IBM’s Current Position in the Marketplace

The environmental management case study at IBM forms the basis of this essay to help undertake a strategic audit and critically evaluate the current position of IBM in the marketplace. This focus of this paper is to understand the external operating environment alongside IBM’s internal core competencies using four management models including Porter’s Five Forces, Pestle, Porter’s Value chain and Ansoff Matrix. This has three sections. The first section addresses IBM’s current position in the marketplace; section two discusses the roles, challenges, and risk of a joint venture as a mechanism for growth. Finally, section presents a discussion on the how organizations apply Ansoff Matrix Model when considering entry into emerging markets.

IBM employs strategies to tackle a broad range of matters in the IT industry environment like external variables demonstrated in Five Forces examination of the IBM. “Michael E. Porter’s Five Forces analysis” is a tool for strategic management which helps in the identification of both external variables alongside associated intensities that contributes to five forces including buyer power; competitive rivalry; supplier power; new market entry threat; substitution threat which dictate the competitive scenery of industry atmosphere. In IBM’s scenario, the external examination regards the context of IT sector.

A broad range of variables influences the real performance of Big Blue. However, external variables highlighted in the examination denote the most important and suitable to the IMB. For instance, the performance of IBM financially is connected unswervingly to its ability to tackle the external variables associated with the competitive rivalry intensity force. Accordingly, it is necessary to undertake suitable action to mitigate the concerns indicated in this “Five Forces” IBM scrutiny. This is useful for investors to make decisions relating to their investments in IBM. For instance, the strong forces present in every element of external examination could correspond to the challenges of IBM in efficaciously implementing established strategies by industry atmospheric conditions. The precedence of IBM in tackling such external variables and forces have to equate intensities of such same forces. This alignment strategically guarantees achievement rates in the rising IT industry.

To sum up, competition denotes “highest-intensity” in IMB business surrounding. Each of the remainders of forces shows a modest intensity. Therefore, this external examination indicates that rivalry has to assume the highest priority in the strategic formulation by IBM. Such prioritizing has to expedite ongoing growth of business in IT industry. Nevertheless, the external variables in “Porter’s Five Forces” examination of the firm further highlight the importance of remaining forces in strategic success. For instance, the consumers and suppliers’ bargaining powers alongside the threats of new entry and substitution are important in the determination of IBM’s performance. Hinged on the outcome of this “Five Forces” examination, the subsequent intensities below are influencing the business of IBM include:

•    Buyers or customers bargaining power stays moderate
•    Competition/rivalry remains a strong force
•    Suppliers bargaining power remains moderate
•    The new entry or entrant threat remains a moderate force
•    The substitution or substitute’s threat remains a moderate force

Roles, Challenges, and Risk of a Joint Venture as a Mechanism for Growth

Because the competition stays the strongest force of the five in the IT industry environment, IBM’s strategic attempts have to be directed towards the sustained competitive edge improvement. Such a recommendation tackles the need to bolster the leadership goals in the industry and aims created in the vision alongside mission statements of IBM. For instance, IBM can improve its skills and talents to optimize business competitiveness via expertise in ITs. The organizational culture of IBM can bolster such HR development strategy. The other important is for IBM to stress breakthrough innovation in its R&D efforts. This “breakthrough innovation” must lead to widespread IP portfolio, the primary strengths acknowledged in SWOT examination of IBM (Tavakoli, Schlagwein and Schoder 2015). It is further recommended that IBM has to improve product development, innovation as well as management for the creation of a competitive edge via well-known institutions in IBM’s operation. For example, adjustment in the IMB’s organizational structure components will support this strategy for enhancement for a competitive edge. Moreover, IBM has to tackle the remaining forces included in the analysis of “Porter’s Five Forces”, taking into account their modest intensities as well as the importance of their related exterior variables.  

Political:

IBM is MNC that operates in several economies, usually leading to IBM’s need to navigate contradicting regulations. This is because whatever could be legal in one nation is illegality in another and financial practices could as well differ. Rights of workers, patent law and export controls must be considered (Zalengera et al. 2014). 

Economical:

Recessions might impact clients that could cut back on IT spending and operations of IBM. The company might find that it requires depending less on operation in the US for profits as emerging economies surface. For instance, Chinese firms are seeking for premium Information Technology service (Yuan 2015).

Technological:

IBM is a market maker and trendsetter for novel technology for Information Technology business and automation. It is possible that old standard might be disrupted suddenly with new technology introduction. IBM requires an ongoing innovation because anything can either be imitated or embraced by competitors.

Environmental:

Natural catastrophes may disrupt operations of IBM because facilities are situated globally. “Green” technology focus remains significant matter as government and clients attempt to tackle global warming.  

(iii). Porter’s Value Chain Model

International Business Machines Corporation IBM’s has various internal strengths which can be divided into various components through application of Porter’s Value Chain. The corporation strengths include highly valued brands, most experienced employees with expertise in material management and production process, an extensive intellectual property portfolio and high economies of scale (Porter and Kramer 2018). The figure below shows the links between IBM’s strengths where the red arrows green arrows show strong linkage while red arrows indicate weak linkage.

