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Placement Based Research Project
Academic Discussion
BA (Hons) International Business
William Scott - 07083290
Date of Submission – Monday 21st March 2011
Table of Contents

1     Topic Area ................................................................................................ 3



2     Literature Review ..................................................................................... 5
2.1     Strategic Capability & Reasoning ..................................................................... 5
    2.1.1     Pricing Strategy ......................................................................................... 6
    2.1.2     Relationship Strategy................................................................................. 7



2.2     Value Added Business ..................................................................................... 8
    2.2.1     Value Net Analysis..................................................................................... 8



2.3     External Analysis .............................................................................................. 9
    2.3.1     Threats to Sustainability........................................................................... 10
    2.3.2     Marketing Strategy................................................................................... 11



3     Findings and Analysis ........................................................................... 13
3.1     Analysis of Marketing Strategy ....................................................................... 13
3.2     Analysis of the Strategic Direction of IBM PowerNet....................................... 15
3.3     Sustainability Analysis of IBM PowerNet‟s Business Model ............................ 16



4     Conclusion and Critical Reflection ....................................................... 18
4.1     Recommendations:......................................................................................... 19


5     References.............................................................................................. 20



6     Appendix 1 – Ethics Checklist .............................................................. 26




                                                                                                                        2
1   Topic Area


The primary topic area of this academic discussion is to analyse the reasoning
behind IBM PowerNet‟s business strategy of working alongside and doing business
with, small, individual businesses, known as Independent Software Vendors (ISVs),
to drive revenue. This strategy is in the form of pairing the software solution of a
small IT firm, with various pieces of IBM‟s hardware, to form a „solution‟. This is then
sold to customers both small and large. These customer groups are divided into two
categories, „White Space‟ meaning they have not bought from IBM within the past 3
years, and „IBM House‟, defined as having previously bought from IBM within the
past 3 years. The strategy implemented by IBM PowerNet targets the White Space
business, as they aim to drive revenue by engaging in business with new customers.


Since the programme was born in 2004, revenue has increased steadily year on year
until 2009, where it fell for the first time. Various reasons have been cited for this,
including the effect of the economic downturn, and the lack of marketing material
made available. When the numbers were analysed, it was decided that marketing
material was needed in order for the number of ISVs to grow, and this was done in
conjunction with the practical part of this project. In making the decision to produce
marketing material, it meant that the strategy of targeting new business, with new
ISVs was to continue for the foreseeable future. The aim of this report is to examine
whether this was a positive move on the part of IBM, and to look at the sustainability
of the programme in current market conditions.


The current market environment is similar to that of the past two-three years, with
firms cutting back on IT expenditure, due to the economic downturn. This will
continue to have an impact on IBM PowerNet, and so the strategy in place must be
able to react to, and cope with these conditions. The marketing material produced in
the practical section of the report has proved successful, helping to increase the
number of ISVs working with IBM PowerNet from 80 in 2009, to 134 in 2010. Whilst
this is not the only factor contributing to this change, it is clear to see that the
marketing strategy was a positive move by the firm.


The aim of this discussion is to assess and evaluate whether the strategy in place by
IBM PowerNet is a sustainable and positive strategy to continue with. In order to
assess and evaluate this, academic sources will be analysed to both critique and



                                                                                           3
back up their strategy. Several key areas will need to be examined in order to come
to a suitable conclusion and assess whether or not it is the correct strategy to pursue.




                                                                                      4
2     Literature Review


The literature review will primarily address the key aims of the project whilst also
providing a foundation from which the research will be built (Saunders et al., 2009).
Findings will be drawn from key texts, journal articles and internet sources in order to
fully analyse the research aims, and develop a critical understanding of the theories
and methods used in relation to the project (Rowley & Slack, 2004). Analysis will also
be made from looking at internal analysis and publications from IBM.


2.1    Strategic Capability &Reasoning


Strategic planning can been seen to start with a firm examining relationships
between the firms “environment, strategy within the environment and
structure”(Chandler, 1962). These three elements allow a firm to study the various
ways in which a strategy can be formed, by not only looking at the internal business
environment, but also the external. (Ansoff ,1977).



                                              Environment




                                  Structure                 Strategy

                                                                Figure 1: Chandler, 1962



Selecting the correct strategy in key to a businesses success, and imperative in
giving a firm competitive advantage. Competitive advantage can be defined as the
unique capability which gives one firm an advantage over another in any given
competitive industry or market place (Porter, 1985). Firms may have many
capabilities that give them this competitive advantage, yet it is the ones which are
valued most by the customer that allow firms to engage with and use the competitive
advantage to the full. Being able to analyse the internal and external relationships as
suggested by Chandler, allows a firm to fully utilise the competitive advantage




                                                                                        5
available to them by implementing the correct strategy and meeting the needs of
their customers (Fahey, 2000).


Another way of determining strategy is to look at the products a firm has to offer.
Placing a product in strategic positions, allows the firm to determine how best to get
the product to market, and make it attractive to customers (Porter, 1980). Porter
suggests that products fall under the headings of either differentiation strategy, or
cost leadership. Further developments on this strategy have however, found that
many products and indeed businesses, can fall under both headings, allowing them
to find a niche in the market place (Miller, 1992), or become a market leader by
combining the two strategies (Baden-Fuller & Stopford, 1992).


A well-evaluated systematic analysis of competitive positioning is key to a firm‟s
competitive advantage, incorrect positioning could mean a firm wastes the
competitive advantage they already hold over other players in the industry (Bowman
& Faulkner, 1994)


2.1.1 Pricing Strategy


The pricing strategy used by IBM PowerNet‟s solutions is key to the way they gain
competitive advantage and make the products attractive to a wide range of
customers. The recent economic downturn has meant that many firms are not
investing as much in IT services or IT solutions, and as such, competitively priced
products on IBM‟s part has made them more attractive in the market place (Piercy et
al., 2010). The decision made by IBM PowerNet to price their products in such a
competitive manor may not solely have been influenced by the economic downturn.
Pricing strategies can also have a effect on customer and supplier relationships, and
in the case of IBM PowerNet, where the end price was determined not only by IBM,
but by the ISV they are partnered with, a long-standing, positive relationship between
customer and firm could be vital (Gourville&Soman, 2002).


Pricing strategy can also be affected by the products life cycle (Thompson & Coe,
1997). Products with a short life cycle, which are renewed, or updated on a regular
basis may often demand a lower pricing strategy, which not only makes the product
more attractive to customers, but also makes the potential risk of a competitor
undercutting the price less so (Forbis & Mehta, 1981).



                                                                                         6
The decision making involved in the pricing strategy does not however, rest on the
volume of sales. Firms must evaluate the other competitive advantages they may
gain by implementing a successful pricing strategy (Staples, 1980). They must look
at the corporate image it reflects on the company, and the relationships it could forge
or loose. A pricing strategy is not just a tool for selling products, but a multi-attribute
one, impacting on many business areas (Coppett & Staples, 1980, and Thompson,
1989).


2.1.2 Relationship Strategy


IBM PowerNet‟s sales rely heavily on the quality, and performance of their business
partners – the ISVs who produce the software to form the package sold to the
customer. This makes, a successful relationship between IBM and both the ISVs and
customers is of paramount importance.


