A Report On Ibm And Its Business Performance

As of today, International Business Machines, simply known as “IBM”, is one of the leading companies in the IT and Technology sector. Operating in over 170 countries across the 6 continents, it produces technological devices, software and hardware components as well as providing hosting and consulting services in areas ranging from mainframe computers all the way to nanotechnology. The company was cofounded by Charles Ranlett Flint and Thomas J. Watson Sr. in 1911 as the Computing-Tabulating-Recording Company (CTR) in New York, before being renamed to its current name “IBM” in 1924. Throughout this report, we will be going through IBM’s CEO’s profile as well as its organizational culture and the effect of the culture on its business performance. We will also be evaluating its social responsibility practices and the impact of such practices on the enterprise, in addition to its global operations and global strategy.

Right from the start, Thomas J. Watson Sr. didn’t take much time to impose a strong culture at IBM. On one day in 1911 at an early meeting, some managers were unable to come up with good ideas on how to improve the business. Immediately, Watson gave a long talk on how knowledge is the result of thought and thought is the keynote of success in any business, and from this moment on, he decided that the company’s slogan would be “THINK”. His efforts established the foundation for IBM’s current corporate culture of THINK. Ever since, IBM is widely regarded as an enterprise with an innovative and strong culture. Such culture is reflected on the fact that IBM holds the record for the most U.S. patents generated by a business for 27 consecutive years, resulting in some inventions that would go on and change the world. The inventions include the hard-disk drive, the Magnetic Strip card and the Dynamic Random-Access Memory (DRAM). All CEOs maintained this innovative and strong culture that defined IBM’s success from the moment it was founded, until this date, all the way from its first CEO back in 1911 – Watson – to the current one – Arvind Krishna.

Unfortunately, during Virginia Rometty’s (IBM’s previous CEO) time, the industrywide change and the rise of fierce competitors threatened IBM’s position as a technology leader. Her inability to defend such threats resulted in her stepping down as CEO of the company. Arvind Krishna succeeded her as CEO in April 2020. Although he didn’t have much time to make an impact on the company’s performance, analysts believe that Krishna is the perfect person for the job as, unlike IBM's previous three CEOs who had largely non-technical careers before taking the top job, his long tenure in engineering is the main aspect distinguishing him from his predecessors . Krishna has been IBM’s senior vice president since 2015 up until being CEO. He received more of the spotlight as the main person behind IBM’s acquisition of enterprise software maker “Red Hat” in 2019. A takeover amounting to $34 billion making it one of the largest tech deals ever. Following this deal, and as a result of his appointment as CEO during the current pandemic, he is widely regarded as a Disturbance Handler manager.

IBM has a long history of following an activist (Dark Green) approach towards the environment. They develop their products in a way that they try as much as they could to maintain the Earth’s natural resources while also making the world become smarter and drive economic improvement. A very obvious example of this is their use of cognitive buildings as their main offices. Cognitive buildings are a result of integrating physical and digital worlds in a way that reduces energy, optimizes space and lower operating costs. They claim that their employment of cognitive building strategies enables them to reduce energy use by up to 50%, while at the same time increase the employee productivity by 18%. Their commitment towards the society doesn’t stop here; they also provide hundreds of grants worldwide every year that provides consulting expertise as well as technologies to support educational and non-profit organizations. These grants add up to more than $53 million, including $6 million in software to over 200 organizations.

IBM doesn’t only focus on a specific product as its main source of profit, instead, many of its entries to new markets came through taking over businesses already successful in the targeted market. An example of this would be the previously mentioned takeover of Red Hat, a takeover that would make IBM the world's leading hybrid multi-cloud provider. Since 2011, IBM acquired more than 60 companies all throughout the globe. With that being said, I am confident that IBM uses horizontal integration as its main growth strategy. In addition to this, it employs more than 350,000 employees, as of 2020, with a whopping 70% of the employees being based outside of the US. This proves the fact that IBM is a geocentric company.

To be able to remain successful for the amount of time it has, IBM relies heavily on its brand name, a huge loyal client base and a big talent pool with expertise in their work force. They are also able to spot new opportunities to expand their company and act accordingly. However, like all successful companies, they face challenges and threats and have weaknesses that they must improve. For example, the challenge of employee retention as attrition is high, the extremely huge size of the company can sometimes affect output quality and the intense competition in the technology market can negatively impact their profitability.

In conclusion, I think that the way IBM has maintained their success throughout the 20th century and into the first quarter of the 21st is something to be admired. They not only were able to provide simple solutions to complex problems but also managed to change the world completely to be the one we know it now. From enabling the first open-heart surgery by their first heart-lung machine to inventing the barcode that’s used on every item worldwide to building computers and writing the complex software programs that enabled Lt. Neil Armstrong to set foot on the Moon and return back safely, their use of their innovative culture carved the way for modern business and is still carving the way for a much simpler life to the one we once knew. 

16 December 2021
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