Introduction
The business environment is highly dynamic and unpredictable. The phenomenon translates to some companies succeeding while others fail. The prosperity of an organization is dependent on implementing effective and ideal strategies that address the needs of the market. Unsuccessful companies are unable to meet these elements. The occurrence may arise from different aspects such as poor administration or the lack of a clear plan of action. IBM is an organization that develops software. Over the years, the enterprise has been successful in the Information Technology sector. However, the extremely competitive setting has made the firm to struggle which threatens its sustainability and profitability (McQuire, 2018).
With this consideration, the report focuses on outlining how to restructure IBM that will translate to the success of the enterprise. There is the analysis of the grand strategy and the critical aspects which should be analyzed to promote prosperity. Concentrated Growth The success of a restructuring program mandates the consideration of critical elements in the grand protocol. These variables include focused growth. The term refers to the approach of elevating the market share held by the organization (Geyer, 2014).
Often, concentrated growth constitutes a low-risk scenario since the correlation between supply and demand provides an ideal economic environment. Under the context of concentrated growth, IBM can focus on elevating customer base and the value of products. The marketing strategy can be based on the acquisition of new clients who did not have prior access to the company’s merchandise. In concentrated growth, advertising can be a useful methodology in promoting awareness in the market. This will constitute advertising the various IT solutions provided by IBM. Emphasis will be on outlining the direct benefits to be realized by users.
IBM can use complimentary marketing by depicting the association between different products. Market Development In business, market development is a concept that involves the analysis of the target market to formulate segments. The idea is useful in facilitating the sale of products and services to new users. IBM should strive to venture into a new market segment that goes beyond conventional expectations (Liu, 2015). This will enable the acquisition of new users, therefore, augmenting the receptions of products provided by IBM. Since the company offers Information Technology related products and software, there is no geographical limitation. Thus, IBM should plan expansion based on the international spectrum. It is a promising avenue that can elevate the market available to the organization. Moreover, the development of different market segments will allow IBM to practice price differentiation which contributes to higher profitability. Product Development The restructuring of IBM should also focus on product development which is an instrumental aspect in improving the market share of the company.
Product development is an objective tactic which deals with developing the value of commodities available to customers (Liu, 2015). The tactic may constitute the provision of incentives or after sales services to clients. Product development is a dynamic ideology which can require alteration of the goods offered by IBM. Therefore, the company should perform an extensive search to determine the current software needs of clients. The information will be vital in the modification of IT products and software hence generating additional value. It is worth noting that product development is a dynamic process which requires consistent input to achieve a competitive advantage. IBM should formulate a research team that proactively addresses this concern. The technique will safeguard the future of the enterprise. Innovation As mentioned above, competitive advantage is essential in a company to survive the dynamic environment. This consideration translates to innovation and creativity as aspects that can be beneficial to the business (Khumalo, 2015).
IBM should proactively engage in these initiatives. This will exhibit a trend of developing new products, provision of quality services, and new protocols of improving efficiency. For instance, IBM can transform the current business model to adopt a customer-oriented perspective. This will be an objective tactic which will ensure the needs of customers are effectively met hence improving client satisfaction. Automation and technology constitute innovation. These parameters improve business functions by inducing efficacy and reducing the cost of operation at IBM. The feature must be extended to the problem-solving spectrum.
The enterprise should focus on creating new solutions that resolve the limitations of traditional approaches. Horizontal Acquisition This is a strategy used in business where a company acquires a different enterprise in the same industry. The distinctive factor of parallel acquisition is that it aims to improve the management of resources. The technique is practical in minimizing the risks that could compromise on business operations (Mizuno, 2016). By reviewing the scenario at IBM, it is possible to state that horizontal acquisition will complement the objectives of the enterprise. Among the promising candidates include Lenovo which primarily manufactures computers and laptops.
This will be a strategic acquisition as it will translate to market for the software created by IBM. Vertical Acquisition The term refers to the process where a company acquires a different enterprise in the same sector. The distinctive factor in the vertical acquisition is that the two firms are at different levels in the production cycle (Mizuno, 2016). Vertical purchase can be useful to IBM as a restructuring concept as it will promote efficiency and reduce the cost of operations. IBM can acquire third-party software developers to provide the product. Afterwards, IBM will capitalize on its brand image to market and sell the software.