Co-operative relationships can be formed between one firm and another (in this case,
IBM and it‟s ISVs), allowing both firms to thrive in a competitive environment by
sharing skills and expertise (Reeves, 2009). A strategy such as this, may enable both
firms to reduce costs, by working together for a mutual benefit, and to shape the way
in which the industry moves, by working against mutual competitors (Reeves &
Deimler, 2009).


Strategic alliances have been in place for many years, particularly in the IT industry,
yet it is the outcome of these relationships that determines how successful, and
useful they are to each firm (Vyas et al., 1995). Forming a strategic relationship with
a firm that has complementary skills or resources, may allow one to fully maximise
both firms efficiency and effectiveness, leading to a competitive advantage, through
shared experience (Mendleson & Polonsky, 1995). It is how a firm decides the extent
to which a strategic relationship will benefit them, that can truly give both parties a
competitive advantage (Day & Montgomery, 1999). Scanning the business
environment for the best partnering opportunities, looking at potential alliances
strategies and experience, can give firms the opportunity to form more effective
partnerships (Kandermir et al., 2006).




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2.2   Value Added Business


Value is created by a business operating together with its customers and suppliers,
to create a value captured by the firm (Ghemawat, 1999). A firm cannot create value
on its own, so the ability to generate and capture value by working with their
customers and suppliers, can be key to any firms survival (Ghemawat, 1999).


The model used by IBM PowerNet, relies on this value created by working with their
ISVs and other businesses. Working alongside other businesses to create value in
this way offers a range of benefits for both firms involved. Integrating in this way can
often give firms a competitive advantage through economies of scale and market
power, particularly in the IT industry (Johnston & Lawrence, 1988). This type of value
added business gives both firms the opportunity to expand within the market, as
working with each other and sharing resources increases the firm‟s knowledge,
without impacting on costs (Hines, 1998).


As is the case in this paper, value added business partnerships often occur between
a large and a small firm, with different benefits for each. Smaller firms will often
supply a very specific product or service, in exchange for the reputation allegiance,
and increased efficiency (Johnston & Lawrence, 1988). Larger firms, such as IBM,
may use tools such as a Value Opportunity Web (VOW), to analyse the market place
and help aid decision making regarding the amount of added value gained by
working with a smaller firm (Fahey, 2000). VOWs allow both firms to critique the
strategic purpose behind a value added partnership, and extract breakthrough
opportunities as they emerge.


2.2.1 Value Net Analysis


The Value Net (Brandenburger & Nalebuff, 1995)(Figure 2) is a tool for examining
competitive strategy, and business relationships, based on the Five Forces Model
(Porter, 1985). Examining the relationship between a firm and four „players‟ –
customers, competitors, suppliers and complementors, allows a firm to fully
understand the market, and where value can be gained.




                                                                                           8
It has been suggested that competition between firms is dead (Moore, 1996), and
that firms must now work with their competitors, in order to survive and gain a
competitive advantage. This has been expanded on, to form the co-opertition idea,
where firms combine competition, and co-operation (Brandenburger & Nalebuff,
1996). This concept is the foundations of the Value Net, as it allows a firm to identify
partnerships and competitive relations within the market.




                                                Figure 2: Brandenburger& Nalebuff, 1996



It has also been suggested that this theory allows firms to experience multi-
directional learning and gain experience from one another, whilst still competing for
business and market share (Tsai, 2002).


However, criticisms have been made of this practice, with it being suggested that co-
opertition allows firms to take advantage of others, and undertake devious practices,
in order to outdo their competitor (Hamel et al., 1989). Yet this is not to say that firms
cannot defend against this. The Value Net analysis allows firm to build suitable
defences against such practices, as well as gain experience and knowledge as to
how their collaborator works, through their relationships with other suppliers,
customers and complementors in the market (Prahalad, 1989).


2.3   External Analysis


An external analysis of the market environment is an important step in aiding
development and implementation of a successful strategy. Porter (1985), suggested
that there were five forces which determined the intensity and attractiveness of a
market, (Figure 3). This model enables a firm to gain a full analysis of the market, as



                                                                                           9
it looks at both vertical and horizontal competition to the firm, and links well into
Porter‟s other models of the value chain and generic strategies.




                                                                      Figure 3: Porter, 1985



This can then provide the base to a sustainability analysis, as a firm can fully
analysis the factors that affect the business, both externally and internally. Without
the use of an external analysis such as Porter‟s Five Forces, a firm cannot fully
understand the market environment, and therefore any strategy implemented may
not be put to full effect.


2.3.1 Threats to Sustainability


Sustainability in strategy is often a difficult factor to obtain, with various threats from
different places in the market. Business threats are constantly in place, and firms
need to adapt and tailor their strategies to overcome these. The “Four Threats to
Sustainability” model (Ghemawat, 1991) (Figure 4) outlines the threats with the
capability of reducing the ability of a firm to add value. This framework can be linked
to the Value Net framework (Brandenburger & Nalebuff, 1996), and used by a firm to
analyse all aspects of an industry‟s threats.




                                                                 Figure 4: Ghemawat, 1991

                                                                                          10
Other factors may need to be taken into consideration when looking to build a
sustainable business model, such as looking at the long-term environmental,
economic and social considerations (Crane & Matten, 2007). These factors are seen
as of particular importance in the modern day business environment, with increasing
pressure on firms to take into account the effect their firm is having on public
situations.


A firms values, visions and priorities also need to be evaluated, (Weick, 1995)
ensuring that achieving a sustainable strategy does not compromise a firms mission
statement. This is also related to what a firm may be willing to trade-off, in order to
achieve sustainability, as certain strategic decisions may have effects on other areas
of the firm (Wilson, 2003). This decision making process involves scanning the
business environment to gather data and identify strategic problems of opportunities
(Starbuck & Milliken, 1988). These results can be evaluated and analysed through
using frameworks such as Ghemawat‟s (Figure 4), in order to gain a theoretical
insight as to the sustainability of a strategy.


It has been suggested, that the emotional link of a manager or firm towards a certain
strategy or direction, may affect the decision making and how relevant it may be
(Kollmus & Agyeman, 2002). This critique of the decision making process adds
another dimension to the sustainability model which needs to be considered by firms.


2.3.2 Marketing Strategy


A firms marketing strategy may often be based on the kind of product being
marketed. What makes a product or firm attractive to a customer is a combination of
elements. These need to be taken into account when deciding on a marketing
strategy, as consumer behaviour is affected by many elements (Kotler, 2003).
Consumer behaviour is displayed by consumers in “searching for, purchasing, using,
evaluating and disposing of products, services and ideas which they expect will
satisfy their needs” (Schiffman&Kanuk, 1986). By studying consumer behavior, a firm
can react to, and understand the consumers need, as therefore, produce the best
marketing strategy to benefit the firm.


Market planning is a critical process, which takes place when choosing a strategy
(McDonald, 1995). Strategic market planning plays a key role in a firm gaining



                                                                                          11
competitive advantage, as identifying key areas of exploitation allows a firm to
perform in ways that competitors cannot match (Kotler, 2006).


