements of structure for becoming successful within the business
environment. At first, brief background information of the organization will be presented and the
various strategies that are needed to be implemented will also be included in this report. The
ways of implementing the most effective strategies for business success will be depicted here
too, furthermore identify the issues faced during the strategic management and implementation
(Barrick et al., 2015). Lastly, few recommendations will be provided about how these issues can
be overcome with ease and effectiveness.
Background information of the organization
IBM, Australia is one of the most popular and established multinational technology
organisation which manages its operations in more than 170 countries and has generated a
revenue of 79.92 billion USD. The founder of the organization is Charles Ranlett Flint and it is
also one of the largest private employer in the whole world (Ibm.com, 2017). International
Business Machines or IBM consists of employees of over 414,400 and it is known for its
manufacturing and marketing of computer hardware products, middleware and software along
with other services such as hosting, consulting services that are found in areas of mainframe

4
MASTER OF COMMERCE MGT 510
computers and nanotechnology. It has an astonishing record of holding the record for most
number of patents that has been generated by a business organization (Bhasin, 2012).
The company has offered business analytics and technology services to the banking
industry as well as to the Government bodies and telecommunication industries. Cloud solutions
are also provided along with management of human resources and IT systems management,
furthermore offering commercial solutions too. IT infrastructure solutions are also provided by
IBM, Australia to create a digital platform that can enable users to integrate and manage mobile
based applications, provide effective solution services and financing solutions too (Chen et al.,
2014). There are also other areas where IBM has provided its services including the retail sector,
education, electronics, healthcare, life insurance, media and entertainment, travel and
transportation industries. IBM Australia has been operating as a subsidiary of the International
Business Machines Corporation. The Managing Director of the company is Mr. Kerry Purcell
and Vice President of operations is Mr. Tony Best.
Identification and evaluation of suitability of the current strategy of IBM
The most effective strategies of IBM are made by the top executives for enabling global
expansion and increased level of outsourcing activities. His could help the company to penetrate
new and developing markets and even outsource the materials to gain benefits like low cost of
labor. The strategies are developed by combining the global expansion and increased outsourcing
to optimize the profit margin by lowering the cost of manufacturing and production with ease
and effectiveness. Global expansion further allowed the company to spread its business
operations outside Australia and gain better stability, which could contribute to the higher profit
level and competitive advantage in business as well (Banker, Mashruwala & Tripathy, 2014).

5
MASTER OF COMMERCE MGT 510
The major components of strategic management are analysis of strategy formulation,
implementation of the strategy and managing interrelationship between the various components
of strategic management. The corporate level strategy, also known as the growth strategy could
help in developing various platforms and undertake approaches to increase the revenue margin
and ensure better growth and business prosperity. This is a long-term strategy and has enabled
the company to develop new products and services, manage the distribution channels, carry out
the business operations through horizontal and vertical integration and target the new market
segments to fulfill their needs and preferences (Furrer, 2016). The organization has followed the
acquisition strategy to gain Vivant Digital and the current alliance is the connection between
IBM and SAP. The diversification strategy has allowed the organization to acquire the small and
medium sized organizations for ensuring better revenue generation and growth in terms of profit
and customer satisfaction. The diversification strategy facilitates the generic competitive strategy
of the company, which has further helped in gaining potential benefits through acquisition of the
new businesses and underpinning its skills and capabilities (Goetsch & Davis, 2014).
The business level strategy is also an essential part of the strategic management at IBM,
Australia. The differentiation of strategy is considered as one of the best and most suitable
business level strategies because of its ability to develop unique products and services and
differentiate those by utilizing the various resources and attributes of the organization. The
business level strategy would allow IBM to gain competitive advantage in business through
improvement of experiences, skills, expertise level and knowledge, manage re-allocation of
internal resources, maintain budgeting and reorganize the human resources or manpower to
enhance organizational productivity (Grinblatt & Titman, 2016). The business level strategic
management would create a highly experienced and skilled research and development

