The report is designed to outline he various ways and approaches followed for implementing the strategic management aspects considering the business organization IBM as the case study. The various methods of implementing strategies to enhance organizational capabilities, improve the structure, maintain good leadership and culture along with bringing necessary changes and improvements. The topic will discuss the major aspects of how IBM has implemented its strategies to adopt changes and make improvements through consideration of leadership skills and improvements of structure for becoming successful within the business environment. At first, brief background information of the organization will be presented and the various strategies that are needed to be implemented will also be included in this report. The ways of implementing the most effective strategies for business success will be depicted here too, furthermore identify the issues faced during the strategic management and implementation (Barrick et al., 2015). Lastly, few recommendations will be provided about how these issues can be overcome with ease and effectiveness.
Background information of the organization
IBM, Australia is one of the most popular and established multinational technology organisation which manages its operations in more than 170 countries and has generated a revenue of 79.92 billion USD. The founder of the organization is Charles Ranlett Flint and it is also one of the largest private employer in the whole world (Ibm.com, 2017). International Business Machines or IBM consists of employees of over 414,400 and it is known for its manufacturing and marketing of computer hardware products, middleware and software along with other services such as hosting, consulting services that are found in areas of mainframe computers and nanotechnology. It has an astonishing record of holding the record for most number of patents that has been generated by a business organization (Bhasin, 2012).
The company has offered business analytics and technology services to the banking industry as well as to the Government bodies and telecommunication industries. Cloud solutions are also provided along with management of human resources and IT systems management, furthermore offering commercial solutions too. IT infrastructure solutions are also provided by IBM, Australia to create a digital platform that can enable users to integrate and manage mobile based applications, provide effective solution services and financing solutions too (Chen et al., 2014). There are also other areas where IBM has provided its services including the retail sector, education, electronics, healthcare, life insurance, media and entertainment, travel and transportation industries. IBM Australia has been operating as a subsidiary of the International Business Machines Corporation. The Managing Director of the company is Mr. Kerry Purcell and Vice President of operations is Mr. Tony Best.
Identification and evaluation of suitability of the current strategy of IBM
The most effective strategies of IBM are made by the top executives for enabling global expansion and increased level of outsourcing activities. His could help the company to penetrate new and developing markets and even outsource the materials to gain benefits like low cost of labor. The strategies are developed by combining the global expansion and increased outsourcing to optimize the profit margin by lowering the cost of manufacturing and production with ease and effectiveness. Global expansion further allowed the company to spread its business operations outside Australia and gain better stability, which could contribute to the higher profit level and competitive advantage in business as well (Banker, Mashruwala & Tripathy, 2014).
The major components of strategic management are analysis of strategy formulation, implementation of the strategy and managing interrelationship between the various components of strategic management. The corporate level strategy, also known as the growth strategy could help in developing various platforms and undertake approaches to increase the revenue margin and ensure better growth and business prosperity. This is a long-term strategy and has enabled the company to develop new products and services, manage the distribution channels, carry out the business operations through horizontal and vertical integration and target the new market segments to fulfill their needs and preferences (Furrer, 2016). The organization has followed the acquisition strategy to gain Vivant Digital and the current alliance is the connection between IBM and SAP. The diversification strategy has allowed the organization to acquire the small and medium sized organizations for ensuring better revenue generation and growth in terms of profit and customer satisfaction. The diversification strategy facilitates the generic competitive strategy of the company, which has further helped in gaining potential benefits through acquisition of the new businesses and underpinning its skills and capabilities (Goetsch & Davis, 2014).
The business level strategy is also an essential part of the strategic management at IBM, Australia. The differentiation of strategy is considered as one of the best and most suitable business level strategies because of its ability to develop unique products and services and differentiate those by utilizing the various resources and attributes of the organization. The business level strategy would allow IBM to gain competitive advantage in business through improvement of experiences, skills, expertise level and knowledge, manage re-allocation of internal resources, maintain budgeting and reorganize the human resources or manpower to enhance organizational productivity (Grinblatt & Titman, 2016). The business level strategic management would create a highly experienced and skilled research and development department as well as enable the organization to provide training sessions for improving the skills and abilities of workers, ensure better production and enhanced relationship with the customers as well.