A firm must ensure that its marketing strategy is able to build relationships between
the firm and its customers, with four main elements of trust, commitment, satisfaction
and loyalty (Eggert et al., 2002). Each of these factors helpsfirms build competitive
advantage through business to customer relationships (Woodruff, 1997 and
Palmatier et al., 2007) as the strategy builds up positive relationships and barriers
against entry for other competitors.


Such marketing strategies are not without their criticisms however, particularly as
customers may not respond to a marketing campaign as positively as thought by a
firm, leaving them in a situation of uncertainty as the sought after link between
planning and success is not established (Saker & Smith, 1997 and Pulendran et al.,
2003). Barriers can also impact on the successfulness of a marketing strategy, and
these are issues that must be investigated and researched before a strategy is
implemented (McDonald, 1996). These may be simple issues, such as cultural
barriers, yet they are still vital in the execution of a successful marketing strategy.
Mintzberg (1994) suggested that three fallacies were responsible for poor marketing
strategy formation: poorly evaluated predetermination of events, detachment from
the required situation with top down management formation, and poor formulisation
during the creative process.




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3     Findings and Analysis


The aim of this section of the report is to analyse and apply the theories and models
examined in the literature review, to the work done in the Placement Project report. It
will aim to look at this from a wider perspective, and critically analyse whether or not
the marketing strategy that was ultimately undertake was done in the correct manner,
and if the current strategy employed by IBM PowerNet is the best to continue with in
the future.


The literature studied in the literature review section of this report, will help me
analysis these issues, by providing me with a range of theory and sources to base
the reasoning around. It has allowed me to gain an understanding as to the
reasoning behind certain marketing strategies, strategic directions and sustainability,
all of which will be examined under the following sub-sections.


3.1    Analysis of Marketing Strategy


After internal analysis of IBM PowerNet‟s ISV relationships, and revenue drive, it was
decided that a new marketing strategy was to be put in place. This consisted of a
tangible tri-fold flyer, as well as an electronic version, detailing what the IBM
PowerNet programme consisted of, and why ISVs would want to join. The aim of this
strategy was primarily to increase the number of new ISVs working in conjunction
with IBM PowerNet, and secondly, to increase the year on year revenue of the
programme.


The literature studied has shown that this marketing campaign could be used to
create a unique competitive advantage, by targeting a very select audience (Kotler,
2003). IBM PowerNet‟s key target public when recruiting, is small ISVs, providing a
unique software package, which can be paired with IBMs hardware, creating a
custom made solution. The marketing material produced, did exactly this, specifically
targeted towards ISVs, it directly focused on the key target public, and was tailored to
suit their requirements.


Focusing specifically on these small businesses also enabled IBM PowerNet to gain
a competitive advantage by telling the ISVs, exactly what the programme entailed.
Whilst Porter (1985) suggested that products either fall under either of the two


                                                                                       13
categories of differentiation or low-cost, IBM PowerNet allow these to be combined,
creating a low-cost differentiated product as the solutions sold are often to very small
firms, yet are uniquely tailored to that firms needs (Baden-Fuller & Stopford, 1992).


The ability to define the PowerNet programmes strategic direction, and benefits,
meant that IBM could use this marketing strategy to draw in firms they believed could
uniquely fit the PowerNet strategy and way of working (McDonald, 1995). The recent
drop in new ISVs joining the programme had affected revenue, and as such, this
ability was key in allowing IBM PowerNet to turn this around.


Eggert et al., (2002), suggest that the firms ability to engage with their target publics,
and build relationships, is a fundamental part of a successful marketing strategy. This
may be done in a variety of ways; to build trust, commitment, satisfaction and loyalty,
all key in a firms attempt to gain competitive advantage. IBM PowerNet‟s decision to
use handouts, or flyers, meant that the marketing material was delivered in a
personal manner, often at events where representatives of the programme were in
attendance, allowing follow up discussions about the programme to take place. A
personalised, face-to-face strategy such as this, allowed IBM to build on the
information given in the marketing material, and fully engage with their target publics,
therefore building relationships, and giving the ISV a feeling of service.


A negative side of the strategy has been identified, linked to work developed by
Saker & Smith, (1997). They suggested that some marketing strategies might
experience a lack of response from the target audience, leading to a situation of
uncertainty for the marketing firm. This was indeed the case with IBM PowerNet,
linked to the electronic marketing of the material. This relied heavily on using pre-
built up networks of contacts to market the material too, and did not allow the
personal follow up effect provided with the physical copy. This lead to a low response
rate compared with the physical flyer, and success could not be measured as easily.
The success of this marketing strategy has been measured on the total number of
ISVs in the programme at the end of 2010, approximately 6 months after the
marketing strategy was put in place. At the end of 2009, IBM PowerNet had 80 ISVs
working with it, however this number had risen significantly by the end of 2010, to
134. Whilst the marketing strategy may not have been the only impacting factor on
this number, it is clear to see that the effect it has had on new ISVs is significant, and
has been a positive move by IBM.



                                                                                        14
3.2   Analysis of the Strategic Direction of IBM PowerNet


IBM PowerNet‟s marketing strategy tied in with the strategic direction of the
programme, in such that they aim to drive revenue by working alongside ISVs selling
solutions to new business. The main business model is based around a lot of value
added business, relying on the success of their partnerships with ISVs to drive
revenue.


Literature has suggested that this is a positive business model and strategic direction
to follow, as it allows the firms involved to share knowledge and expertise (Hines,
1998). Johnston & Lawrence (1988) have also suggested that these partnerships are
particularly useful in the IT industry, as the ability to share skills and product systems
allows both firms to benefit, giving each a competitive advantage, whilst also building
positive relations and trust between the two. This factor links in well with IBM
PowerNet‟s strategic direction, as their ability to successfully build positive
relationships and work cohesively with ISVs is what has made the programme a
success in the past.


As well as the strategy of selling solutions in partnership with ISVs, IBM PowerNet
chooses to price their solutions as competitively as possible, with the price often
being based on the technicality of the software being provided by the ISV, and the
willingness to pay of the customer. Although Porter (1985) suggested that products
were either low-price or differentiated, IBM have managed to combine the two to
create anwell priced, tailored solution that their customers can afford. Miller (1992)
has re-enforced this notion that products can overlap, and IBM PowerNet have built
their strategy around this.


Their strategy of offering custom made solutions, means that IBM can work with their
ISVs to competitively price their products, in order to drive as much revenue for both
the ISV and themselves, whilst appealing to as big a market as possible. Piercy et al.,
(2010) suggested that low price strategies might appeal to a larger market place,
particularly in times of recession such as today. For me, this underlines the fact that
IBM PowerNet‟s strategic direction of working alongside these ISVs, in order to offer
a customised, competitively priced solution is a positive one to be pursuing.




                                                                                         15
Another factor built into this strategy employed by IBM PowerNet, is the ability to
build and develop long lasting relationships, both with ISVs and customers. The
nature of the products and solutions sold means that they often have a very short
product life cycle, needing updating and improving every few years as technology
advances. The positive relationships built over the years between IBM PowerNet and
the ISVs they work with, gives both parties a mutual understanding of each other,
building up a trust with is only gained over time, as suggested by Forbis & Mehta
(1981).


