With over 100 years of experience, IBM is synonymous with the business machine we use today. International Business Machines, more commonly known as IBM, was founded in 1911 and has revolutionized the modern business world. Referred to as “Big Blue,” the company was a merger of various small businesses and now ranks 49th in Fortune 500. What made it so successful? Today we will find out.
IBM – At A Glance
|Company Name||IBM (Internation Business Machines Corporation)|
|Founded||June 16, 1911|
|Founder||Charles Ranlett Flint|
|Headquarter||Armonk, New York, U.S.|
|Annual Revenue||$57.35 Billion (FY 2021)|
IBM SWOT Analysis
Analyzing SWOT involves examining the organization’s internal strengths and weaknesses, as well as external opportunities and threats. The effectiveness of a SWOT analysis is immense as it has proven to be a valuable resource in making managerial decisions. Hence, today, we will look at the IBM SWOT analysis to understand what makes the company so big.
Strengths of IBM in SWOT Analysis
Several factors of a company help the company succeed in the tight competition. The factors can be traits, resources, elements, or the business plan. These factors are also known as the strengths of a company. Now, in the IBM SWOT analysis, we will look at some of IBM’s critical and powerful traits.
Diversified Portfolio: IBM has its presence in different types of markets. The company started as a computer hardware manufacturer and later moved to the software industry. Additionally, IBM is also doing business in the service and financial market. The diversified portfolio of IBM has given the company a solid foundation against losses. According to IBM, diversification plays a massive role in succeeding in this dynamic market.
Practical Business Model: IBM has an effective business model that played a significant role in its success. IBM’s business model heavily caters to the customers. The business model high emphasizes customer relationships. IBM is dedicated to the value proposition and comes with innovation and development to ensure that. However, customers are not the only focus point here. The stakeholders are also given due importance. Additionally, the business model also high focus on operations.
Strong R&D: Research and development is one of the main departments of a company, especially if that is a technology company. IBM has always lefts its remarks in the technology sector with its excellent innovation, research, and development. IBM constantly spends an amount of money in the research sector, and the number speaks for itself. In 2020, IBM spent around $6.5 billion in the R&D sector. In 2021, the annual expenditure was $6.567 billion.
Weaknesses of IBM in SWOT Analysis
Being the best at everything is a challenging task, and it becomes even more daunting for a company. The weaknesses are always there, and room for improvement is always present. An organization like IBM should recognize how much it lacks in a particular area and how to overcome it. Now in this IBM SWOT analysis, we will look at the weaknesses.
High Price: IBM products are high in price, no matter what you get. IBM offers a comprehensive solution that can be very costly. For this complete solution, a company will have to pay for hardware, software, and additional services. In most cases, the initial cost can get extremely high, which is a negative factor for smaller companies.
Decreasing Brand Awareness: There is no doubt IBM is one of the most popular companies in the world. However, the popularity is seeing a dip. Over a few years, IBM is losing its brand awareness, and it’s reflected in the rankings. In 2017, the brand value of IBM was around $103 billion, whereas, in 2022, the brand value is at $91.34 billion. According to Rankingthebrands, IBM was the 14th best global brand in 2020. In 2021, IBM was in 18th place.
Constant Litigations: IBM has dealt with legal issues already. Due to a faulty system from IBM, Bridgestone America, the largest tire and rubber manufacturing company, filed a $600 million lawsuit due to its flawed IT implementation in 2016. Also, in 2019, four former employees of IBM sued the company for age discrimination. Also, in 2022, the federal judge ordered IBM to pay AT&T $1.5 billion for fraud, one of the most significant lawsuits in history.
Opportunities for IBM in SWOT Analysis
Strengths and weaknesses are part of the internal environment of a company. Just like the internal environment, the external environment also has an impact on the performance of a company like IBM. The positive aspects of the external environment are known as the opportunities we will discuss in this IBM SWOT Analysis.
Taking Advantage of Cloud Technology: Cloud competition has got its momentum in recent years and IBM Cloud can take the most of it. IBM Cloud focuses on digitalizing the business platform, something that is in high demand. Digital transformation of business in the future. After the impact of Covid-19, more and more companies are moving towards digital transformation. The situation has proven to be a massive opportunity for IBM Cloud to expand its growth in the cloud service industry.
Business and IT Consultancy: IBM already has a presence in many industries. Getting into the consultancy business can be a profitable decision for the decision. Business and IT consultancy have become quite popular in recent years, and a tech giant like IBM can exploit this opportunity. With the experience, expertise, brand image, and reliability, IBM can quickly excel in this industry. Additionally, IBM is already working with some of the leading businesses in the world, and it can easily make their customers.
Service and Software Expansion: IBM already offers a wide variety of services for different types of consumers. IBM’s software and service sector have seen good growth recently. Therefore, IBM will be more likely to become more profitable if it focuses on the above mentioned sectors.
Threats for IBM in SWOT Analysis
Competition, economic situation, innovation, and customer preference can drastically affect a company’s performance. Just like positive impacts, it can go another way too. These are known as the threats. A company should always remain aware of what is happening in its external environment to avoid threats. In this IBM SWOT Analysis, we will also cover the perils of IBM.
Emerging Competition: IBM is a pioneer in the IT industry. However, other companies have caught up quite closely recently. Accenture, IBM’s closest competitor in the IT industry, has a market cap of over $150 billion. In the hardware market, HP is quite close to IBM, with a market cap of over $30 billion. Some other notable competitors of IBM are Apple, Microsoft, Amazon, Oracle, Dell, HP, etc.
Fragile Cyber Security: Businesses today is going digital, which has resulted in a rise in cybercrime. Year by year, cybercrime has increased rapidly. There was a 62% increase in cyber in 2022 compared to 2021. A company that provides cyber security, IBM should highly focus on its security strategies to defend against the ever-rising hackers. Motherless, further legal issues will be on their way.
Global Economic Crisis: The global economy is experiencing a crisis at present. The dollar value has risen dramatically, fuel resources have been limited, and political embargoes have been imposed. Developing countries are struggling so are the businesses. A crisis like this is always a threat to companies like IBM as most of its customers are enterprises.
IBM SWOT Analysis Overview Template
Conclusion and Recommendations for IBM
If IBM plans to remain in its top position, the below steps from the experts can be the right arsenal to get the company going.
- Concentrate primarily on the cloud computing industry while ensuring data security is maintained correctly.
- Diversify in the business and IT consultancy industry to exploit the high potential market.
- Expand the software and service offering as these have proven to be profitable.
- Keep track of all the competitors and understand what should be the next step to stay ahead of them.
- Understand the global economic crisis and ensure products and services are offered according to the customers’ ability.
With a market presence in over 171 countries, IBM is one of the biggest tech giants in the entire world. By developing electronic keypunch, electronic typewriters, the Automatic Sequence Controlled Calculator known as Mark I, and the phenomenal IBM 701, IBM has shaped the world of business. A pioneer in technology, IBM is still thriving with its full glory with a few drawbacks.
Drawbacks such as weaknesses and threats are ever present, and companies like IBM knows how to deal with them. A single or several decisions can quickly sort things out, and something like the IBM SWOT analysis is one of the best resources the top management of IBM can have. It is our belief that to sustain in this dynamic world of business, this SWOT analysis can play a crucial part.