This technique will reduce the amount of time used by IBM in manufacturing thus improving overall productivity. It is important to point out that the success of vertical acquisition is dependent on the elimination of redundancy in the companies to prevent engagement in the same activities. Concentric Diversification The term outlines a situation where the business implements compartmentalization to improve performance and becomes objective. The technique allows the company to formulate a comprehensive goal which provides overall guidance. However, there is a subdivision into different sections which translate to the institution of various departments (Hughes, 2016).
As a result, the organization works as a system which has smaller components that actively contribute to the realization of set objectives. IBM can apply concentric diversification to improve various business functions. For example, promotion, publicity, production, and testing can be sub-components at IBM that work together to achieve a competitive advantage. It is worth pointing out that concentric diversification is useful in regulating workload where employees do not feel overwhelmed my responsibilities. Conglomerate Diversification In this approach, there is the inclusion of new products by the company. Often, innovation is an element that facilitates conglomerate diversification as there is the manufacturing of diversified goods that are different from current merchandise (Hughes, 2016).
The technique can be implemented by IBM as it ventures into new markets territories. This will ensure the effective attainment of diversified customer needs. Turnaround The concept primarily focuses on the redefinition of the enterprise. Under this context, turnaround management capitalizes on evaluation to showcase aspects that compromise on performance in the market (Azmeh, 2014). Turnaround constitutes planning where the company formulates strategies to revive production. The philosophy envisions assessment of different business factors such as liquidity and equity level to come up with an objective plan of action. It will be a useful instrument to IBM as it will showcase limitations that should be resolved by the firm to attain past success.
Divestiture The term refers to a process where an organization disposes some of its assets. The approach is beneficial as it makes the organization objective. In the divestiture strategy, the company offloads acquisitions that do not contribute to the primary goal (Azmeh, 2014).
It has been used to promote efficiency, reduce the cost of operation, and achieve a competitive advantage. However, it is worth noting that extensive evaluation should be done to prevent decisions that compromise on functionality. Divestiture can be applied to IBM to ensure that the corporation focuses on the development of software that addresses the needs of customers. Liquidation It is the process of converting assets into cash. Liquidation can be used in the restructuring of a company as it provides financial resources to pursue different initiatives. However, liquidation should not be used as an avenue to offset liabilities as it does not translate to growth or development (Azmeh, 2014).
At IBM, liquidation is a critical element that will contribute to effective restructuring. As mentioned above, the market and product development steps require significant financial resource for execution. This phenomenon depicts how liquidation at the firm will provide the necessary monetary resources for an active restructuring project. Bankruptcy Bankruptcy is a concept where companies can file a claim during economic anguish. Certain conditions have to be fulfilled before a bankruptcy claim can be processed. This involves the inability of the business to maintain functionality as a result of the lack of resources (Azmeh, 2014).
The bankruptcy claim has been used in the past to offset financial liabilities in a situation where an organization does not have sufficient funds for normal operations. At the moment, the position at IBM does not mandate for a bankruptcy claim. On the other hand, the enterprise can focus on a structural modification which promotes efficiency and manages the cost of operations. Furthermore, the business can pursue diversification strategies to enhance market share and provide elevated value to customers. Joint Ventures In business, there are situations where two organizations agree to collaborate in the production of products and services for an agreed period. A joint venture refers to this agreement where two companies use their resources to achieve a common goal (Azmeh, 2014).
It is a useful approach in addressing market dynamics which could lead to fluctuation. A joint venture may be a valuable strategy to IBM as it expands in the international spectrum. This will involve the establishment of useful partnerships with local enterprises as IBM strives to build its brand image in the new territory. The technique will be advantageous to IBM as it prevents full commitment which could compromise on aspirations and operations in the case of an acquisition. Strategic Alliance In some cases, an objective or goal leads to a partnership between two companies. This is referred to as a strategic alliance where the realization of the set objective marks the end of the collaboration (Geyer, 2014). Strategic partnerships are useful in eradicating the limitations of a particular organization.