The management of strategies helped in differentiation of the products and services of IBM, Australia for the purpose of focusing on the mission and vision of the organization to achieve the goals and objectives in business with ease. It is done for focusing less on the hardware manufacturing techniques but more on management of e-commerce technologies and designing of services for meeting the demand and preferences of the customers. This is done by transforming the old database into an entirely new online business process through introduction of new web based technologies (Hayes, 2014). The web based technologies and applications have been integrated into the internal business operations for enhancing the operational efficiency and furthermore enable the company to target the small-scale business organizations. The focus has been still on the software packages and services on certain areas of baking and healthcare.
The cost leadership strategy is also managed to ensure that the cost of manufacturing and production of products and services is reduced. This has even allowed IBM, located in Australia, to reduce the price of selling for the unique products and services of the company and make products effective to fulfill the expectations of customers with convenience (Hitt, Ireland & Hoskisson, 2012). The lower production cost and keeping the prices of products lower have also resulted in attracting more customers, thereby resulting in keeping the profit margin stable for a consistent time period efficiently. The transactional strategy helps in managing high foreign investments by managing coordination between subsidiaries while the multi-domestic strategy allows for enabling the domestic organizations to operate within a single country (Ibm.com, 2017).
Success of strategic management according to the SWOT analysis
Based on the SWOT analysis, the company, strengths, weaknesses, opportunities and threats are identified at first. It could be understood that IBM had capitalized on the strengths of the company by management of global supply chain. This has not only helped in ensuring successful global expansion but can also lead to better outsourcing activities to improve the skills and capabilities of the organisation largely. The weakness included the high cost of products and services of IBM, which could be overcome by making a good strategic choice of outsourcing and maintain a proper and competitive pricing strategy. This would not only differentiate the unique products of IBM in terms of the process that are set but could also make the company stay ahead of the competitors by influencing the buying behaviors of customers through offering of products at a lower price range (Iyamu, 2017).
The global expansion and outsourcing activities are important aspects of the strategic management of IBM and this has helped in utilizing the organizational scopes and opportunities by developing new markets. IBM has considered the benefits of the developing markets and grabbed opportunities through utilization of cheap labor costs in Australia. Competition is always a major threat faced by multinational companies in Australia and outsourcing activities of the company have helped in offering products available at competitive prices. This has enabled to keep the larger market shares secure and even stay ahead of the other competitors in business with ease and effectiveness (Kapferer, 2012). Gaining better market share would result in maintaining good relationship between people, processes, functions and organizational structure and furthermore respond to changes and generate more profit in business.
Evaluating the implementation of the strategy
The implementation of strategies is done with the maintenance of a network organizational structure. The structural strategy that is implemented by the organization in Australia is network organizational structure and it includes the three major divisions including the product division, functional division and geographical division. All these divisions are interrelated with each other and can help in streamlining the process of product development and optimize the Information technology solutions for ensuring better market delivery. By implementing the current strategy, IBM in Australia has aligned the business related aspects with the corporate vision and mission for the achievement of business goals and objectives effectively (Mendenhall et al., 2012). The corporate network structure has defined the business forms, processes of interaction and even managed the strategies properly to influence the business processes and become successful within the business environment.
From the various resources gathered, it could be understood that corporate level strategy had been implemented by connecting it with the structure of the organization for ensuring proper alliance and acquisition and gain competitive advantage in business. The geographical division’s corporate structure could help in overcoming the issues within the regional markets such as Asia Pacific, Europe, Middle East, Africa and America. The product type divisions include the major business functions and services delivered like the cognitive solutions, Global business services, cloud based applications and network management and management of global finance. The major functions managed by IBM to facilitate the global IT business cover the areas of research and development, sales and distribution, Intellectual property and management of supply chains too (Mi?ankov? & Ko?i?ov?, 2014). The strategic alliances and acquisitions has helped IBM to bring out improvements in the existing products and diversify into the new business while fir the existing market, it is important to strengthen the existing business and introduce new range of products and services for the local markets and keep the customers satisfied.
There are alternate international business structures too that can help in implementing an effective strategy in business with ease and effectiveness. The decentralized federation manages decentralized strategy for controlling the financial aspects while the coordinated federation allows for strong centralized control, i.e., implementation of strategies, policies, planning and administrative controls too. Centralized hub enables to gain proper control of the business operations and helps in adopting the local market conditions while the integrated network helps in managing control of strategies, policies and coordination of people along with improvement of technical expertise within the whole system (Ojokuku et al., 2012).