The risks involved in this strategy are that these relationships may not be formed, or
that they may not last as forecasted. This is why Reeves (2009) backs up the idea
that knowing your business partners, and understanding the relationships is what
makes this strategy successful. IBM PowerNet regularly meet with their ISVs at
public events, and keep them updated via e-communications, in an attempt to
continue the positive relationships built up over time, helping to keep the strategy
successful, as it has been in the past.


3.3      Sustainability Analysis of IBM PowerNet’s Business Model


The final section of the findings and analysis is to examine the sustainability of the
IBM PowerNet business model. Using the Threats to Sustainability framework
(Ghemawat, 1991) (Figure 3) examined in the literature review, the business model
can be clearly examined under the four threats of imitation, substitution, holdup and
slack.


The business model of IBM PowerNet is such that the products and solutions
purchased by customers are custom designed to suit their needs, and as such, the
threat of imitation and substitution is reduced. As IBM PowerNet seek to constantly
work with and build relationships with ISVs working in as many software fields as
possible, it is constantly working against the threat of imitation, which is particularly
important in the ever changing IT industry (Johnston & Lawrence, 1988).


Wilson (2003) suggests that in order for a firm or project to be sustainable, it must
ensure that it does not impact on other areas of the firm, or business partners.
Research into the IBM PowerNet programme has proved that they in fact do the
opposite, building relationships with ISVs and over time, passing them on to other



                                                                                            16
programmes within IBM, where they can also be of use. This further reinforces the
sustainability of IBM PowerNet, as they are building business relations within the
programme, as well as for other areas of the business.


The ability of IBM PowerNet to build these relationships, as well as identify new and
emerging technologies that can be worked into the programme, has been a large
factor in the past success of the programme. Starbuck & Milliken (1988) suggest that
the ability to identify changes in the environment, and needs of customers, can play
an important role in forming a sustainable business strategy, as IBM PowerNet has
done.




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4   Conclusion and Critical Reflection


After discussing and evaluating the aims and objectives of this discussion through
various literature and theories, a conclusion can be reached, backed up by the
research and literature used thus far. A sustainability analysis of the IBM PowerNet
Programme has proved that whilst there may be clear negative aspects to the
scheme, such as the need for customers to constantly upgrade their products, the
positives much outweigh the negatives.Critical analysis has proved that the
programme helps to build positive relationships with other businesses, and has a
wider positive effect on IBM as a whole, passing business partners over to other
areas of the firm where they can also be of use. This Value-added property
reinforces the suggestion that the IBM PowerNet programme is a positive way for
IBM to drive new business, and aid the overall growth of the firm.


This approach fits in well with the company‟s ethics and culture, which is based on
communication and building relationships, both internally between employees, and
externally between IBM, customers and business partners, underpinning the
suggestion that it is a strategy that should be continued with.


Theory and literature has backed up the need for more marketing material to be
produced, and therefore supports the work done in the practical section of this report.
It addressed the key target publics and has proved successful in its application when
results are analysed, however, research done in the literature review has suggested
that part of the way in which it was distributed was not done to full effect, and may
have been more efficient.


The literature review allowed me to fully analyse the PowerNet programme from
views otherwise not available, and fully critique it by looking at a variety of papers
highlighting different theoretical approaches. Using a variety of sources and papers
to analysis the different approaches allowed me to gain a full understanding by
reading a range of opinions and criticisms on the different methods used. When
applying this to the area discussed I was able to fully construct an argument to come
up with the most suitable conclusion.




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4.1   Recommendations:


From this analysis, I am able to conclude with a concise set of recommendations,
which could serve to aid the growth and development of IBM PowerNet in the future:


       Continue to build on B2B relationships with both ISVs and business partners,
       allowing IBM PowerNet to build the foundations of it‟s success on a positive
       reputation of client relationships
       Focus on new and unique ISVs, whilst passing bigger, more developed ISVs
       onto other areas of the IBM business – this with the aim of growing both the
       IBM PowerNet programme and IBMs business as a whole
       Re-evaluate marketing material when needed, ensuring that any promotions
       or marketing programmes are delivered to key target publics on a regular
       basis, keeping the IBM PowerNet programme as a vocal player in the IT
       market place




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                                                                                     21
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                                                                                     22
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                                                                                       23
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                                                                                     24
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Journal of the Academy of Marketing Science, 25(2), pp.139-143




                                                                                  25
6    Appendix 1 – Ethics Checklist

                                                                          YES     NO   N/A
1.   Is the size of sample proposed for any group enquiry larger                  ✓
     than justifiably necessary?

2    Will any lines of enquiry cause undue distress or be                         ✓
     impertinent?

3    Has any relationship between the researcher(s) and the                            ✓
     participant(s), other than that required by the academic activity,
     been declared?

4    Have the participants been made fully aware of the true nature       ✓
     and purpose of the study?


     If NO is there satisfactory justification (such as the likelihood
     of the end results being affected) for withholding such
     information? (Details to be provided to the person approving
     the proposal).

5    Have the participants given their explicit consent?                      ✓
     If NO is there satisfactory justification for not obtaining
     consent? (Details to be provided to the person approving the
     proposal).

6    Have the participants been informed at the outset that they can      ✓
     withdraw themselves and their data from the academic activity
     at any time?

7    Are due processes in place to ensure that the rights of those        ✓
     participants who may be unable to assess the implications of
     the proposed work are safeguarded?

8    Have any risks to the researcher(s), the participant(s) or the       ✓
     University been assessed?

     If YES to any of the above is the risk outweighed by the value
                                                                          ✓
     of the academic activity?
9    If any academic activity is concerned with studies on activities                  ✓
     which themselves raise questions of legality is there a
     persuasive rationale which demonstrates to the satisfaction of
     the University that:

     i the risk to the University in terms of external (and
     internal) perceptions of the worthiness of the work has
     been assessed and is deemed acceptable;

     ii arrangements are in place which safeguard the
     interests of the researcher(s) being supervised in
     pursuit of the academic activity objectives;
     iii special arrangements have been made for the security
     of related documentation and artefacts.

     Appropriate expert advice should be sought as appropriate
10   Have the ethical principles and guidelines of any external           ✓
     bodies associated with the academic activity been considered?


                                                                                             26
1      Name(s) of Applicant: William Scott

2      Department: Sales and Operations Department

3      Name of Supervisor: Sara Penney

4      Title of Project: An assessment of IBM PowerNet’s business strategy,
analysing sustainability, suitability and marketing strategy

5      Resume of ethical issues: N/A

6      Does the project require the approval of any external agency?

       NO      *

       If YES has approval been granted by the external agency?




       * delete as appropriate




7      Statement by Applicant

       I confirm that to the best of my knowledge I have made known all relevant information and I
       undertake to inform my supervisor of any such information which subsequently becomes
       available whether before or after the research has begun


8      Signature of Applicant: ________________________             Date: _____________




                                                                                                27
Statement by Supervisor/Line Manager (please sign the relevant statement)

      Approval for the above named proposal is granted

      I confirm that there are no ethical issues requiring further
      consideration.

