1 / 16

THE DECLINE of a BIG SUCCESS IBM

THE DECLINE of a BIG SUCCESS IBM. by IFTIKHAR, Fa-2010/ MSc -EM/162. IBM—Milestones. IBM—The Making Of a Coy.

yanni
Download Presentation

THE DECLINE of a BIG SUCCESS IBM

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. THE DECLINE of aBIG SUCCESSIBM byIFTIKHAR, Fa-2010/MSc-EM/162

  2. IBM—Milestones

  3. IBM—The Making Of a Coy • Jun 1911 - IBM incorporates in New York as the Computing-Tabulating-Recording (CTR) Coy; with Merger of The Tabulating Machine Company, the International Time Recording Company, and the Computing Scale Company of America. • May 1914 - Thomas J. Watson Sr. becomes GM of IBM predecessor, CTR Coy. • Nov 1915 - IBM stock begins to sell publicly on NY Stock Exchange for $46 a share. • Feb 1924 – CTR Coy changes its name to Int’l Business Machines—IBM.

  4. IBM—The Making Of a Coy • May 1956 - Thomas J. Watson Jr. takes over as IBM's CEO from his father. Thomas J. Watson Sr dies at age 82 in Jun 56. • Apr 1964 - IBM introduces System 360, first large family of computers. • Jun 1971 - Thomas J. Watson Jr. steps down as IBM Chairman & CEO, replaced by T. Vincent Learson as CEO & Frank T. Carry as President. • Aug 1981 - IBM introduces the PC.

  5. IBM—The Decline Starts • Jun 1986 - John Akers becomes IBM CEO. Big Blue converted into 13 Baby Blues. • Jan 1991 - IBM announces 10% reduction in pension benefits. • 1991 (or 1992?) - Elimination of medical plan's "coordination of benefits". • Apr 1992 - Elimination of Pre-Retirement Education for IBMers within 5 years of retirement. • Apr 1993 - Louis V. Gerstner Jr. becomes IBM Chairman and CEO, On April Fool's day

  6. IBM—The Decline Cont’ • 1993 - The coy posted a Revenue of $ 68 bn with $ 6 bn profit in 1990, faced loss of $ 8 bnin1993 • Feb 1994 - 320 employees laid off. • Jul 1994 - IBM announces Kingston, NY plant closing. • Jul 1999 – Pension & Retirement Med Benefits reductions for employees under 40 • 2000 (first quarter) - Reduced 2000 variable pay due to poor mgmt. Since variable pay is about 10% of yearly salary, this amounted to a 3% pay cut

  7. IBM—The Decline Cont’ • Sep 2000 - IBM Endicott announces Alternate Work Schedule; with mandatory 12 hr work days and weekend days. Workers must work every other Saturday. Overtime pay is reduced. • Oct 2000 - IBM announces that new retirees will have to pay for medical benefits. • Nov 2001 - IBM Terminates the jobs of over 1,500 workers (500 in Burlington, VT; 400 in Endicott, NY; 200 in East Fishkill, NY; 180 in Rochester, NY; 150 in Fremont, CA; 75 in Raleigh, NC).

  8. IBM—The Decline Affirmed • Jan 2002 • An unknown number of vendors & 30 IBMers laid off in Rochester. • Mass termination(>50%) at Lotus Professional Services. • Jun 2002 - IBM cuts over 9,000 jobs in the United States. • Aug 2002 - IBM admits to over 14,000 job cuts in a corporate filing

  9. THE SUCCESS STORY • Merger of 3 Productive Coys • Initiative & Lead in Computer Industry • Thomas J. Watson’s Ldrship & ‘Think’ Motto • Enviable Sale Force • Direct Sale to End Users & Focus on Customer Service • Multiple Product Divisions—Each in Direct Service of Respective Customer(s) • Mkt Monopoly • Ltd Competitors with Little Resources

  10. THE DOWNFALL • Mainframe Myopia • System/36 a success in 1960s • Future Systems—an Ambitious Proj in 70s; Scrapped in 1975 • $100 Bn Blunder • Planned to achieve $100 Bn in sales by 1990, driven by Mainframe Success • Failed to read the fast changing Mkt Needs & Trend • Focused on increased production instead of Innovative Products • Focus on Mainframe: Planned on mainframe as hub of inter-connected web of AS/400 minis & IBM PCs

  11. THE DOWNFALL • Tunneled Monopolistic Approach: With fol tools: • Mkt Segmentation & Price Discrimination thru Separate Product Lines • Earlier systems mutually incompatible—Customers having spent on Trg of Pers & Software implementation—were locked in with first IBM’s products • Force-feeding the customers instead of learning about their Needs • With this focus IBM failed to compete on 3 Ps—Price, Performance & Product • Bureaucracy & Late Entry into Every Mkt: It took 31 approvals for an employee to get 1 pc of Equipment

  12. THE DOWNFALL • Introducing IBM PC/1980-81 • Hasty decision to bring out a PC ASP (13 months) • Outsourcing of Key Components to Expedite • Use of Microsoft Software—MS DOS, with a deal for Microsoft to collect Royalties from other users of MS DOS. • DOS became industry std for all less Apple. • Use of ‘Intel’ micro-processor, instead of developing their Own. • IBM outperformed the rival-Apple but lost Con of the Mkt & a no of Clones OVER-THREW its monopoly • Failure to utilize 80386, remaining restd to 80286 whereas world had started ref to 386—the processor, instead of IBM PC etc

  13. THE DOWNFALL • Failure to See the Mkt Trend • Hi Price/ Low Vol—to— Low Price/ Hi Vol • Instead of riding the tide of Tech Advancement, tried to stem it • Remained restd to Select Customers instead going for Open Sale thru Dealers • Onrush of Competitors & Unpreparedness to Face • Thomas J. Watson’s mantra, ‘Think’ was lost while thinking that “monopoly of thought can never be achieved” • Risk Aversion & Resistance to Change • Faulty Decisions: Is the net reason for the Fall of this, once, Financial Giant

  14. CONCLUSION The New IBM Has Emerged; Highly Successful But Is Only A Shadow Of Its Former Self.

  15. Thanks!

  16. A HDD in 1956

More Related