Application of Ansoff Matrix Model when Considering Entry into Emerging Markets

The company has developed a wide array of high technology platforms which is linked to human resources, organizational infrastructure, procurement, technology development as well as inbound logistics (Porter and Heppelmann 2014). This aggressive development and creation of internal strengths by IBM’s have enabled the organization to meet various consumers’ problems and the ability to support other products apart from IBM’s products.

 The organization as in the value chain above has been receiving a lot of benefits as a result of the strong links. However, the company is still having weak a link between human resource, organizational structures, and operations which is still having similarities with a pool of the corporation’s closest competitors (Bustinza, Bigdeli, Baines and Elliot 2015). International Business Machines Corporation should, therefore, come up with clear management strategies which will help with improvement of factors within the yellow margins. Increasing the profit margin will require the organization to improve on the identified weak links to remain at the current position or move to the top of global information technology industry. 

There are various strategies which organizations can use to enter new markets or expand into a new market. The joint venture is one of the key strategies which organizations can use to grow from a given level of business operation to the next.  A joint venture as s growth strategy is a common way in which two or more business ventures come together as when to meet a common objective (Grant 2016).  Organizations are coming together pull up their resources towards the identified goal.  In a joint venture, business organizations coming together as one may have a close relationship of otherwise two unrelated ventures.  Joint venture as a strategy to grow and expand a business is a type of partnership which comes with a lot of benefits to the organizations coming together to meet a certain goal within the industry.

According to various sources, lack of enough capital to fund business growth and expansion is one of the reasons preventing the business organization from growth.  Majority of business organizations lack enough capital to fund growth priorities such as product marketing, product development and dispersal of products to various regions to that extent they would like (Yan and Lou 2016).  A Joint venture is, therefore, a crucial strategy which business organizations are striving through Capital Gap may consider getting more resources to attack existing marketing gaps and opportunities which they cannot acquire as single ventures.  The joint venture, therefore, performs a great role by providing two or more business entities with a way to create and launch various initiatives such as the development of lines of goods and services as well as new channels for product and service distribution.

A joint venture (JV) as a strategy enables two firms which have come together to create a new business entity in which all the sides contribute towards a common goal. Joint venture enable parties to involve to bring together their personnel, the two ventures also pull together their equipment and assets, the organizations also contribute cash and other intellectual property (Koryak et al. 2015). The process of joining ventures is based on an agreement through which parties involved agree on the perfect governance strategy and the most appropriate way to share revenues.  Through this agreement, the two entities can come up with quality management strategies based on the combined intellectual property.

Proper implementation of a joint venture as a growth strategy also enables business ventures coming together to get access to the required talent for business expansion which either of the organizations could acquire on their own. Through joint ventures, the business will be able to try various expansion mechanisms which may not be feasible to the internal business operations or which may interrupt the business core objectives while expanding to anew market.  The joint venture (JV) also performs a role in assisting the company to avoid various conflicts which may arise from company culture. Moreover, an organization using joint venture has an opportunity to acquire finance for expansion without necessarily borrowing money from different financial institutions. In summary, the business through JV strategy can expand through product diversity, commercialization of new commodities, and exploration of markets, acquisition of new market strategies, as well as sharing of investments in various commercial projects with high technical and business risks and expand the business ecosystem and influence sphere to new regions.

On the other hand, business growth and expansion through joint venture may also present certain challenges and certain risks based on high complexities involved with venture agreements. Partnering one business with another may be complex moreover when the two ventures are not matching regarding resources and capabilities.  Joint ventures take time as well as a lot of effort to build since developed a working partnership relationship, and joint risks cannot be avoided completely.  Various risks associated with joint ventures include:  

• Unclear and realistic business objectives
• Improper communications within the organization
• Unrealistic partnerships
• Joint ventures may limit an organizations ability to external exploiteropportunities based on restrictions
• The business may also suffer from a clashof business cultures

Risks and challenges coming with joint ventures come as a result of the organization using not performing proper research and lack of enough knowledge on what the business is involved. The communication and unclear objectives evident in joint ventures comes as a result of the joint ventures, not communication its objectives clearly to everyone involved.  Another challenge involved with joint ventures are the restrictions which may arise as a result of the partnership agreement. The business involved in joint ventures may have difficulty in exploiting external opportunities which are restricted by the venture agreement. The challenge of business culture clashes in joint ventures arises with the inability of the parties involved to match their different organizational cultures and management styles. The business may also the risks of poor integration and lack of co-operation with sufficient leadership and support which is always insufficient in early business stages.

It is, therefore, recommended for business to conduct proper research and analysis of aims and business objectives before getting into an agreement. Moreover, for any joint business venture to operate smoothly without challenges and minimum risks, the joint business plan should be effectively communicated to all individual in involved. Even though all challenges and risks involved may not be avoided in a joint venture, they can be limited through effective communication, research, and analysis of the business aims and objectives.  