      (Any subsequent changes to the nature of the project will require a
      review of the ethical considerations):

      Signature of Supervisor: ________________________                Date: _____________



     Approval for the above named proposal is not granted
     I confirm that there are ethical issues requiring further consideration and will refer the
     project proposal to the appropriate Committee**
     Signature of Supervisor: _________________________                Date: _____________



**    For work forming part of an MMU taught programme– refer to Faculty
      Academic Standards Committee

**    For work forming part of an MMU research programme – refer to Faculty
      Research Degree Committee

**    For PhD by published work – refer to Research Degree Committee

**    For any other work – refer to appropriate Faculty/Department
      Committee or line manager




                                                                                                  28

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Dissertation Part 2 - Academic Discussion

  • 1. Placement Based Research Project Academic Discussion BA (Hons) International Business William Scott - 07083290 Date of Submission – Monday 21st March 2011
  • 2. Table of Contents 1 Topic Area ................................................................................................ 3 2 Literature Review ..................................................................................... 5 2.1 Strategic Capability & Reasoning ..................................................................... 5 2.1.1 Pricing Strategy ......................................................................................... 6 2.1.2 Relationship Strategy................................................................................. 7 2.2 Value Added Business ..................................................................................... 8 2.2.1 Value Net Analysis..................................................................................... 8 2.3 External Analysis .............................................................................................. 9 2.3.1 Threats to Sustainability........................................................................... 10 2.3.2 Marketing Strategy................................................................................... 11 3 Findings and Analysis ........................................................................... 13 3.1 Analysis of Marketing Strategy ....................................................................... 13 3.2 Analysis of the Strategic Direction of IBM PowerNet....................................... 15 3.3 Sustainability Analysis of IBM PowerNet‟s Business Model ............................ 16 4 Conclusion and Critical Reflection ....................................................... 18 4.1 Recommendations:......................................................................................... 19 5 References.............................................................................................. 20 6 Appendix 1 – Ethics Checklist .............................................................. 26 2
  • 3. 1 Topic Area The primary topic area of this academic discussion is to analyse the reasoning behind IBM PowerNet‟s business strategy of working alongside and doing business with, small, individual businesses, known as Independent Software Vendors (ISVs), to drive revenue. This strategy is in the form of pairing the software solution of a small IT firm, with various pieces of IBM‟s hardware, to form a „solution‟. This is then sold to customers both small and large. These customer groups are divided into two categories, „White Space‟ meaning they have not bought from IBM within the past 3 years, and „IBM House‟, defined as having previously bought from IBM within the past 3 years. The strategy implemented by IBM PowerNet targets the White Space business, as they aim to drive revenue by engaging in business with new customers. Since the programme was born in 2004, revenue has increased steadily year on year until 2009, where it fell for the first time. Various reasons have been cited for this, including the effect of the economic downturn, and the lack of marketing material made available. When the numbers were analysed, it was decided that marketing material was needed in order for the number of ISVs to grow, and this was done in conjunction with the practical part of this project. In making the decision to produce marketing material, it meant that the strategy of targeting new business, with new ISVs was to continue for the foreseeable future. The aim of this report is to examine whether this was a positive move on the part of IBM, and to look at the sustainability of the programme in current market conditions. The current market environment is similar to that of the past two-three years, with firms cutting back on IT expenditure, due to the economic downturn. This will continue to have an impact on IBM PowerNet, and so the strategy in place must be able to react to, and cope with these conditions. The marketing material produced in the practical section of the report has proved successful, helping to increase the number of ISVs working with IBM PowerNet from 80 in 2009, to 134 in 2010. Whilst this is not the only factor contributing to this change, it is clear to see that the marketing strategy was a positive move by the firm. The aim of this discussion is to assess and evaluate whether the strategy in place by IBM PowerNet is a sustainable and positive strategy to continue with. In order to assess and evaluate this, academic sources will be analysed to both critique and 3
  • 4. back up their strategy. Several key areas will need to be examined in order to come to a suitable conclusion and assess whether or not it is the correct strategy to pursue. 4
  • 5. 2 Literature Review The literature review will primarily address the key aims of the project whilst also providing a foundation from which the research will be built (Saunders et al., 2009). Findings will be drawn from key texts, journal articles and internet sources in order to fully analyse the research aims, and develop a critical understanding of the theories and methods used in relation to the project (Rowley & Slack, 2004). Analysis will also be made from looking at internal analysis and publications from IBM. 2.1 Strategic Capability &Reasoning Strategic planning can been seen to start with a firm examining relationships between the firms “environment, strategy within the environment and structure”(Chandler, 1962). These three elements allow a firm to study the various ways in which a strategy can be formed, by not only looking at the internal business environment, but also the external. (Ansoff ,1977). Environment Structure Strategy Figure 1: Chandler, 1962 Selecting the correct strategy in key to a businesses success, and imperative in giving a firm competitive advantage. Competitive advantage can be defined as the unique capability which gives one firm an advantage over another in any given competitive industry or market place (Porter, 1985). Firms may have many capabilities that give them this competitive advantage, yet it is the ones which are valued most by the customer that allow firms to engage with and use the competitive advantage to the full. Being able to analyse the internal and external relationships as suggested by Chandler, allows a firm to fully utilise the competitive advantage 5
  • 6. available to them by implementing the correct strategy and meeting the needs of their customers (Fahey, 2000). Another way of determining strategy is to look at the products a firm has to offer. Placing a product in strategic positions, allows the firm to determine how best to get the product to market, and make it attractive to customers (Porter, 1980). Porter suggests that products fall under the headings of either differentiation strategy, or cost leadership. Further developments on this strategy have however, found that many products and indeed businesses, can fall under both headings, allowing them to find a niche in the market place (Miller, 1992), or become a market leader by combining the two strategies (Baden-Fuller & Stopford, 1992). A well-evaluated systematic analysis of competitive positioning is key to a firm‟s competitive advantage, incorrect positioning could mean a firm wastes the competitive advantage they already hold over other players in the industry (Bowman & Faulkner, 1994) 2.1.1 Pricing Strategy The pricing strategy used by IBM PowerNet‟s solutions is key to the way they gain competitive advantage and make the products attractive to a wide range of customers. The recent economic downturn has meant that many firms are not investing as much in IT services or IT solutions, and as such, competitively priced products on IBM‟s part has made them more attractive in the market place (Piercy et al., 2010). The decision made by IBM PowerNet to price their products in such a competitive manor may not solely have been influenced by the economic downturn. Pricing strategies can also have a effect on customer and supplier relationships, and in the case of IBM PowerNet, where the end price was determined not only by IBM, but by the ISV they are partnered with, a long-standing, positive relationship between customer and firm could be vital (Gourville&Soman, 2002). Pricing strategy can also be affected by the products life cycle (Thompson & Coe, 1997). Products with a short life cycle, which are renewed, or updated on a regular basis may often demand a lower pricing strategy, which not only makes the product more attractive to customers, but also makes the potential risk of a competitor undercutting the price less so (Forbis & Mehta, 1981). 6