6
MASTER OF COMMERCE MGT 510
department as well as enable the organization to provide training sessions for improving the
skills and abilities of workers, ensure better production and enhanced relationship with the
customers as well.
The management of strategies helped in differentiation of the products and services of
IBM, Australia for the purpose of focusing on the mission and vision of the organization to
achieve the goals and objectives in business with ease. It is done for focusing less on the
hardware manufacturing techniques but more on management of e-commerce technologies and
designing of services for meeting the demand and preferences of the customers. This is done by
transforming the old database into an entirely new online business process through introduction
of new web based technologies (Hayes, 2014). The web based technologies and applications
have been integrated into the internal business operations for enhancing the operational
efficiency and furthermore enable the company to target the small-scale business organizations.
The focus has been still on the software packages and services on certain areas of baking and
healthcare.
The cost leadership strategy is also managed to ensure that the cost of manufacturing and
production of products and services is reduced. This has even allowed IBM, located in Australia,
to reduce the price of selling for the unique products and services of the company and make
products effective to fulfill the expectations of customers with convenience (Hitt, Ireland &
Hoskisson, 2012). The lower production cost and keeping the prices of products lower have also
resulted in attracting more customers, thereby resulting in keeping the profit margin stable for a
consistent time period efficiently. The transactional strategy helps in managing high foreign
investments by managing coordination between subsidiaries while the multi-domestic strategy

7
MASTER OF COMMERCE MGT 510
allows for enabling the domestic organizations to operate within a single country (Ibm.com,
2017).
Success of strategic management according to the SWOT analysis
Based on the SWOT analysis, the company, strengths, weaknesses, opportunities and
threats are identified at first. It could be understood that IBM had capitalized on the strengths of
the company by management of global supply chain. This has not only helped in ensuring
successful global expansion but can also lead to better outsourcing activities to improve the skills
and capabilities of the organisation largely. The weakness included the high cost of products and
services of IBM, which could be overcome by making a good strategic choice of outsourcing and
maintain a proper and competitive pricing strategy. This would not only differentiate the unique
products of IBM in terms of the process that are set but could also make the company stay ahead
of the competitors by influencing the buying behaviors of customers through offering of products
at a lower price range (Iyamu, 2017).
The global expansion and outsourcing activities are important aspects of the strategic
management of IBM and this has helped in utilizing the organizational scopes and opportunities
by developing new markets. IBM has considered the benefits of the developing markets and
grabbed opportunities through utilization of cheap labor costs in Australia. Competition is
always a major threat faced by multinational companies in Australia and outsourcing activities of
the company have helped in offering products available at competitive prices. This has enabled
to keep the larger market shares secure and even stay ahead of the other competitors in business
with ease and effectiveness (Kapferer, 2012). Gaining better market share would result in

8
MASTER OF COMMERCE MGT 510
maintaining good relationship between people, processes, functions and organizational structure
and furthermore respond to changes and generate more profit in business.
Evaluating the implementation of the strategy
The implementation of strategies is done with the maintenance of a network
organizational structure. The structural strategy that is implemented by the organization in
Australia is network organizational structure and it includes the three major divisions including
the product division, functional division and geographical division. All these divisions are
interrelated with each other and can help in streamlining the process of product development and
optimize the Information technology solutions for ensuring better market delivery. By
implementing the current strategy, IBM in Australia has aligned the business related aspects with
the corporate vision and mission for the achievement of business goals and objectives effectively
(Mendenhall et al., 2012). The corporate network structure has defined the business forms,
processes of interaction and even managed the strategies properly to influence the business
processes and become successful within the business environment.
From the various resources gathered, it could be understood that corporate level strategy
had been implemented by connecting it with the structure of the organization for ensuring proper
alliance and acquisition and gain competitive advantage in business. The geographical division’s
corporate structure could help in overcoming the issues within the regional markets such as Asia
Pacific, Europe, Middle East, Africa and America. The product type divisions include the major
business functions and services delivered like the cognitive solutions, Global business services,
cloud based applications and network management and management of global finance. The
major functions managed by IBM to facilitate the global IT business cover the areas of research

