IBM's Decade of Transformation: Turnaround to Growth SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Organizational Development
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of IBM's Decade of Transformation: Turnaround to Growth
Describes IBM's decade of transformation. Provides background on the company's history and the factors that led to its near death in the early 1990s and to its remarkable turnaround during Lou Gerstner's reign as CEO. A rewritten version of an earlier case.
Swot Analysis of "IBM's Decade of Transformation: Turnaround to Growth" written by Lynda M. Applegate, Elizabeth Collins includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Ibm's Gerstner's facing as an external strategic factors. Some of the topics covered in IBM's Decade of Transformation: Turnaround to Growth case study are - Strategic Management Strategies, Entrepreneurship, Internet, Joint ventures, Leadership, Organizational culture and Organizational Development.
Some of the macro environment factors that can be used to understand the IBM's Decade of Transformation: Turnaround to Growth casestudy better are - – customer relationship management is fast transforming because of increasing concerns over data privacy, increasing transportation and logistics costs, wage bills are increasing, competitive advantages are harder to sustain because of technology dispersion, geopolitical disruptions, increasing government debt because of Covid-19 spendings, banking and financial system is disrupted by Bitcoin and other crypto currencies,
increasing energy prices, increasing inequality as vast percentage of new income is going to the top 1%, etc
Introduction to SWOT Analysis of IBM's Decade of Transformation: Turnaround to Growth
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in IBM's Decade of Transformation: Turnaround to Growth case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Ibm's Gerstner's, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Ibm's Gerstner's operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of IBM's Decade of Transformation: Turnaround to Growth can be done for the following purposes –
1. Strategic planning using facts provided in IBM's Decade of Transformation: Turnaround to Growth case study
2. Improving business portfolio management of Ibm's Gerstner's
3. Assessing feasibility of the new initiative in Organizational Development field.
4. Making a Organizational Development topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Ibm's Gerstner's
Strengths IBM's Decade of Transformation: Turnaround to Growth | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Ibm's Gerstner's in IBM's Decade of Transformation: Turnaround to Growth Harvard Business Review case study are -
Low bargaining power of suppliers
– Suppliers of Ibm's Gerstner's in the sector have low bargaining power. IBM's Decade of Transformation: Turnaround to Growth has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Ibm's Gerstner's to manage not only supply disruptions but also source products at highly competitive prices.
Ability to lead change in Organizational Development field
– Ibm's Gerstner's is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Ibm's Gerstner's in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Sustainable margins compare to other players in Organizational Development industry
– IBM's Decade of Transformation: Turnaround to Growth firm has clearly differentiated products in the market place. This has enabled Ibm's Gerstner's to fetch slight price premium compare to the competitors in the Organizational Development industry. The sustainable margins have also helped Ibm's Gerstner's to invest into research and development (R&D) and innovation.
High brand equity
– Ibm's Gerstner's has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Ibm's Gerstner's to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Strong track record of project management
– Ibm's Gerstner's is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Diverse revenue streams
– Ibm's Gerstner's is present in almost all the verticals within the industry. This has provided firm in IBM's Decade of Transformation: Turnaround to Growth case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
High switching costs
– The high switching costs that Ibm's Gerstner's has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Highly skilled collaborators
– Ibm's Gerstner's has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in IBM's Decade of Transformation: Turnaround to Growth HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Digital Transformation in Organizational Development segment
- digital transformation varies from industry to industry. For Ibm's Gerstner's digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Ibm's Gerstner's has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Operational resilience
– The operational resilience strategy in the IBM's Decade of Transformation: Turnaround to Growth Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Cross disciplinary teams
– Horizontal connected teams at the Ibm's Gerstner's are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Ability to recruit top talent
– Ibm's Gerstner's is one of the leading recruiters in the industry. Managers in the IBM's Decade of Transformation: Turnaround to Growth are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Weaknesses IBM's Decade of Transformation: Turnaround to Growth | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of IBM's Decade of Transformation: Turnaround to Growth are -
High bargaining power of channel partners
– Because of the regulatory requirements, Lynda M. Applegate, Elizabeth Collins suggests that, Ibm's Gerstner's is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
Workers concerns about automation
– As automation is fast increasing in the segment, Ibm's Gerstner's needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Ibm's Gerstner's supply chain. Even after few cautionary changes mentioned in the HBR case study - IBM's Decade of Transformation: Turnaround to Growth, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Ibm's Gerstner's vulnerable to further global disruptions in South East Asia.