  • 7. The decision making involved in the pricing strategy does not however, rest on the volume of sales. Firms must evaluate the other competitive advantages they may gain by implementing a successful pricing strategy (Staples, 1980). They must look at the corporate image it reflects on the company, and the relationships it could forge or loose. A pricing strategy is not just a tool for selling products, but a multi-attribute one, impacting on many business areas (Coppett & Staples, 1980, and Thompson, 1989). 2.1.2 Relationship Strategy IBM PowerNet‟s sales rely heavily on the quality, and performance of their business partners – the ISVs who produce the software to form the package sold to the customer. This makes, a successful relationship between IBM and both the ISVs and customers is of paramount importance. Co-operative relationships can be formed between one firm and another (in this case, IBM and it‟s ISVs), allowing both firms to thrive in a competitive environment by sharing skills and expertise (Reeves, 2009). A strategy such as this, may enable both firms to reduce costs, by working together for a mutual benefit, and to shape the way in which the industry moves, by working against mutual competitors (Reeves & Deimler, 2009). Strategic alliances have been in place for many years, particularly in the IT industry, yet it is the outcome of these relationships that determines how successful, and useful they are to each firm (Vyas et al., 1995). Forming a strategic relationship with a firm that has complementary skills or resources, may allow one to fully maximise both firms efficiency and effectiveness, leading to a competitive advantage, through shared experience (Mendleson & Polonsky, 1995). It is how a firm decides the extent to which a strategic relationship will benefit them, that can truly give both parties a competitive advantage (Day & Montgomery, 1999). Scanning the business environment for the best partnering opportunities, looking at potential alliances strategies and experience, can give firms the opportunity to form more effective partnerships (Kandermir et al., 2006). 7
  • 8. 2.2 Value Added Business Value is created by a business operating together with its customers and suppliers, to create a value captured by the firm (Ghemawat, 1999). A firm cannot create value on its own, so the ability to generate and capture value by working with their customers and suppliers, can be key to any firms survival (Ghemawat, 1999). The model used by IBM PowerNet, relies on this value created by working with their ISVs and other businesses. Working alongside other businesses to create value in this way offers a range of benefits for both firms involved. Integrating in this way can often give firms a competitive advantage through economies of scale and market power, particularly in the IT industry (Johnston & Lawrence, 1988). This type of value added business gives both firms the opportunity to expand within the market, as working with each other and sharing resources increases the firm‟s knowledge, without impacting on costs (Hines, 1998). As is the case in this paper, value added business partnerships often occur between a large and a small firm, with different benefits for each. Smaller firms will often supply a very specific product or service, in exchange for the reputation allegiance, and increased efficiency (Johnston & Lawrence, 1988). Larger firms, such as IBM, may use tools such as a Value Opportunity Web (VOW), to analyse the market place and help aid decision making regarding the amount of added value gained by working with a smaller firm (Fahey, 2000). VOWs allow both firms to critique the strategic purpose behind a value added partnership, and extract breakthrough opportunities as they emerge. 2.2.1 Value Net Analysis The Value Net (Brandenburger & Nalebuff, 1995)(Figure 2) is a tool for examining competitive strategy, and business relationships, based on the Five Forces Model (Porter, 1985). Examining the relationship between a firm and four „players‟ – customers, competitors, suppliers and complementors, allows a firm to fully understand the market, and where value can be gained. 8
  • 9. It has been suggested that competition between firms is dead (Moore, 1996), and that firms must now work with their competitors, in order to survive and gain a competitive advantage. This has been expanded on, to form the co-opertition idea, where firms combine competition, and co-operation (Brandenburger & Nalebuff, 1996). This concept is the foundations of the Value Net, as it allows a firm to identify partnerships and competitive relations within the market. Figure 2: Brandenburger& Nalebuff, 1996 It has also been suggested that this theory allows firms to experience multi- directional learning and gain experience from one another, whilst still competing for business and market share (Tsai, 2002). However, criticisms have been made of this practice, with it being suggested that co- opertition allows firms to take advantage of others, and undertake devious practices, in order to outdo their competitor (Hamel et al., 1989). Yet this is not to say that firms cannot defend against this. The Value Net analysis allows firm to build suitable defences against such practices, as well as gain experience and knowledge as to how their collaborator works, through their relationships with other suppliers, customers and complementors in the market (Prahalad, 1989). 2.3 External Analysis An external analysis of the market environment is an important step in aiding development and implementation of a successful strategy. Porter (1985), suggested that there were five forces which determined the intensity and attractiveness of a market, (Figure 3). This model enables a firm to gain a full analysis of the market, as 9
  • 10. it looks at both vertical and horizontal competition to the firm, and links well into Porter‟s other models of the value chain and generic strategies. Figure 3: Porter, 1985 This can then provide the base to a sustainability analysis, as a firm can fully analysis the factors that affect the business, both externally and internally. Without the use of an external analysis such as Porter‟s Five Forces, a firm cannot fully understand the market environment, and therefore any strategy implemented may not be put to full effect. 2.3.1 Threats to Sustainability Sustainability in strategy is often a difficult factor to obtain, with various threats from different places in the market. Business threats are constantly in place, and firms need to adapt and tailor their strategies to overcome these. The “Four Threats to Sustainability” model (Ghemawat, 1991) (Figure 4) outlines the threats with the capability of reducing the ability of a firm to add value. This framework can be linked to the Value Net framework (Brandenburger & Nalebuff, 1996), and used by a firm to analyse all aspects of an industry‟s threats. Figure 4: Ghemawat, 1991 10
  • 11. Other factors may need to be taken into consideration when looking to build a sustainable business model, such as looking at the long-term environmental, economic and social considerations (Crane & Matten, 2007). These factors are seen as of particular importance in the modern day business environment, with increasing pressure on firms to take into account the effect their firm is having on public situations. A firms values, visions and priorities also need to be evaluated, (Weick, 1995) ensuring that achieving a sustainable strategy does not compromise a firms mission statement. This is also related to what a firm may be willing to trade-off, in order to achieve sustainability, as certain strategic decisions may have effects on other areas of the firm (Wilson, 2003). This decision making process involves scanning the business environment to gather data and identify strategic problems of opportunities (Starbuck & Milliken, 1988). These results can be evaluated and analysed through using frameworks such as Ghemawat‟s (Figure 4), in order to gain a theoretical insight as to the sustainability of a strategy. It has been suggested, that the emotional link of a manager or firm towards a certain strategy or direction, may affect the decision making and how relevant it may be (Kollmus & Agyeman, 2002). This critique of the decision making process adds another dimension to the sustainability model which needs to be considered by firms. 2.3.2 Marketing Strategy A firms marketing strategy may often be based on the kind of product being marketed. What makes a product or firm attractive to a customer is a combination of elements. These need to be taken into account when deciding on a marketing strategy, as consumer behaviour is affected by many elements (Kotler, 2003). Consumer behaviour is displayed by consumers in “searching for, purchasing, using, evaluating and disposing of products, services and ideas which they expect will satisfy their needs” (Schiffman&Kanuk, 1986). By studying consumer behavior, a firm can react to, and understand the consumers need, as therefore, produce the best marketing strategy to benefit the firm. Market planning is a critical process, which takes place when choosing a strategy (McDonald, 1995). Strategic market planning plays a key role in a firm gaining 11
