Strategic Planning for IBM: External, Internal Analysis and Strategy

This report presents a comprehensive strategic analysis of IBM, examining its vision and mission statements, and conducting both external and internal analyses. The external analysis covers the general and industry environments, including a Porter's Five Forces analysis and competitor analysis. It identifies opportunities and threats through an External Factor Evaluation (EFE) matrix. The internal analysis assesses IBM's strengths, weaknesses, core competencies, and competitive advantages, utilizing an Internal Factor Evaluation (IFE) matrix and a value chain analysis. Strategic tools such as a TOWS matrix, SPACE matrix, Boston Consulting Group (BCG) matrix, Internal-External (IE) matrix, and Grand Strategy Matrix are applied to formulate strategic recommendations. Finally, the report outlines long-term and annual objectives, and concludes with a Quantitative Strategic Planning Matrix (QSPM) to evaluate strategic alternatives and corporate-level strategies. The report aims to provide a holistic understanding of IBM's strategic position and potential future directions.

INTERNATIONAL BUSINESS SCHOOL
Strategic Management
(MBSA 1213)
FINAL EXAMINATION:
IBM STRATEGIC PLANNING
NUR SYAZANA (MBS 1001)
Lecturer
Dr. Shathees Baskaran

Table of content
Vision and mission statement of IBM........................................................................................2
External Analysis: General Environment...................................................................................4
Justification on General Environment External Analysis..........................................................6
Industry Environment Analysis: Porter 5 Forces.....................................................................10
Competitor Environment Analysis...........................................................................................11
External Factor Evaluation (EFE) Matrix for IBM..................................................................13
Strategic Group Map................................................................................................................14
Competitive Profile Matrix (CPM)..........................................................................................15
Capabilities, Core Competency and Competitive Advantage of IBM.....................................16
Internal Analysis: Strengths and Weaknesses..........................................................................17
Justification on Strengths and Weaknesses..............................................................................18
Internal Factor Evaluation (IFE) Matrix of IBM......................................................................23
Value Chain of IBM.................................................................................................................24
TOWS Matrix...........................................................................................................................27
SPACE Matrix..........................................................................................................................30
The Boston Consulting Group (BCG) Matrix..........................................................................32
Internal External (IE) Matrix....................................................................................................33
Grand Strategy Matrix..............................................................................................................34
Summary on Strategies.............................................................................................................34
Quantitative Strategic Planning Matrix (QSPM).....................................................................35
Long-term Objectives...............................................................................................................37
Annual Objectives....................................................................................................................38
Corporate Level Strategies Formulation for IBM....................................................................39
Porter's Five Generic Strategies...............................................................................................43
1

Vision and Mission statement of IBM
According to the case study, as in 2015, there are no official vision and mission statement of
IBM on its website. Nevertheless, based on my findings on IBM website
(https://www.ibm.com/ibm/ke/en/examples.html) on 15 December 2017, there is a statement
found that seemed to be its abandoned mission during the 2003 statement which is “at IBM,
we strive to lead in the creation, development and manufacture of the industry's most
advanced information technologies, including computer systems, software, networking
systems, storage devices and microelectronics. And our worldwide network of IBM solutions
and services professionals translates these advanced technologies into business value for our
customers. We translate these advanced technologies into value for our customers through
our professional solutions, services and consulting businesses worldwide.”. However, there is
no vision statement of some sorts to be found in its website. Vision and mission statements
both serve purposes of putting the company in clear direction as the statements provide clear
company’s goals to all its employees, which later act as important key priorities for them to
construct effective strategic planning.
For vision statement, there are 3 elements should be considered which are:
1. What the company wants to become in the future?
2. The type of business the company is in.
3. Constructed in one sentence, preferably.
Thus, the proposed new vision statement for IBM is, “to be the world leader in information
technologies manufacturer and developer”.
For mission statement, which officially IBM does not have, there are 9 components to be
considered in creating a good mission statement which are:
1. Customers 4. Technology 7. Self-concept
2. Product or services 5. Survival, growth &
profitability
8. Public image
3. Market 6. Philosophy 9. Employees
Apart of that, it should be inspiring, broad in scope without any numbers included and is
fewer than 150 words.
2

If I were to consider the unofficial mission statement of IBM mentioned which is “at IBM,
we strive to lead in the creation, development and manufacture of the industry's most
advanced information technologies, including computer systems, software, networking
systems, storage devices and microelectronics. And our worldwide network of IBM solutions
and services professionals translates these advanced technologies into business value for our
customers. We translate these advanced technologies into value for our customers through
our professional solutions, services and consulting businesses worldwide”, and compare it to
the mission statement elements, the elements analysis results are as following:
1. Customers 4. Technology 7. Self-concept
No No Yes
2. Product/services 5. Survival & growth 8. Concern for public image
Yes No No
3. Markets 6. Philosophy 9. Concern for employees
Yes No No
The proposed new mission statement for IBM is:
“We strive to create the most advanced information technologies (IT) devices, systems and
software [2] to IT users [1] from all around the globe [3] through our broad network of IBM
professional solutions, services and consulting businesses [7]. By using advanced technology
in our creation [4], we prioritise our business growth and sustainability [5] to further forge
our philosophy of “Innovation that matters—for our company and for the world” [6] that
helps making the world better for the community [8] and as a way to appreciate our
employees [9]. (90 words)
3

