1

Formulating Business Formulating Business

Strategy Using Strategy Using
SWOT Analysis SWOT Analysis
IBM Case IBM Case
(Solutions) (Solutions)
IST 301/ A. Konak IST 301/ A. Konak 2 2
What is IBM What is IBM s Strategic s Strategic Goal(s Goal(s)? )?
To grow revenues at least 5% each To grow revenues at least 5% each
year year
To increase earning per share at To increase earning per share at
least 10% least 10%
IST 301/ A. Konak IST 301/ A. Konak 3 3
What is IBM What is IBM s Strategic s Strategic Plan(s Plan(s)? )?
Openness Openness - -
sharing IBM innovations sharing IBM innovations
collaborating with customers and rivals collaborating with customers and rivals
Reduce the cost of providing services Reduce the cost of providing services
IST 301/ A. Konak IST 301/ A. Konak 4 4
SWOT Internal Analysis SWOT Internal Analysis- -Strengths Strengths
Valuable intellectual property, Valuable intellectual property,
software, patents, ideas... software, patents, ideas...
Talented work force Talented work force
Research & development ($5.7 Research & development ($5.7
billion) billion)
A multi A multi- -national organization national organization
2
IST 301/ A. Konak IST 301/ A. Konak 5 5
SWOT Internal Analysis SWOT Internal Analysis- -
Weaknesses Weaknesses
260,000 expensive employees 260,000 expensive employees
High operating costs High operating costs
IST 301/ A. Konak IST 301/ A. Konak 6 6
SWOT External Analysis SWOT External Analysis- -Threats Threats
Low Low- -cost generic competition cost generic competition
(commoditization) (commoditization)
Outsourcing Outsourcing
New competitors in services market New competitors in services market
(e.g., Dell, Accenture) (e.g., Dell, Accenture)
IST 301/ A. Konak IST 301/ A. Konak 7 7
SWOT External Analysis SWOT External Analysis- -
Opportunities Opportunities
Collaborative innovation Collaborative innovation
Open Open- -source source
Expensive products of competitors Expensive products of competitors
Accepting standards brings economic Accepting standards brings economic
expansion expansion
IST 301/ A. Konak IST 301/ A. Konak 8 8
SWOT Analysis SWOT Analysis
match strengths with opportunities match strengths with opportunities
Valuable intellectual property Valuable intellectual property
Talented work force Talented work force
Research & development Research & development
Open Open- -source source
Standards Standards economic economic
expansion expansion
Strengths Opportunities
3
IST 301/ A. Konak IST 301/ A. Konak 9 9
SWOT Analysis SWOT Analysis
match weaknesses with threats match weaknesses with threats
Expensive workforce Expensive workforce
High operating costs High operating costs
Low Low- -cost competition cost competition
Outsourcing Outsourcing
Bigger competitors Bigger competitors
Weaknesses
Threats
IST 301/ A. Konak IST 301/ A. Konak 10 10
Develop Strategies Develop Strategies
to exploit opportunities in areas to exploit opportunities in areas
where the organization has strengths where the organization has strengths
to defend against threats in areas to defend against threats in areas
where organization has weakness where organization has weakness
IST 301/ A. Konak IST 301/ A. Konak 11 11
Example Example
Valuable intellectual property Valuable intellectual property
Talented work force Talented work force
Research & development Research & development
Open Open- -source source
Standards Standards economic economic
expansion expansion
Strengths Opportunities
Openness
Making pie bigger
IBM can sell services
Expectations
Support open-
source
development
University
Programs
Give precious
technology away
Tactics
Strategy
IST 301/ A. Konak IST 301/ A. Konak 12 12
Example Example
Expensive workforce Expensive workforce
High operating costs High operating costs
Low Low- -cost competition cost competition
Out sourcing Out sourcing
Bigger competitors Bigger competitors
Weaknesses Threats
Reduce
Cost of Services
Utilize workforce
more efficient
Shutdown
operations in EU
Move to low cost
places
Tactics
Strategy