  • 12. competitive advantage, as identifying key areas of exploitation allows a firm to perform in ways that competitors cannot match (Kotler, 2006). A firm must ensure that its marketing strategy is able to build relationships between the firm and its customers, with four main elements of trust, commitment, satisfaction and loyalty (Eggert et al., 2002). Each of these factors helpsfirms build competitive advantage through business to customer relationships (Woodruff, 1997 and Palmatier et al., 2007) as the strategy builds up positive relationships and barriers against entry for other competitors. Such marketing strategies are not without their criticisms however, particularly as customers may not respond to a marketing campaign as positively as thought by a firm, leaving them in a situation of uncertainty as the sought after link between planning and success is not established (Saker & Smith, 1997 and Pulendran et al., 2003). Barriers can also impact on the successfulness of a marketing strategy, and these are issues that must be investigated and researched before a strategy is implemented (McDonald, 1996). These may be simple issues, such as cultural barriers, yet they are still vital in the execution of a successful marketing strategy. Mintzberg (1994) suggested that three fallacies were responsible for poor marketing strategy formation: poorly evaluated predetermination of events, detachment from the required situation with top down management formation, and poor formulisation during the creative process. 12
  • 13. 3 Findings and Analysis The aim of this section of the report is to analyse and apply the theories and models examined in the literature review, to the work done in the Placement Project report. It will aim to look at this from a wider perspective, and critically analyse whether or not the marketing strategy that was ultimately undertake was done in the correct manner, and if the current strategy employed by IBM PowerNet is the best to continue with in the future. The literature studied in the literature review section of this report, will help me analysis these issues, by providing me with a range of theory and sources to base the reasoning around. It has allowed me to gain an understanding as to the reasoning behind certain marketing strategies, strategic directions and sustainability, all of which will be examined under the following sub-sections. 3.1 Analysis of Marketing Strategy After internal analysis of IBM PowerNet‟s ISV relationships, and revenue drive, it was decided that a new marketing strategy was to be put in place. This consisted of a tangible tri-fold flyer, as well as an electronic version, detailing what the IBM PowerNet programme consisted of, and why ISVs would want to join. The aim of this strategy was primarily to increase the number of new ISVs working in conjunction with IBM PowerNet, and secondly, to increase the year on year revenue of the programme. The literature studied has shown that this marketing campaign could be used to create a unique competitive advantage, by targeting a very select audience (Kotler, 2003). IBM PowerNet‟s key target public when recruiting, is small ISVs, providing a unique software package, which can be paired with IBMs hardware, creating a custom made solution. The marketing material produced, did exactly this, specifically targeted towards ISVs, it directly focused on the key target public, and was tailored to suit their requirements. Focusing specifically on these small businesses also enabled IBM PowerNet to gain a competitive advantage by telling the ISVs, exactly what the programme entailed. Whilst Porter (1985) suggested that products either fall under either of the two 13
  • 14. categories of differentiation or low-cost, IBM PowerNet allow these to be combined, creating a low-cost differentiated product as the solutions sold are often to very small firms, yet are uniquely tailored to that firms needs (Baden-Fuller & Stopford, 1992). The ability to define the PowerNet programmes strategic direction, and benefits, meant that IBM could use this marketing strategy to draw in firms they believed could uniquely fit the PowerNet strategy and way of working (McDonald, 1995). The recent drop in new ISVs joining the programme had affected revenue, and as such, this ability was key in allowing IBM PowerNet to turn this around. Eggert et al., (2002), suggest that the firms ability to engage with their target publics, and build relationships, is a fundamental part of a successful marketing strategy. This may be done in a variety of ways; to build trust, commitment, satisfaction and loyalty, all key in a firms attempt to gain competitive advantage. IBM PowerNet‟s decision to use handouts, or flyers, meant that the marketing material was delivered in a personal manner, often at events where representatives of the programme were in attendance, allowing follow up discussions about the programme to take place. A personalised, face-to-face strategy such as this, allowed IBM to build on the information given in the marketing material, and fully engage with their target publics, therefore building relationships, and giving the ISV a feeling of service. A negative side of the strategy has been identified, linked to work developed by Saker & Smith, (1997). They suggested that some marketing strategies might experience a lack of response from the target audience, leading to a situation of uncertainty for the marketing firm. This was indeed the case with IBM PowerNet, linked to the electronic marketing of the material. This relied heavily on using pre- built up networks of contacts to market the material too, and did not allow the personal follow up effect provided with the physical copy. This lead to a low response rate compared with the physical flyer, and success could not be measured as easily. The success of this marketing strategy has been measured on the total number of ISVs in the programme at the end of 2010, approximately 6 months after the marketing strategy was put in place. At the end of 2009, IBM PowerNet had 80 ISVs working with it, however this number had risen significantly by the end of 2010, to 134. Whilst the marketing strategy may not have been the only impacting factor on this number, it is clear to see that the effect it has had on new ISVs is significant, and has been a positive move by IBM. 14
  • 15. 3.2 Analysis of the Strategic Direction of IBM PowerNet IBM PowerNet‟s marketing strategy tied in with the strategic direction of the programme, in such that they aim to drive revenue by working alongside ISVs selling solutions to new business. The main business model is based around a lot of value added business, relying on the success of their partnerships with ISVs to drive revenue. Literature has suggested that this is a positive business model and strategic direction to follow, as it allows the firms involved to share knowledge and expertise (Hines, 1998). Johnston & Lawrence (1988) have also suggested that these partnerships are particularly useful in the IT industry, as the ability to share skills and product systems allows both firms to benefit, giving each a competitive advantage, whilst also building positive relations and trust between the two. This factor links in well with IBM PowerNet‟s strategic direction, as their ability to successfully build positive relationships and work cohesively with ISVs is what has made the programme a success in the past. As well as the strategy of selling solutions in partnership with ISVs, IBM PowerNet chooses to price their solutions as competitively as possible, with the price often being based on the technicality of the software being provided by the ISV, and the willingness to pay of the customer. Although Porter (1985) suggested that products were either low-price or differentiated, IBM have managed to combine the two to create anwell priced, tailored solution that their customers can afford. Miller (1992) has re-enforced this notion that products can overlap, and IBM PowerNet have built their strategy around this. Their strategy of offering custom made solutions, means that IBM can work with their ISVs to competitively price their products, in order to drive as much revenue for both the ISV and themselves, whilst appealing to as big a market as possible. Piercy et al., (2010) suggested that low price strategies might appeal to a larger market place, particularly in times of recession such as today. For me, this underlines the fact that IBM PowerNet‟s strategic direction of working alongside these ISVs, in order to offer a customised, competitively priced solution is a positive one to be pursuing. 15