Demographic Economic Political/legal Sociocultural Technological Global Physical
Opportunities
1. Asia has
best growth
rate in IT
2. Potential
market
growth on
emerging
market
countries
3. IT and
management
consulting
high growth
in US
1. Growth in
business of data
2. Worldwide
growth of
software
business
3. Cloud
computing high
growth
percentage
4. High-end server
business is less
prone to
commoditization
1. Fast
growth of
use of data
and the
information
that can be
derived
from data.
1. UK
highlighted
the
importance of
workplace
equality
2. Establishment
of gay-
friendliness
index for
company
1. Smartphone
apps further
growth
2. Increase in
development
of IT
infrastructure
by other
business
companies
3. Social media
revolution
Not
mentioned
in the case.
Not
mentioned
in the case.
Threats 1. Europe debt 1. Reduction of 1. Privacy Not mentioned in 1. New super- Not Not
4
Element
Extrnal
Analysis
External Analysis : General Environment

crisis
2. Costly
labour force
for software
industry.
price due to high
standardisation
of computer
products
2. Increase demand
in tablet and
smartphone
3. Low entry
barrier of the
industry
4. Slow growth
between 2015
and 2017 for IT
consulting, IT
outsourcing and
IT hardware
support
concerns
from the
public
2. Legal
issues
against big
data usage
3. Privacy
risk threat
4. Piracy or
copyright
risk
the case. computer
technology
innovation
by HP
mentioned
in the case.
mentioned
in the case.
5

Justification on general environment external analysis
Opportunities
Demographic
2. Asia has best growth rate in IT As per IT growth by geographic region, Asia has experienced the best growth rates of late, with
China up 7.7 percent, Indonesia up 6.2 percent, Vietnam up 5.0 percent, and India up 3.2 percent
in 2012. (Page 8, paragraph 3, line 1)
4. Potential market growth on
emerging market countries
Accenture has seen the U.S. market grow at an annualized rate of 13 percent in revenues from
2011 to 2013, but continues to focus on emerging markets, especially Brazil. (Page 7, paragraph
7, line 7)
6. IT and management consulting
high growth in US
Increase in growth for project-based of IT (Page 8, exhibit 6)
Economic
1. Growth in business of data The business of data analytics, data storage, and security are growing. (Page 9, paragraph 2, line
1)
2. Worldwide growth of software
business
Software is a growing business worldwide, and....(Page 7, paragraph 5, line 3)
3. Cloud computing high growth
percentage
Cloud computing clearly dominates future expectations. Some analysts in fact predict over 80
percent
of all IT growth between 2012 and 2017 will be cloud related. (Page 8, paragraph 1, line 6)
4. High-end server business is less
prone to commoditization
For example, IBM acquired SPSS and Cognos (data analytics software) in 2009 for $1.2 billion.
IBM plans to keep its high-end server business, which is less prone to commoditization by other
firms’ products. (Page 1, paragraph 7, line 6)
Political/legal
6

1. Fast growth of use of data and the
information that can be derived
from data
The use of data, and more specifically the information that can be derived from data, has grown
faster than our legal systems can keep up. (Page 3, paragraph 2, line 3)
Sociocultural
1. UK highlighted the importance of
workplace equality
In recent years, IBM UK has ranked first in Stonewall’s annual Workplace Equality Index for
United Kingdom (UK) employers. (Page 3, paragraph 2, line 4)
2. Establishment of gay-friendliness
index for company
IBM provides same-sex partners of its employees with health benefits and provides an anti-
discrimination clause. The Human Rights Campaign for 10 consecutive years has rated IBM 100
percent on its index of gay-friendliness. (Page 3, paragraph 2, line 2)
Technological
1. Smartphone apps further growth Smartphone apps represent about 2 percent of this industry, but further growth is expected. (Page
9, paragraph 2, line 3)
2. Increase in development of IT
infrastructure by other business
companies
Global Technology Services (GTS) consists of delivering outsourcing services to help improve
clients’ existing IT infrastructures to aid in risk management, flexibility, and financial value.......
GTS is IBM’s largest division with respect to revenues, with the cloud-computing portion of the
division being the fastest-growing and having the largest expected demand moving forward.
(Page 5, paragraph 1)
3. Social media revolution IBM expects firms to double its expenses in this area by 2016. IBM’s purchase of Skype and
Facebook’s purchase of WhatsApp are two examples of companies trying to profit off the social
media revolution. (Page 3, paragraph 8, line 2)
7

