Strengths (6)

1. Strong competency in acquisitions.

IBM has made 157 acquisitions and 28 investments. The company has spent over $ 69.53B for the
acquisitions. IBM has invested in multiple sectors such as IT Operations, Cybersecurity, Business
Intelligence and more.
Over the last 13 years, from 2000 to 2012, IBM has acquired more than 140 companies in strategic areas
including analytics, cloud, security and commerce. This has led to substantial growth in software and
consulting offerings from IBM and established the company as a leading software and consulting provider
for enterprises. IBM also expects to invest $20 billion over the next two years on acquisitions to
strengthen its product portfolio even further. Company’s competence in successful acquisitions is the key
advantage other companies, like HP, currently lack.

2.  First mover in cloud computing solutions for enterprises.

IBM moved to cloud computing in 2007 with its “Blue Cloud” program, which was designed to offer
hardware and software solutions for enterprises that were willing to have their own private cloud. Since
then the company has become the first reference point for enterprise cloud solutions in the cloud market.
Unlike many other companies in the cloud market, the company has been offering the broadest range of
software and services in one place.

3. Business Model
IBM focuses on two aspects of its long-term growth strategy. First, to help its clients to become
more innovative, efficient and competitive through the application of business insight and IT solutions and
secondly, to provide long-term value to shareholders. Keeping this in mind they have developed superior
capabilities to offer services, software and systems.
This is one of the reasons the brand still sticks by.
4. Clear, stable product development roadmap:

Shorten project implementation time and costs: the components are already integrated into a total
solution, so when deployed, it will save a lot in terms of time, risks, and associated costs. followed by
project implementation costs. With the current competitive situation, bringing the best product and service
to the market in the fastest time is a very important factor for every business. Therefore, saving time,
money and risks with IBM solutions will help businesses gain a great advantage in the market.
Customers are assured of a stable supply and product development roadmap. For high-tech products,
having a stable product development roadmap is very important. Thereby, customers will be guaranteed
initial investment costs, ensuring the sustainability of the solution.
IBM (USA) has announced its latest quantum computing development roadmap, including a plan to
radically improve the performance of quantum processors by 41 times by 2023.

Nguồn dẫn chứng: https://mediaonlinevn.com/2020/10/01/ibm-cong-bo-lo-trinh-phat-trien-dien-toan-

luong-tu-toi-nam-2023/
 
5. Customer Loyalty 
Customer loyalty matters because repeat customers spend more on each transaction.
 Loyal customers are more likely to repurchase, refer more, and try a new offering.
IBM has a huge and extensive client base, which is present across the world. 79% of customers said  that
they are satisfied and will be loyal to ibm's https://www.comparably.com/brands/ibm

6.  Expertise in Production Processes and Materials Management

IBM’s expertise in production processes and materials management. Such expertise is based on a long
history of innovation, which shapes the company’s business strategies and human resource development
programs for IBMers’ talent and skills, and influences the development of the industry.
For example, IBM Production Optimization delivers three key capabilities:
1. Predict and pinpoint losses, related to process and equipment
2. Analyze the root causes and test alternative scenarios
3. Prescribe the best actions to solve the issue
The solution is built to be versatile – enabling data scientists and process engineers to optimize costs,
quality or throughput. They can do this by customizing the pre-built analytics for specific assets, and
changing the KPIs to maintain optimal conditions for efficiency. 

 =>The result: significantly better throughput, improved yields and reduced manufacturing costs.

Weakness (6)
1. Expensive service and software solutions.
IBM offers expensive integrated custom solutions for enterprises that want to build reliable IT
infrastructure in their companies. This often involves buying hardware, software and services from IBM at
the same time, which is very costly expenditure for any size of enterprise. Such an infrastructure
investment is often postponed in times of uncertainty or slowing economy growth. This weakness was
evident over the last few years, when IBM struggled to cross sell its products and saw decreasing
revenues in the same period.

2. Low degree of diversification 

In relation, IBM has a low degree of diversification. This weakness pertains to the company’s operations
in only a limited number of markets within the information technology industry, leading to high risks based
on these markets. This issue has even worsened because of the firm’s shrinking product mix.
(kem da dang ve phan khuc thi truong)

3. Production cost is too high

In addition to plant and equipment costs that cost billions of dollars, IBM and companies in this field often
have to spend a lot of money developing new manufacturing technologies to improve performance. data
storage capacity, and the price of the chip. Operating manufacturing plants is often very expensive and
sometimes it is a burden for companies, even big companies like IBM. The production of electronic
accessories requires a lot of capital while this is a business that is prone to fluctuations
According to a recent report by the Wall Street Journal, IBM is considering selling its chip business.
According to research by financial research firm Sanford C. Bernstein, IBM's chip business generated
about $1.75 billion in revenue in 2008, but lost $130 million in pre-tax earnings.