Slow to strategic competitive environment developments
– As IBM's Decade of Transformation: Turnaround to Growth HBR case study mentions - Ibm's Gerstner's takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study IBM's Decade of Transformation: Turnaround to Growth, it seems that the employees of Ibm's Gerstner's don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
Aligning sales with marketing
– It come across in the case study IBM's Decade of Transformation: Turnaround to Growth that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case IBM's Decade of Transformation: Turnaround to Growth can leverage the sales team experience to cultivate customer relationships as Ibm's Gerstner's is planning to shift buying processes online.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study IBM's Decade of Transformation: Turnaround to Growth, is just above the industry average. Ibm's Gerstner's needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Lack of clear differentiation of Ibm's Gerstner's products
– To increase the profitability and margins on the products, Ibm's Gerstner's needs to provide more differentiated products than what it is currently offering in the marketplace.
Capital Spending Reduction
– Even during the low interest decade, Ibm's Gerstner's has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Interest costs
– Compare to the competition, Ibm's Gerstner's has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Products dominated business model
– Even though Ibm's Gerstner's has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - IBM's Decade of Transformation: Turnaround to Growth should strive to include more intangible value offerings along with its core products and services.
Opportunities IBM's Decade of Transformation: Turnaround to Growth | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study IBM's Decade of Transformation: Turnaround to Growth are -
Low interest rates
– Even though inflation is raising its head in most developed economies, Ibm's Gerstner's can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Ibm's Gerstner's to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Ibm's Gerstner's to hire the very best people irrespective of their geographical location.
Using analytics as competitive advantage
– Ibm's Gerstner's has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study IBM's Decade of Transformation: Turnaround to Growth - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Ibm's Gerstner's to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Ibm's Gerstner's in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Organizational Development segment, and it will provide faster access to the consumers.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Ibm's Gerstner's can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Developing new processes and practices
– Ibm's Gerstner's can develop new processes and procedures in Organizational Development industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Organizational Development industry, but it has also influenced the consumer preferences. Ibm's Gerstner's can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Manufacturing automation
– Ibm's Gerstner's can use the latest technology developments to improve its manufacturing and designing process in Organizational Development segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Better consumer reach
– The expansion of the 5G network will help Ibm's Gerstner's to increase its market reach. Ibm's Gerstner's will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Ibm's Gerstner's can use these opportunities to build new business models that can help the communities that Ibm's Gerstner's operates in. Secondly it can use opportunities from government spending in Organizational Development sector.
Leveraging digital technologies
– Ibm's Gerstner's can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Buying journey improvements
– Ibm's Gerstner's can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. IBM's Decade of Transformation: Turnaround to Growth suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Ibm's Gerstner's can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Threats IBM's Decade of Transformation: Turnaround to Growth External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study IBM's Decade of Transformation: Turnaround to Growth are -
Regulatory challenges
– Ibm's Gerstner's needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Organizational Development industry regulations.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Ibm's Gerstner's needs to understand the core reasons impacting the Organizational Development industry. This will help it in building a better workplace.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study IBM's Decade of Transformation: Turnaround to Growth, Ibm's Gerstner's may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Organizational Development .
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Ibm's Gerstner's can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study IBM's Decade of Transformation: Turnaround to Growth .
Consumer confidence and its impact on Ibm's Gerstner's demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Increasing wage structure of Ibm's Gerstner's
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Ibm's Gerstner's.
Stagnating economy with rate increase
– Ibm's Gerstner's can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Ibm's Gerstner's in the Organizational Development sector and impact the bottomline of the organization.
Shortening product life cycle
– it is one of the major threat that Ibm's Gerstner's is facing in Organizational Development sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Technology acceleration in Forth Industrial Revolution
– Ibm's Gerstner's has witnessed rapid integration of technology during Covid-19 in the Organizational Development industry. As one of the leading players in the industry, Ibm's Gerstner's needs to keep up with the evolution of technology in the Organizational Development sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Easy access to finance
– Easy access to finance in Organizational Development field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Ibm's Gerstner's can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Ibm's Gerstner's in the Organizational Development industry. The Organizational Development industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Weighted SWOT Analysis of IBM's Decade of Transformation: Turnaround to Growth Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study IBM's Decade of Transformation: Turnaround to Growth needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study IBM's Decade of Transformation: Turnaround to Growth is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study IBM's Decade of Transformation: Turnaround to Growth is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of IBM's Decade of Transformation: Turnaround to Growth is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Ibm's Gerstner's needs to make to build a sustainable competitive advantage.