Threats
Demographic
Europe debt crisis Europe, still recovering from its economic debt crisis, reported the smallest growth rates, with
the United Kingdom up only 0.2 percent and Germany up 0.9 percent. (Page 8, paragraph 3, line
3)
Costly labour force for software
industry.
But this industry requires large R&D expenses to stay current, as well as an expensive labor
force, protection of patents and piracy risks, and substantial marketing. (Page 9, paragraph 2,
line 5)
Economic
Reduction of price due to high
standardisation of computer products
High standardization of products makes differentiating product lines difficult, resulting in
reduced prices for manufacturers. (Page 9, paragraph 1, line 1)
Increase demand in tablet and
smartphone
Increases in tablet and smartphone demand also erode into PC sales, but..... (Page 9, paragraph
1, line 4)
Low entry barrier of the industry Compounding problems, new competitors are able to enter the industry fairly easily, creating
downward pressure on prices. (Page 9, paragraph 1, line 2)
Slow growth between 2012 and 2017
for IT consulting, IT outsourcing and
IT hardware support
Areas of slower growth between 2012 and 2017 are expected to come from IT outsourcing, IT
consulting, and IT hardware support at projected annualized growth rates of 1.3, 4.1, and 2.9
percent, respectively. (Page 8, paragraph 2, line 1)
Political/legal
Privacy concerns from the public In the last 5 years, the general public has become especially aware and suspicious of data usage.
Privacy concerns have arisen and even rights to who owns the data presents a problem moving
forward for corporations in the data business. (Page 9, paragraph 3, line 1)
Legal issues against big data usage The threat of legal issues against firms using big data is increasing daily. (Page 9, paragraph 4,
8

line 7)
Privacy risk threat But this industry requires large R&D expenses to stay current, as well as an expensive labor
force, protection of patents and piracy risks, and substantial marketing. (Page 9, paragraph 2,
line 5)
Piracy or copyright risk But this industry requires large R&D expenses to stay current, as well as an expensive labor
force, protection of patents and piracy risks, and substantial marketing. (Page 9, paragraph 2,
line 5)
Technological
New super-computer technology
innovation by HP
Hewlett Packard’s new Apollo 8000 system is the first super-computer to be 100 percent liquid
cooled and offers direct competition to IBM’s high-end server market. (Page 7, paragraph 6,
line 1)
Industry Environment Analysis: Porter 5 Forces
Forces High/Low Justification
9

Threat of new
entrants
High New competitors are able to enter the industry fairly easily which has created arising problem of creating
downward pressure on price. Besides that, with the reduced price for manufacturer, the product lines
differentiation has become less vivid. (Page 9, paragraph 1, line 1)
Power of
suppliers
Low IBM has shift the weight of its business from manufacturing to R&D of “big data” and focus on business
consulting and analytical services. Moreover, IBM is a big customer to the suppliers that buy goods in bulk.
(Page 3, paragraph 4, line 1)
Power of buyers High IBM business model involved business-to-business model which supply IT products and/or services in large
quantity or in large size. This enables the buyer to negotiate for cheaper price for the large/many products or
services they request. (Page 3, paragraph 5, line 2)
Threat of product
substitutes
Low Many of IBM products or services are unique and its features can be differentiated from other products or
services. For example, the IBM SPSS and Cognos are differentiated products which are hard to be substituted
by other software. (Page 1, paragraph 7, line 6) IBM also has Z13 which is the most sophisticated computer
and is hard to be substituted. (Page 2, paragraph 4, line 4)
Intensity of
rivalry among
competitors
High IBM competing alongside HP and Accenture which both are doing great in IT research and development of
products and services. Although they are small compare to IBM in terms of revenue, they have created many
advanced technologies. For example, when HP launched the super-computer Apollo 8000, it shows that HP
can come up with more advanced technology in super-computer segment which IBM is lagging behind. (Page
7, paragraph 6, line 1 and exhibit 5)
Competitor Environment Analysis
10

Competitor
Analysis
Competitors
HP Accenture
Future Objectives - HP wants to pride itself on key areas of converged cloud,
big data, and security and risk management. (Page 7,
paragraph 3, line 1)
- Accenture will continue strengthen its position in the
US market as its revenue increased annually in the US.
(Page 7, paragraph 7, line 7)
- Accenture will continue to focus on emerging markets
especially Brazil. (Page 7, paragraph 7, line 8)
- Accenture plans on strengthen its marketing consulting
businesses through its made acquisitions. (Page 7,
paragraph 7, line 5)
Current Strategy - HP provides technologies, software, PCs, workstations,
tables, calculators, and many other products and services
to individuals and corporations. (Page 7, paragraph 2,
line 1)
- HP’s Enterprise Group and Enterprise Services focus on
technology infrastructure, IT services, consulting, and
business outsourcing. (Page 7, paragraph 5, line 1)
- Accenture focuses on management consulting and
technology. (Page 7, paragraph 7, line 1)
- Made many acquisitions on notable companies such as
Acquity Group, Fjord and AvVenta. (Page 7,
paragraph 7, line 3)
- Made a joint venture with GE called Taleris that
focuses on airplanes maintenance issues. (Page 7,
paragraph 7, line 5)
Assumptions - Software business is growing worldwide. (Page 7,
paragraph 5, line 3)
- HP will be competing with IBM, CA Technologies, BMC
Software and other competitors in the software business.
- Accenture foresee the continuing growth in the US
market. (Page 7, paragraph 7, line 7)
- Accenture predicts increase growth in the emerging
markets especially Brazil. (Page 7, paragraph 7, line 8)
11