IBM and Multibusiness Strategy

What is IBM’s corporate or multi-business strategy for the twenty-first century, and how is it different from its long-standing strategy?

Businesses today are looking for creative ways to reduce their costs of operations while improving their efficiency. One of the main strategies many businesses apply to achieve this is through specialized services (Paroutis & Pettigrew, 2007). Specialized services require lower investments compared to production-based businesses. IBM’s strategy for the 21^st century is to venture more into the world of specialized services. Samuel J Palmisano, the CEO of IBM, described the new direction that the company hopes to take in the 21^st century. The company wants to shift its focus from developing computer hardware to developing specialized services. The company will improve efficiency and reduce the costs of production since these services need not be developed in-house. The company’s CEO’s goal is to reduce the company’s dependency on its core functions. The company wants to follow in the footsteps of P&G, a company that has managed to outsource some of the important core functions to minimize costs and improve efficiency. This strategy gives the business a transformation without huge investments in the improvement of the core functions. The company also wants to reduce its dependence on the development of computer hardware as its main source of income. They want to diversify their product portfolio to include other sources of revenue. This includes the diversification of the company to the provision of computer-based services.

The new strategy choices by the company are significantly different from the 20^th-century strategies at IBM. In the past, the company has mostly focused on the development of high-end computer hardware. The company internally developed systems that would enable the development of its computers. The company earned the image “Big Blue” from the production of blue-colored high-end mainframe computers. The company was a market leader in the development of good-quality computers, but the industry has since become competitive. To survive, the company has to shift its focus from legacy computer manufacturing to specialized services that will help to improve efficiency.

What does the case title “Beyond Blue” mean?

IBM is primarily a business that is into the manufacturing and sale of high-end computer and technology products. The company initially developed advanced mainframe computers that were colored blue. These computers were the main reason behind the company’s name of the, Big Blue. This case is named “Beyond Blue” because the company is looking beyond the manufacture of its big blue computers. The main focus of the case is a strategy shift with the business attempting to outsource several of its functions. The company wants to not only focus on the core product but also to become specialized service providers. The company’s CEO, Samuel J Palmisano, aims to transform the company from simply the producers of the powerful computers that gave it the Blue name to focusing on service provision, consulting, and outsourcing of its services to businesses. In other words, the new business strategy goes beyond its blue computers. It is a multi-strategy that includes several areas of specialization for the business.

References

Hamm, S., & Ante, S. E. (2005). Beyond Blue. Businessweek. 3929, 68-76

Paroutis, S., & Pettigrew, A. (2007). Strategizing In The Multi-Business Firm: Strategy Teams At Multiple Levels And Over Time. Human Relations, 60(1), 99-135.

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Question

[u07d1] Unit 7 Discussion 1 – IBM and Multibusiness Strategy

IBM and Multibusiness Strategy

Based upon the information in this unit’s readings, create a post that answers the following:

IBM and Multibusiness Strategy

What is IBM’s corporate or multibusiness strategy for the twenty-first century, and how is it different from its long-standing strategy?
What does the case title “Beyond Blue” mean?

Your post should be substantive and logical to the topic. Read the Discussion Participation Scoring Guide to learn the discussion participation requirements of this course. In addition, post your work in the text box, not as an attached file.