Written Case Analysis IBM
Salient Case Facts at a Glance:
John Akers became the CEO of IBM in 1985. By this time, IBM
had registered a drop in earnings for the first time. This trend
continued, creating various other problems till John Akers was
forced to resign in 1993.
IBM was perceived as a ruthless giant with tremendous growth.
Naturally, it was singled out for criticism by the entire industry
and the government. IBM also attracted anti-trust legislation as
IBM lost out once the Personal Computer industry began to boom.
It found that the old paradigm of closed proprietary systems
applicable to the mainframe business was not relevant to PCs.
Reasons for decline of ...view middle of the document...
Under his leadership,
IBM's earnings showed a remarkable turnaround in the next two
years after registering a huge loss in 1993.
PC Industry - Structural Analysis: (Using Michael Porter's
Based on the information provided in the case, we can do a
structural analysis of the PC industry which will help us in better
analysis of the case.
Threat of New Entrants: Entry was easy in the industry due to
its huge potential. However, the major market share was held only
by a few players.
Rivalry: Stiff competition among a few major players having equal
strength and potential. This led to intensive rivalry.
Bargaining Power of Customers: High bargaining power because of
stiff competition, and a large number of suppliers offering similar
products to choose from.
Bargaining Power of Suppliers: Bargaining power of suppliers is
high because of the dominant position of players such as
Microsoft and Intel.
Substitutes: The PC industry was a highly dynamic one. However
an immediate substitute did not seem likely.
Major Problems Facing IBM :
In the current scenario, the most important task was to initiate a
long term growth strategy that would sustain IBM's recovery and
spearhead it into the future. An associated issue was whether
IBM should be split into smaller entities.
Recommended Solutions :
· IBM is a player in almost all areas in the computer industry.
However, IBM's core competencies lie in the design of high
configured or high capability machines which provide excellent
business and computing solutions.
IBM's main strengths are in the design of mainframes, PC,
client server and powerful networks created using these