International Business Plan: IBM

International Business Plan: IBM

Introduction

International Business Machine Corporation or widely known as the IBM is an American multinational organization and has headquarters in New York. IBM deals in manufacturing of hardware's, software's, hosting and offers consulting services to its various clients worldwide. Its expertise ranges from mainframe computers to the nano technology of today. The development of IBM systems in the above machines is further divided into three segments which are the Systems, Software and Services. In their systems segment, they deal in servers, storage elements, micro processors and other electronic equipment. The software market is also strong with major clients residing in the International Markets. The consulting services deal with the complex issues arising from these machines. The company was established in 1911 through a merger of three companies. In the year 2012, the company was ranked as the ninth most profitable company and globally it was ranked on thirty one (Fortune, 2012) (Industryweek, 2009) (Industryweek, 2009).

Industry Analysis

In today's world technology has a, major role in the world's economy. IBM is well positioned in the international markets as it works closely with its various integrated units and the technology dependent community. The industry in which IBM deals is a technology industry where all companies' basic function is to produce new and improved products and services for their clients. The primary function of the information technology is to manage and process information. The trading methods differ in every organization dealing in the industry as technology itself is sensitive to economic cycles. Currently, the global market is in recession, and IBM is a dominant player in this industry (Yousigma 2009). This is mainly due to talent it is able to retain, the experience of being one of the first in the industry and its financial status. It is difficult to compete with industry leaders due to less business and risks associated with investment (Industryweek, 2009) (Industryweek, 2009).

Five Force Model of IBM

The five force model of Porter is an industry framework which helps the organization knows its situation and others it competes with in the industry. Accordingly business strategy is developed by the company to improve its overall profitability and position in the industry. These forces are the micro environment of the company as they directly affect the customers and profit of the company. The change in any of these forces requires the company to re assess its business in the market.

Threat of New Entrants

The capital requirement of this Industry is high, therefore, funding of assets and setup of Research & Development unit is difficult. This causes the threat of new entrants to be low. IBM spends a considerable amount of its funds in Research & Development annually. This helps in producing new products that are innovative and solutions to problems arising in the market (Yousigma 2009). Thus, there is immense competition and less survival rate of the new entrants. Moreover, since the company has an established reputation over the years, consumers prefer and trust those ...