IBM Corporation Turnaround Case study
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IBM faced a crisis in the early 1990s as demand for mainframes decreased and the company struggled with bureaucracy and weak marketing. Louis Gerstner was hired as CEO in 1993 to lead a turnaround. He launched structural changes that empowered line executives and held them accountable for results. IBM shifted to a customer-centric approach and unified marketing strategy under the single brand of "IBM". The company focused on the growing market for network-centric computing while maintaining revenues from mainframes. These changes stabilized IBM's business and positioned it for renewed growth.
IBM Corporation Turnaround Case study
- 1. IBM Corporation Turnaround Bharti Bankey Swati Prasad Saloni Sanghani Ajinkya Thanekar Kriti Sahu Satyam Gumasta Rohit Gupta
- 2. INDUSTRY ANALYSIS Global Technology Services Global Business Services Software System and Technology Global Financing Products And Services
- 3. IBM Evolution Founded in 1911 by Charles Ranlett Flint. Thomas J. Watson took over as the CEO on 1914- built a sales powerhouse, corporate culture and a strong focus on research and international sales. In 1924 The company was subsequently renamed International Business Machines with the birth Slogan of THINK. Thomas J. Watson Jr. took charge as the CEO in 1956,, moved the company into the electronics era, building it into the mainframe powerhouse. T. Vincent Learson - CEO from 1971 to 1973. Frank T. Cary - CEO from 1973 to 1981. John R. Opel - CEO from 1981 to 1985. In 1984 IBM captured 70% of Industry’s Profits and became the world’s leading IT company. John F. Akers — CEO from 1985 to 1993. Joined in a peak condition which later ended up the company in deep crises. Louis V. Gerstner — CEO 1993 to 2002. He launched a new system in which there were no scattered companies. “Going to the market as one IBM”- Turnaround point. Sam Palmisano — CEO from 2002 to 2012. he helped create IBM Global Services. Ginni Rometty — CEO 2012 till date.
- 4. BEFORE TURNAROUND Decentralized Authority. Akers made managers more accountable for results. Planning to break IBM Corporation Policy of having Lifetime employment which was later abolished. Due to inner circle collegiality on personal relationships prevented Akers from replacing weak performers. Cost cutting, layoffs and voluntary retirement, involuntary too. AFTER TURNAROUND Going to market as one IBM. Restoring line Managers’ accountability and ownership. • Assigning projects to executive with cost reduction targets. • Changes in style of management. • Operation Bear Hug. • Partnership executives program. Cost reduction – Increased Layoffs and sale of non core businesses. Changes in the Organizational Structure – CEC and WMC New product Strategy - Network Centric Computing. No to giving up on the mainframe- source of revenues and growth.
- 5. Problems Demand for IBM core mainframe was decreasing Weak marketing strategies and customer relationships Bureaucracy hindered decision making Relentless cost cutting and low staff morale.
- 6. Solutions Structural Empowerment 1) Organizational Changes – CEC and WMC 2) More emphasis on performance over collegiality 3) Decision Authority given to line executives instead of committees. Marketing Strategy 1) Going to market as one IBM 2) Remaking the brand 3) Customer Centric Approach 4) Recognizing Market needs - Targeting network centric computing
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