9
MASTER OF COMMERCE MGT 510
and development, sales and distribution, Intellectual property and management of supply chains
too (Mišanková & Kočišová, 2014). The strategic alliances and acquisitions has helped IBM to
bring out improvements in the existing products and diversify into the new business while fir the
existing market, it is important to strengthen the existing business and introduce new range of
products and services for the local markets and keep the customers satisfied.
There are alternate international business structures too that can help in implementing an
effective strategy in business with ease and effectiveness. The decentralized federation manages
decentralized strategy for controlling the financial aspects while the coordinated federation
allows for strong centralized control, i.e., implementation of strategies, policies, planning and
administrative controls too. Centralized hub enables to gain proper control of the business
operations and helps in adopting the local market conditions while the integrated network helps
in managing control of strategies, policies and coordination of people along with improvement of
technical expertise within the whole system (Ojokuku et al., 2012).
IBM also implements change management by unfreezing the crisis situations, changing
the structure, systems and value and through consolidation of various references by organizing
the structures, systems and values effectively. The transformation strategy and management is
essential for IBM to identify the components that are required for responding to changes and
gain knowledge to align the vision with the organizational goals and objectives. To enable
changes, change leadership strategy is also implemented by providing the workers of the
organization with various tools to maintain the framework of governance and engage the various
stakeholders too (Paroutis, Bennett & Heracleous, 2014). There are various stakeholders like the
customers, employees, managers, suppliers and the shareholders who must be informed about the
change management process and this should be possible by implementing the change

10
MASTER OF COMMERCE MGT 510
management strategy. The job structure, roles and responsibilities of workers and management of
organizational resources are essential to ensure that the implementation of change management
strategies bring good results. The skills and knowledge of the organization are managed properly
to ensure that a healthy and positive culture is established where people can work together as an
unit and bring positive results to achieve business success (Peppard & Ward, 2016).
Major issues faced during strategic implementation
Several issues have been faced during the implementation of strategies within the
business organization IBM in Australia. It is not possible to bring 100 percent success through
implementation of strategies at IBM, Australia. Few issues that were experienced during the
strategic implementation process had been issues while using multiple change management
strategies at the same time, limitations of budget, lack of sufficient resources and inappropriate
time of implementing strategies like in the midway of a project. The other implementation issues
related to the systems and its capabilities include delivery of products and services by other
companies at a much lower price due to the maturity of the service market consistently. The
revenue and sales of IBM’s subsidiaries were reduced largely by 10 % and 13 % respectively
(Purce, 2014). IBM had also faced complexities to differentiate its hardware components with
other company’s hardware components, as a result of which, there were lesser sales both for the
hardware and software components of IBM. Not only have these issues hindered the successful
management of business operations but there are other risks as well that have been associated
with the implementation of business level strategies. The risks of substitute products at lower
prices and lack of experiences could reduce the positive perception of customers regarding the
value of products and its differentiable features. This might also decrease the brand loyalty

11
MASTER OF COMMERCE MGT 510
among the consumers and result in deteriorating the brand image from time to time (Rothaermel,
2015).
From the various reports and evidences, it was found that IBM had acquired many other
organizations to ensure continuous development and market expansion. There were several
challenges and risks associated with it such as the lack of ability to adapt a new culture, poor
skills among the workers, decreased morale of staffs and synergies that had deteriorated the flow
of cash at IBM, Australia. While acquiring another company, the staffs might even face
difficulties to get accustomed with the new culture, products and services and even difficulty in
managing the human resource. Lakc of leadership skills could even employees move in the
wrong direction and face immense issues to accomplish the organizational objectives (Waddell et
al., 2013).
Recommendations
There are various cultures within the organization and among all these, IBM has
considered the task and person cultures as the most effective. Task culture enabled to improve
the leadership aspects and even raised the morale of employees by allowing them to perform
more efficiently through promoting innovation, creativity and higher production. The person
culture is recommended when most of the authority shall be provided to the team members,
which can keep them motivated to perform to their potential. To develop a good culture, it is
recommended to manage diversity training and employee engagement programs too including
network blogging, peer coaching, community postings, etc (Wheelen & Hunger, 2017). It is also
recommended to enable the major components linked and compatible with each other including
the people, processes, culture, structure and operations.