  • 16. Another factor built into this strategy employed by IBM PowerNet, is the ability to build and develop long lasting relationships, both with ISVs and customers. The nature of the products and solutions sold means that they often have a very short product life cycle, needing updating and improving every few years as technology advances. The positive relationships built over the years between IBM PowerNet and the ISVs they work with, gives both parties a mutual understanding of each other, building up a trust with is only gained over time, as suggested by Forbis & Mehta (1981). The risks involved in this strategy are that these relationships may not be formed, or that they may not last as forecasted. This is why Reeves (2009) backs up the idea that knowing your business partners, and understanding the relationships is what makes this strategy successful. IBM PowerNet regularly meet with their ISVs at public events, and keep them updated via e-communications, in an attempt to continue the positive relationships built up over time, helping to keep the strategy successful, as it has been in the past. 3.3 Sustainability Analysis of IBM PowerNet’s Business Model The final section of the findings and analysis is to examine the sustainability of the IBM PowerNet business model. Using the Threats to Sustainability framework (Ghemawat, 1991) (Figure 3) examined in the literature review, the business model can be clearly examined under the four threats of imitation, substitution, holdup and slack. The business model of IBM PowerNet is such that the products and solutions purchased by customers are custom designed to suit their needs, and as such, the threat of imitation and substitution is reduced. As IBM PowerNet seek to constantly work with and build relationships with ISVs working in as many software fields as possible, it is constantly working against the threat of imitation, which is particularly important in the ever changing IT industry (Johnston & Lawrence, 1988). Wilson (2003) suggests that in order for a firm or project to be sustainable, it must ensure that it does not impact on other areas of the firm, or business partners. Research into the IBM PowerNet programme has proved that they in fact do the opposite, building relationships with ISVs and over time, passing them on to other 16
  • 17. programmes within IBM, where they can also be of use. This further reinforces the sustainability of IBM PowerNet, as they are building business relations within the programme, as well as for other areas of the business. The ability of IBM PowerNet to build these relationships, as well as identify new and emerging technologies that can be worked into the programme, has been a large factor in the past success of the programme. Starbuck & Milliken (1988) suggest that the ability to identify changes in the environment, and needs of customers, can play an important role in forming a sustainable business strategy, as IBM PowerNet has done. 17
  • 18. 4 Conclusion and Critical Reflection After discussing and evaluating the aims and objectives of this discussion through various literature and theories, a conclusion can be reached, backed up by the research and literature used thus far. A sustainability analysis of the IBM PowerNet Programme has proved that whilst there may be clear negative aspects to the scheme, such as the need for customers to constantly upgrade their products, the positives much outweigh the negatives.Critical analysis has proved that the programme helps to build positive relationships with other businesses, and has a wider positive effect on IBM as a whole, passing business partners over to other areas of the firm where they can also be of use. This Value-added property reinforces the suggestion that the IBM PowerNet programme is a positive way for IBM to drive new business, and aid the overall growth of the firm. This approach fits in well with the company‟s ethics and culture, which is based on communication and building relationships, both internally between employees, and externally between IBM, customers and business partners, underpinning the suggestion that it is a strategy that should be continued with. Theory and literature has backed up the need for more marketing material to be produced, and therefore supports the work done in the practical section of this report. It addressed the key target publics and has proved successful in its application when results are analysed, however, research done in the literature review has suggested that part of the way in which it was distributed was not done to full effect, and may have been more efficient. The literature review allowed me to fully analyse the PowerNet programme from views otherwise not available, and fully critique it by looking at a variety of papers highlighting different theoretical approaches. Using a variety of sources and papers to analysis the different approaches allowed me to gain a full understanding by reading a range of opinions and criticisms on the different methods used. When applying this to the area discussed I was able to fully construct an argument to come up with the most suitable conclusion. 18
  • 19. 4.1 Recommendations: From this analysis, I am able to conclude with a concise set of recommendations, which could serve to aid the growth and development of IBM PowerNet in the future: Continue to build on B2B relationships with both ISVs and business partners, allowing IBM PowerNet to build the foundations of it‟s success on a positive reputation of client relationships Focus on new and unique ISVs, whilst passing bigger, more developed ISVs onto other areas of the IBM business – this with the aim of growing both the IBM PowerNet programme and IBMs business as a whole Re-evaluate marketing material when needed, ensuring that any promotions or marketing programmes are delivered to key target publics on a regular basis, keeping the IBM PowerNet programme as a vocal player in the IT market place 19
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  • 26. 6 Appendix 1 – Ethics Checklist YES NO N/A 1. Is the size of sample proposed for any group enquiry larger ✓ than justifiably necessary? 2 Will any lines of enquiry cause undue distress or be ✓ impertinent? 3 Has any relationship between the researcher(s) and the ✓ participant(s), other than that required by the academic activity, been declared? 4 Have the participants been made fully aware of the true nature ✓ and purpose of the study? If NO is there satisfactory justification (such as the likelihood of the end results being affected) for withholding such information? (Details to be provided to the person approving the proposal). 5 Have the participants given their explicit consent? ✓ If NO is there satisfactory justification for not obtaining consent? (Details to be provided to the person approving the proposal). 6 Have the participants been informed at the outset that they can ✓ withdraw themselves and their data from the academic activity at any time? 7 Are due processes in place to ensure that the rights of those ✓ participants who may be unable to assess the implications of the proposed work are safeguarded? 8 Have any risks to the researcher(s), the participant(s) or the ✓ University been assessed? If YES to any of the above is the risk outweighed by the value ✓ of the academic activity? 9 If any academic activity is concerned with studies on activities ✓ which themselves raise questions of legality is there a persuasive rationale which demonstrates to the satisfaction of the University that: i the risk to the University in terms of external (and internal) perceptions of the worthiness of the work has been assessed and is deemed acceptable; ii arrangements are in place which safeguard the interests of the researcher(s) being supervised in pursuit of the academic activity objectives; iii special arrangements have been made for the security of related documentation and artefacts. Appropriate expert advice should be sought as appropriate 10 Have the ethical principles and guidelines of any external ✓ bodies associated with the academic activity been considered? 26
  • 27. 1 Name(s) of Applicant: William Scott 2 Department: Sales and Operations Department 3 Name of Supervisor: Sara Penney 4 Title of Project: An assessment of IBM PowerNet’s business strategy, analysing sustainability, suitability and marketing strategy 5 Resume of ethical issues: N/A 6 Does the project require the approval of any external agency? NO * If YES has approval been granted by the external agency? * delete as appropriate 7 Statement by Applicant I confirm that to the best of my knowledge I have made known all relevant information and I undertake to inform my supervisor of any such information which subsequently becomes available whether before or after the research has begun 8 Signature of Applicant: ________________________ Date: _____________ 27
  • 28. Statement by Supervisor/Line Manager (please sign the relevant statement) Approval for the above named proposal is granted I confirm that there are no ethical issues requiring further consideration. (Any subsequent changes to the nature of the project will require a review of the ethical considerations): Signature of Supervisor: ________________________ Date: _____________ Approval for the above named proposal is not granted I confirm that there are ethical issues requiring further consideration and will refer the project proposal to the appropriate Committee** Signature of Supervisor: _________________________ Date: _____________ ** For work forming part of an MMU taught programme– refer to Faculty Academic Standards Committee ** For work forming part of an MMU research programme – refer to Faculty Research Degree Committee ** For PhD by published work – refer to Research Degree Committee ** For any other work – refer to appropriate Faculty/Department Committee or line manager 28