Nguồn : https://genk.vn/khong-chiu-noi-chi-phi-ibm-tim-noi-ban-lai-mang-san-xuat-chip-
20140210114105546.ch

4. The size of the company is exceeding to its requirements: 

The massive size of IBM can make coordination on projects difficult.

5. Niche markets and local monopolies that companies such as IBM able to exploit are fast disappearing.
The customer network that IBM has promoted is proving less and less effective.

6. Declining market share of IBM with increasing revenues 

The Computer Services industry is growing faster than the company.
In such a scenario IBM has to carefully analyze the various trends within the Technology sector
and figure out what it needs to do to drive future growth

Opportunities (7)
1. Expanding product portfolio, diverse opportunity areas like cloud, business consulting,
sustainable business projects etc.
IBM has been trying endlessly to expand its services, one such service is IT consultancy. If a big name
like IBM ventures into something of this sort and puts money into it, it can pay off really well in the long
run. IBM already has an established reputation that people can catch onto very quickly.
IBM has the opportunity to acquire more companies and to partner with many others. This can prove to
be a very good option considering the current situation. Previous acquisitions have benefitted IBM
significantly and contributed majorly to improving its market share.
IBM provides various services (cloud, security and infrastructure) and enterprise solutions (servers,
networking and storage), which are the most profitable IBM’s businesses at the moment. The company
should focus on growing these divisions as they promise better growth opportunities and higher profit
margins.

2. Alliances with firms from different industries or markets.

The opportunities for IBM is to develop alliances with other firms in different industries and markets. This
external factor is based on the trend of technological integration in industries and markets. For example,
the products of other industries, such as the automotive industry, are becoming increasingly dependent
on computing technologies

3. Increasing demand of cloud based services

The cloud computing market is expected to grow by an average of 22% each year from 2011 to 2020. By
2020, the market is expected to reach $240 billion value. Currently, IBM is offering many services related
with cloud computing and is well positioned to benefit from that growing market.

4. Data Analytics
The big data and analytics market reached a value of nearly $73,287.6 million in 2020, having increased
at a compound annual growth rate (CAGR) of 10.2% since 2015. The market is expected to grow from
$73,287.6 million in 2020 to $135,706.1 million in 2025 at a rate of 13.1%. The market is then expected to
grow at a CAGR of 13.2% from 2025 and reach $252,361.3 million in 2030.
To take advantage of the opportunities, IBM should focus on big data-as-a-service (bdaas), hybrid clouds,
investing in edge computing, establish operations in emerging markets, provide competitively priced
offerings in low-income countries, partnerships with end-users, increase visibility through websites,
leverage social media to maximize reach and focus on industries.

5. Increasing government regulations are making it difficult for un-organized players to operate in the
Computer Services industry. This can provide IBM an opportunity to increase the customer base. (TẠO
RA HÀNG RÀO GIA NHẬP THỊ TRƯỜNG CHO CÔNG TY ĐÃ BASED)

6. Opportunities in Online Space - Increasing adoption of online services by customers will also enable
IBM to provide new offerings to the customers in Computer Services industry.

7. Trend of customers migrating to higher end products - It represents great opportunity for IBM, as
the firm has strong brand recognition in the premium segment, customers have experience with excellent
customer services provided by IBM brands in the lower segment. It can be a win-win for the company and
provides an opportunity to increase the profitability.

Threat (7)
1. Information leakage
Ginni Rometty, IBM Corp.’s Chairman, President and CEO, had the following to say at the IBM Security
Summit in New York City earlier this year, “We believe that data is the phenomenon of our time. It is the
world’s new natural resource. It is the new basis of competitive advantage, and it is transforming every
profession and industry. If all of this is true – even inevitable – then cyber crime, by definition, is the
greatest threat to every profession, every industry, every company in the world.” Cyber incidents will
damage their reputations – which can have a negative impact on revenues, company valuation when
raising capital, customer acquisition and retention, and their ability to recruit top talent. For example, cloud
platform products expose the firm and its clientele to potential cyber attacks and related risks.

