Sample Essay on IBM Business Operation


Proper management in any organization enhances growth and profitability by ensuring that the company is capable of maximizing its production from the very little resources available. Other than the use of resources, organization management ranges from appropriate use of available systems and technologies to appropriate use of production techniques to enhance production of goods and service. Like any other organization, IBM business operations rely on its management. This paper explores the role globalization and technology changes play in IBM operations, how IBM uses its industrial organization model and resource-based model to earn above average, how the vision statement and mission statement influence the overall success of the company and the impact of each category of stakeholder on overall success of IBM

IBM Business Operation

How globalization and technology changes have impacted IBM

IBM is a multination corporation serving the global market with computer, computer applications, computer hardware and different kinds of software. The mainstream of business world for IBM is characterized by changes in global market settings, increasing levels of competition, changes in technology and shifts in consumer tastes and preferences (Axel & Tan, 2010, p. 23). With globalization comes the expansion of markets for IBM products, expansion in computer industry and a reduction in input prices as more suppliers are generated. On the other side, globalization has led to expansion in labor market and for IBM, this is considered a disruptive force towards the company’s workforce. IBM experiences instances of upending jobs due to the increasing number of companies, and this makes the IBM factories to obsolete faster than the rate at which the systems can be adjusted or fixed.

One important factor to mention is that computer industry is driven by changes in technology. For IBM, technology does not only help the company to make its production processes more efficient and effective but also facilitates new inventions and release of highly competitive products in a fast growing market (IBM Redbooks, 2012, p. 44). Through technology, customers can interact more efficiently and instantly with the business despite their geographical locations, and just like other companies, IBM has established its own website through which customers, suppliers and other stakeholders can see the company’s internal data like products, status and order. The company’s use of internet and social media improves the rate at which information can be shared among parties alongside changing the rate at which deliveries can be made across markets.

How IBM uses its industrial organization model and the resource-based model to earn above average

IBM’s business model is a strategic plan that relates the company’s operations to the needs of stakeholders. The value stakeholders obtain from the company’s operations are best explained through IBM’s industrial organization model and resource-based model. Under Organization model, IBM management recognizes that the company’s average returns depends of the dominant factors, which are well explained by the external environment (IBM Redbooks, 2012, p. 47). This would mean that the industry in which IBM operates is characterized by strong influence on performance because of the stiffening level of competition and therefore, IBM must make strategic choices believed to primarily determine vital characteristics of computer industry like economies of scale, market entry barriers, production diversification and product differentiation as well as the degree of company concentration within the industry.

On the side of economies of scale, the company management believes that the external environment imposes pressure on would enable the company earn above average returns. Similarly, majority of firma tend to compete within the same industry and strategically, the industry controls a better portion of the resource IBM uses. This means that the same strategy IBM uses to acquire and convert these resources into final goods and services is the strategies other firms within the industry uses to compete IBM. It is therefore very clinical that IBM management understands the circumstance that might lead to failure if the industry is assumed to be operating at equilibrium.

As noted, IBM would earn above average returns if the company decides to implement every strategy dictated by the genera characteristics of the industry and competitor’s environment. By applying I/O in its management, IBM can succeed in almost all its operations through improves profitability while its competitors are likely to face off due to highly elevated market competitions. Industrial organization model is therefore one of the strategies IBM use to capture market opportunities arising for the computer industry.

Under resource-based model, IBM assumes that its business units are a collection of particular resources and capabilities. The company considers its resources as unique and only directed to specific production processes, which are can never be imitated by another company. The company’s unique resources are the sole market drivers that enable IBM to earn above average returns (IBM Redbooks, 2012, p. 47). The company’s set of resources include employees’ skills, patents, funds and talents from managers. These set of resources can be generalized into physical, human and organizational capital but can as we include environmental motivators like technology and changes in market demand. The level of return IBM gets from its set of resources depends of the company’s ability to transform the resources into capability, which in this case are the company’s final output. Through the company’s core competencies, the production process can be controlled such that every result obtained adds value to the company and its stakeholders.

How the vision statement and mission statement influence the overall success of IBM

IBM mission and vision statements translate to the purpose of the company and the production relationship between the company and its stakeholders. The company’s mission statement describes the dedication the company has in ensuring the success of every stakeholder while taking into an account matters of innovation, the kind of trust people have on the company personal responsibility among managers (IBM Redbooks, 2012, p. 51). IBM mission and vision statements contain in brief the company’s short term and long term goals, and by meeting these goals, IBM becomes successful. The company aims at leading in creation and development of most advanced information technologies. This would help in making the company highly competitive within the industry and among other companies, and as to such, the amount of sales from the products will improve significantly.

The impact of each category of stakeholder on overall success of IBM

The most influential groups of stakeholders in IBM’s operations include customers, suppliers of resources and investors. Meeting the taste and preference of customers is important in the company’s production history since consumption is subject to quality in relation to commodity prices. Thus, if customers decide to forego IBM products then there will be a reduction in total sale and such losses if accumulated will lead to final collapse of the company. In order to improve performance in terms of output, the suppliers must keep their supplies constant. In the past, IBM has been experiencing delays from suppliers while some of the items supplied form the basis of the company’s production. Otherwise, the company today keeps its supplies flowing from different sources as a way of reducing the risks associated with overdependence on one supply (Axel & Tan, 2010, p. 31). Apart from customers and suppliers, the role of investors is equally important in the production process. In most cases, IBM cannot stand to finance all its project without involving investors especially when the company’s savings have gone down because of various issues. In this case, investors are the suppliers of funds and other forms of capital which the company uses to revive its productions.


In general, globalization and changes in technology affect operations of IBM specifically in the four areas of the company’s management: planning, organizing, leading and controlling. This is because managerial roles keep on changing in order to meet the global production standards and if IBM cannot keep with such a pace, then there are high chances that the company’s products will not give consumers the required level of satisfaction. As already stated, companies use a lot of resources to design products that compete highly in international markets and IBM is nor exceptional (Axel & Tan, 2010, p. 23). Otherwise stated, the company’s products are technologically integrated and any change in system operation means redefining the company’s products to match global standards.

On the same note the company industrial organization model and resource based model defines its core areas of operation and levels of competencies. With the changes in business setup within the industry, IBM needs to study its areas of competencies like its management, resources available and position within the market in terms of competition. Analysis of the market based on the company’s production capacity enhances growth while ensuring long term performance.


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