The model is useful when an organization is faced with a challenge to evaluate the growth opportunities explicitly entering new markets or even launching new products. This evaluation brings several questions to mind as the organization considers various options that can provide the best return for the organization. Ansoff matrix is also regarded as the product/market grid/matrix. It has four options for growth based on matching up the current and new products with existing and new markets and plotted on a matrix (Dawes, 2018).

The model assists in highlighting the risk which a given growth strategy could expose the organization as it moves from a section of the matrix to the next. It is defined as a strategic marketing tool which connects the marketing strategy of the organization and its overall strategic direction (Paroutis Bennett and Heracleous 2014). This approach provides four growth strategies which encompass market penetration, market development, product development as well as diversification. It can also be understood as a way of examining the existing market and products of the company by demonstrating products it might begin to make and market it might enter. The model thus presents the product as well as market choices that the firm can use (Marshall, Mueck and Shockley 2015).

The model is used by business to determine the best strategy or boosting sales. The matrix assists the business to decide how to determine this strategy by demonstrating the available alternatively in a clear manner, synthesizing them to four strategies. The number of such variables as resources, market position, location, infrastructure, and budget dictates the determination of the best strategy (Peral et al. 2015). The notion of perceiving the matric in this manner is to illustrate that each time the organization shifts into a novel quadrant for marketing strategy, risks are surged. The transition, nevertheless, can reap substantial rewards for the organization of adequately managed. Further, an excellent strategic marketing consultant can research as well as define the risks, establish whether they remain worthwhile, create contingencies as well as assist manage the transition (Scuotto, Ferraris  and Bresciani 2016).

The model is used following the advice from the marketing professionals that the company should annually use Ansoff Matrix to establish if the business requires improvement or adjustment of existing offerings or even invest into novel markets. In this case, this model becomes effective to explore growth strategies the business. The model assists the company to see the risk level linked with various strategies balanced against the potential return. The model helps the business consider various variables and determine the new market to enter (Lidstone and MacLennan 2017).

The model was developed by Igor Ansoff who suggested that this model highlights to practical approaches to develop a growth strategy to enter emerging market. The organization can vary what it sells called product growth or vary who it sells to also known as market growth. These two strategies combine with the Ansoff Matrix shown above to deliver four strategic options with each differing risk level. In essence, therefore, an organization can thus use Ansoff Matrix to analyze the risk and returns linked to a particular strategy (Rothaermel 2015).

For example, the lowest risk approach is for the organization to sell its prevailing products into the current markets because the customers are known already, and the firm has established channels. This strategy is termed by Ansoff as market penetration. This strategy is solely feasible where the market is still expanding, or where the firm is prepared to utilize other aspects of the marketing mix including price discounting and extra promotional activities to facilitate the market penetration at the competitors’ expense (Dahlander, O’Mahony and Gann 2016).

The 2^nd strategy alternative in the Model is to develop novel products for the current market or customers; a strategy referred to as product development. In this strategy, the “product” and “promotion” aspects of “marketing mix” shall alter (as at least) and hence the higher risk than “market penetration” (Riccò and Guerci 2014). The strategy’s success is reliant on the capability of the firm to undertake effective “marketing research” alongside insight into its consumers besides market requirements alongside their individual internal competencies and capabilities for propelling effective innovation.

A 3^rd strategic alternative engages taking prevailing commodities into the novel market utilizing a “marketing development’ approach. This is further regarded as being riskier than market penetration because it can be challenging to comprehend the new markets’ complexities. Key alterations in marketing mix are probably to be “place,” with new channels alongside routes to market considerations alongside “promotion’ via new target segments promotion (Armstrong, Kotler, Harker & Brennan, 2015).

The last option is the “diversification” that refers to the development of new products for new markets. This is viewed as the riskiest option of all the four because the firm is shifting into an unacquainted market. Nevertheless, this risk can efficiently be mitigated by carrying ‘related’ diversification, and it might have the potential of gaining the highest returns (Scuotto, Ferraris and Bresciani 2016).

In conclusion, the Ansoff Model is useful in the strategy phase of marketing planning process by the organization. It is utilized in the identification of which overarching strategy the organization has to take and then informs the best tactics used in marketing activity. The organization might use the model by combining two or more strategies to reach emerging markets.

Conclusion:

To this end, this essay has presented a comprehensive proposed transformation on strategy essential for IBM as it enters an emerging market while still maintaining if not improving its sustained competitive edge over competitors that continually attempt to imitate is offering at much-reduced cost points. Even though IBM gained a better deal from the firm’s virtual labor force, it is the time for the company to speak to its downside- the knowledge sharing and camaraderie within the general office context. This transformation will lead to the restoration of its employees’ social context; build loyalty, promote teamwork and dependence among peers, give the joy to experience at work; and satisfy customers with excellent and distinct services.  

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