IBM also implements change management by unfreezing the crisis situations, changing the structure, systems and value and through consolidation of various references by organizing the structures, systems and values effectively. The transformation strategy and management is essential for IBM to identify the components that are required for responding to changes and gain knowledge to align the vision with the organizational goals and objectives. To enable changes, change leadership strategy is also implemented by providing the workers of the organization with various tools to maintain the framework of governance and engage the various stakeholders too (Paroutis, Bennett & Heracleous, 2014). There are various stakeholders like the customers, employees, managers, suppliers and the shareholders who must be informed about the change management process and this should be possible by implementing the change management strategy. The job structure, roles and responsibilities of workers and management of organizational resources are essential to ensure that the implementation of change management strategies bring good results. The skills and knowledge of the organization are managed properly to ensure that a healthy and positive culture is established where people can work together as an unit and bring positive results to achieve business success (Peppard & Ward, 2016).
Major issues faced during strategic implementation
Several issues have been faced during the implementation of strategies within the business organization IBM in Australia. It is not possible to bring 100 percent success through implementation of strategies at IBM, Australia. Few issues that were experienced during the strategic implementation process had been issues while using multiple change management strategies at the same time, limitations of budget, lack of sufficient resources and inappropriate time of implementing strategies like in the midway of a project. The other implementation issues related to the systems and its capabilities include delivery of products and services by other companies at a much lower price due to the maturity of the service market consistently. The revenue and sales of IBM’s subsidiaries were reduced largely by 10 % and 13 % respectively (Purce, 2014). IBM had also faced complexities to differentiate its hardware components with other company’s hardware components, as a result of which, there were lesser sales both for the hardware and software components of IBM. Not only have these issues hindered the successful management of business operations but there are other risks as well that have been associated with the implementation of business level strategies. The risks of substitute products at lower prices and lack of experiences could reduce the positive perception of customers regarding the value of products and its differentiable features. This might also decrease the brand loyalty among the consumers and result in deteriorating the brand image from time to time (Rothaermel, 2015).
From the various reports and evidences, it was found that IBM had acquired many other organizations to ensure continuous development and market expansion. There were several challenges and risks associated with it such as the lack of ability to adapt a new culture, poor skills among the workers, decreased morale of staffs and synergies that had deteriorated the flow of cash at IBM, Australia. While acquiring another company, the staffs might even face difficulties to get accustomed with the new culture, products and services and even difficulty in managing the human resource. Lakc of leadership skills could even employees move in the wrong direction and face immense issues to accomplish the organizational objectives (Waddell et al., 2013).
There are various cultures within the organization and among all these, IBM has considered the task and person cultures as the most effective. Task culture enabled to improve the leadership aspects and even raised the morale of employees by allowing them to perform more efficiently through promoting innovation, creativity and higher production. The person culture is recommended when most of the authority shall be provided to the team members, which can keep them motivated to perform to their potential. To develop a good culture, it is recommended to manage diversity training and employee engagement programs too including network blogging, peer coaching, community postings, etc (Wheelen & Hunger, 2017). It is also recommended to enable the major components linked and compatible with each other including the people, processes, culture, structure and operations.
Leadership is always an important concept on which the success of a business depends. The charismatic and democratic leadership aspects are recommended for managing implementation of strategies properly. These kinds of leadership aspects are essential because it has enhanced the level of motivation of workers and even considered their opinions and responses to make good strategic decisions. The balance scorecard utilization is recommended as well for ensuring that the strategies and financial controls are established properly to monitor the performance of the workers and organization (Willcocks, 2013). The financial metric would help in obtaining the financial condition of IBM, Australia and even improve the areas of weaknesses by turning those into strengths. Thus, use of balanced scorecard is recommended for analyzing organizational performance and develops new partnerships for improving the ability to implement strategies and gain enhanced levels of profit in business (Wood, 2012).
The report was developed to focus on the management of strategies and how these could be implemented within the organization IBM in Australia. It was found that IBM implemented various strategies at different operational levels and these were made by the top level management executives for ensuring international expansion as well as manage better outsourcing activities. To optimize the profit margin and reduce the cost of manufacturing and production, it was essential for proper strategic implementation and this had been possible by implementing business level strategy, differentiation strategy and cost leadership strategy. The success and suitability of strategies were based on the analysis of SWOT. The major issues faced during the implementation of strategies were poor revenue generation, reduced capabilities of embracing a new culture and outsourcing activities and improper flow of cash at IBM. The recommendations provided to overcome these issues had been improvement of culture, leadership and management of diversity training and employee engagement programs. This had made the organizational operations and strategic implementation process stable, generated more profit and gained competitive advantage in business as well.
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