IBM Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

IBM Case Study Analysis

Net Profit Margin

This demonstrates the measure of pay produced. By partitioning the net benefit with all-out income; the organization can see the level of income made total compensation. Net revenue enables the financial specialists to survey if the organization's administration is creating many benefits from its incomes, and whether the working costs and overhead expenses are being controlled or not. It shows the monetary soundness of IBM as: 0.16, 0.17 and 0.13. This implies that the net benefits are: 16%, 17%, and 13% of the organization's business income, which is in a decent monetary position. IBM can likewise build its net benefit by creating more income through it’s“as good as ever” items.

Operating efficiency = Net Profit Margin

Asset efficiency

Asset efficiency represents the measures used by a company to see how assets are generating sales or income for the company. Low-overall revenue implies high resource turnover, while the high net revenue has low resource turnover. This implies the estimation of the organization's business income to be comparative with the estimation of benefits. The benefits turnovers of IBM are: 0.85, 0.81 and 1.58,which implies that the organization’s complete resources are approximately 80%, which is adding to its business income. The advantage turnover proportion is in a sound position. If it is higher, it would mean that the company is generating its revenue more efficiently and if the company’s asset turnover ratio is normal; it means the company is generating normal profit as compared to its assets.

Asset efficiency = Total Asset Turnover

Financial leverage

It is one of the few budgetary estimations, which demonstrates how much capital comes as obligation for the organization to meet its money related commitments. The influence proportion is additionally significant as the organization depends on a blend of value and obligation to back its tasks and find the measure of the obligation owed by the organization. It must value proportion, value multiplier, level of money related influence and shopper influence proportion. On the off chance that the multiplier is higher;it implies that the obligation segment of advantages is expanding, which willbe a progressively monetary influence for the organization. The organizations with higher obligations have a higher obligation serving cost, which implies that they ought to create more incomes to beat these conditions. The financial leverage of the company for three are: 6.03, 6.44 and 9.9.

From this analysis, the competitor's ROE can also be seen. The competitors are also near to the ratios of IBM. As the ROE of IBM are:0.82, 0.87, and 2.03 in 2012, 2013 and 2014, respectively.The company’s competitors are also near to these ratios.

Current Strategic Health of IBM

The strategy of the company includes the focus of the company on global expansion and outsourcing. The healthy strategy of the company also includes business operations with higher profitability. The global expansion strategy of a company is aimed at entering the developing market as there are more chances of growth for the company if it does so. IBM also outsources some raw materials of manufacturing and processing machines and computers. The company’s strategy is also competitive in terms of the lower cost and higher profit margins. The expansion strategy of the company enables it to have a higher stability. This current strategy of the company is a sound strategy and a competitive advantage as well. The strategy of IBM is related to the SWOT analysis model and Porter’s generic model.

SWOT Analysis

Strengths

The strengths of the business are strong brand loyalty of IBM and the global supply chain. The brand is strong because it is in the world’s best computing technology. The financial position of the company is also the strength of the company, as it supports the global expansion of the company in the long-run. Moreover, the strengths of IBM encourage the company to expand and outsource.

Weaknesses

The weaknesses of the company reduce its potential of having growth and expansion. Some of the financial declines of the industry as well as the company, have created problems for the company to stay in the market. The difference in the culture of different workforce is also a weakness of IBM as it does not support the flexibility of workforce.

Opportunities

There are different strategies, which the company can use as opportunities to improve its financial and operational performance. There are different opportunities in technology industry as this market is huge and technology is demanded by people in a large proportion, particularly in India and China. The acquisitions are also opportunities for IBM as the company can also establish operations in association with different rivals, through which the company can improve its own operations.

Threats

There are also some threats for the company as it is operating in a highly competitive market. IBM suffers from aggressive methods of other technologies, such as: Google, Amazon, and Intel. All of these are offering could computing, which is giving the competition to IBM. New competitors are also making their entries in the market because of less government restrictions. These rivals also sell their products online to attract more customers and provide better services.

Porter’s Generic Model

Cost Leadership

The generic strategy of the company is cost leadership. The company is using this strategy to ensure the competitive advantage. This strategy supports the competitive advantage by cost effectiveness in the operations of IBM. The difference in cost from the competitors also enable the company to maximize its selling price, making the company’s products more attractive.

Differentiation

This strategy of differentiation is playing a supportive role in the growth of the business and is helping the company in maintaining the competitive advantage. At the start, the company mainly focused on differentiation as a competitive strategy. The uniqueness of the products created value for the customers. This strategy of IBM includes focus on specific segments.

Recommendations

The company is performing well in financials and operations. The customers are also loyal and the brand has loyalty. The company uses different strategies to compete in the intense market as the strategy of outsourcing and global expansion. There are numbers of threats and risks, which the company keeps on being faced with, due to which the company is inclining towards including these issues and the necessary measures to resolve these issues, in its current strategy. Acquisition strategy should be adopted by IBM to minimize the completion and function well in the market. However, the business is growing; the company need to focus more towards cost-cutting in order to become the cost leader in the market. The acquisition of the company with SPSS, PwC and Weather Company also return more than the expectations on the company. So the acquisitions will enhance the products and operations of IBM....................................

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