For instance, it is likely for the company to lack the required monetary resources to pursue its ambitions. This makes it reasonable for the company to cooperate with a different entity to provide the necessary resources. Therefore, a strategic alliance can be useful to IBM during its restructuring phase based on the aspirations to reduce the cost of operations and diversify into a new region. Consortia, Keiretsus, and Chaebols The terms refer to a system used for guiding the organization. This translates to the ability to identify inefficiencies or inadequacies that compromise on productivity. The three ideologies outline the importance of extensive evaluation concerning the internal and exterior atmosphere of the organization (Azmeh, 2014).
This translates to the identification of possible factors that harm operations. The three concepts enable the corporation to formulate remedial approaches to prevent decline. It is from this standpoint that the three considerations will be useful in IBM as it will outline the elements leading to dwindling performance in the market. Therefore, restructuring can be done with the intention of resolving inefficiencies. Business Strategies Different strategies can be implemented in a company to guide operations and contribute to a competitive advantage. Among these include the low-cost methodology. In this system, an organization intends to reduce expenses and provide inexpensive products to the market. The underlying assumption is that economies of scale can be used to reduce overall cost while still maintaining profitability (Fung, 2014).
The technique has been applied in different organizations such as Walmart which capitalizes on large sales to achieve a considerable markup. In this business strategy, the incentive provided to customers constitutes the lowest price in the market for the same product while still maintaining quality. It is from this viewpoint that customers realize value and boost sales. However, economic factors such as inflation have made the low-cost tactic unsustainable in different scenarios. Differentiation is the other technique that can be used in business governance. The methodology refers to the ability of the business to distinguish itself from competitors in an attempt to gain a competitive advantage (Fung, 2014). The technique constitutes the intention of the manufacturer to outperform other enterprises by providing exemplary quality or elevated marketing practices.
The tactic is advantageous as it leads to the development of a positive brand image. Differentiation makes it probable for the corporation to achieve customer loyalty as individuals prefer the brand. Therefore, a company can charge premium prices for its products or services. There are added benefits to this system as it shields the institution from the challenges of a highly competitive commercial atmosphere. The speed-based design methodology depicts a situation where the organization adopts a customer-oriented approach. Under this concept, there is the quick adaptation to the changing needs of customers in the market (Fung, 2014). It is a useful technique in promoting customer value as the products directly address the desires of clients.
The speed-based method is beneficial in a situation where companies offer similar products that are challenging to differentiate. Therefore, success can only be guaranteed if an entity effectively addressing the dynamic customer needs. Proposed Business Strategy By evaluating the three business strategies, differentiation will be ideal for the restructuring of IBM. It is evident that the organization operates in a saturated market where many sellers are offering similar products. This makes it crucial for the company to distinguish itself from competitors by providing additional benefit to clients (Fung, 2014).
For instance, Information Technology products can be accompanied by warranties to affirm the confidence of users. This will manifest through the formulation of a positive brand image associated with IBM. Likewise, differentiation is useful in the restructuring project as it leads to customer loyalty. As outlined above, this is a valuable parameter as it prevents IBM from facing challenges associated with a competitive environment. Consequently, it would be likely for the enterprise to be sustainable as it has a guaranteed market. Implementation Plan The success of the differentiation commercial model requires a comprehensive strategy in the company. As a result, there will be the progressive implementation of the concept in different departments.
The process will start in the human resource section to inform employees about the need to provide exemplary quality and formulate positive customer relations (Fung, 2014). Afterwards, the process will traverse to advertising and marketing. The two parameters will focus on outlining how the products offered by IBM are significantly different from competitors and their additional benefits to users. The technique will contribute to better sales and productivity. During the execution of the differentiation strategy, the research and development department will be instrumental in promoting efficacy. This will constitute active participation to culture innovative ideas which will lead to a competitive advantage.
Conclusion
The research has been instrumental in revealing the challenges faced by IBM in the business spectrum. The observation mandates a comprehensive restructuring process to promote productivity and sustainability in the business. As discussed above, there are critical elements which should be considered such as innovation, market diversification and strategic alliances. The research has elucidated the three fundamental business approaches used in providing governance to corporations. It is apparent that the differentiation strategy offers a promising solution to the challenges faced by IBM. This will lead to a positive brand image which will guarantee customer loyalty. It is from this observation that the company becomes sustainable and safeguards its future.
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