2. The price of software products and services is quite high compared to competitors

With the goal of providing quality products and solutions with perfect support services, IBM always holds
the view that price is not a competitive advantage. IBM's products and solutions are always perceived by
customers as being rarely inferior to competitors. However, this is easily the reason why IBm loses its
competitiveness compared to other low-cost software companies in some developing markets.

In IDC's 2013 report, IBM achieved revenue of $2.97 billion and closely followed HP with 23.6% market
share. IBM's revenue fell more than 10% year-over-year on the threshold of a technology refresh cycle,
and within more than two years, IBM's server revenue fell more than 19%. Servers accounted for about
15% of IBM's total revenue in 2012 and 13% in 201
Nguồn: http://maychuchinhhang.vn/hp-vuot-len-o-thi-truong-may-chu/a161.html

3. Political instability (chinese + usa) bất ổn chính trị . dẫn chứng 5 forces + pestel
Political stability is important for business organizations as it influences customer and investor confidence,
and therefore, has a wide impact on the economy. High political instability has serious implications for the
consumption, investment, and economic growth of businesses. 
Currently, the geographic area in which IBM Values and Corporate Citizenship is actively present is
experiencing some political instability due to internal and external conflicts. Inability to understand and
handle the prevailing political chaos can inhibit the company from achieving its growth objectives, and
management will be reluctant to invest in new capital.

4. An increase in cyber crime

An increase in cyber crime introduces new problems into the industry.  It also exposes weaknesses in the
information infrastructures

5. Distrust of institutions and increasing threat of legal actions for IBM - As the WTO regulations
and laws are difficult to enforce in various markets. Legal procedures have become expensive and long
drawn process. It can lead to less investment into emerging markets by IBM thus resulting in slower
growth.

6. Competitors catching up with the product development - Even though at present the IBM is still
leader in product innovation 
in the Computer Services segment.
 It is facing stiff challenges from international and local competitors.

7. Shortage of skilled human resources - Given the high turnover of employees and increasing
dependence on innovative solution,
 companyname can face skilled human resources challenges in the near future. => PHỤ THUỘC VÀO
NGUỒN BÊN NGOÀI

3. FIVE FORCES MODEL

01. Competitive Rivalry or Competition with IBM (Strong Force)
The degree or intensity of competition is evaluated in this aspect of the Five Forces
analysis of IBM. Competitors impose pressure on the company in terms of market
share, pricing, and profits, among other variables pertinent to the information technology
industry environment. In this case, the strong intensity of competitive rivalry against IBM
is based on the following external factors:

 Moderate degree of differentiation (moderate force)

 High imitation potential (strong force)
 High aggressiveness of firms (strong force)

IBM’s external environment involves moderately differentiated competitors. This

considerable but limited differentiation is evident in the variations in the features of
products available in the information technology industry. For example, some
companies offer mainly data-mining products, while other companies provide mainly
transaction-processing products. This external factor has a moderate contribution to the
force of competitive rivalry against IBM. On the other hand, the high imitation potential is
a strong force that enables competitors to offer products that are highly similar to those
of the company. IBM’s generic strategy and intensive growth strategies involve cost
leadership and low emphasis on product uniqueness, leading to the imitability of the
company’s products. In addition, the high aggressiveness of firms further intensifies the
force of competition in the industry environment. This aggressiveness is applied in
marketing campaigns, product development, and other areas of business.
Consequently, this aspect of the Porter’s Five Forces analysis shows that IBM must
strengthen its competitive advantage to deal with the strong force of competition.
 
 
02. Bargaining Power of IBM’s Customers/Buyers (Moderate Force)
The power of customers or buyers to bargain or impose their demands is determined in
this aspect of the Porter’s Five Forces analysis of IBM. Customers are the source of the
company’s revenues, thereby directly affecting the profits and financial standing of the
information technology business. The following external factors contribute to the
moderate intensity of the bargaining power of customers in IBM’s industry environment:

 High number of customers (weak force)

 Moderate size of each order (moderate force)
 Moderate cost of changing (moderate force)

The high number of customers is an external factor that has a weak contribution to the
bargaining power of buyers in the information technology industry. This condition
weakens individual customers’ influence on IBM. However, the moderate size of each
order strengthens customers’ power in the industry environment. For example, a
company with nationwide operations in the food service industry orders thousands of
machines from IBM. Such size of purchase considerably intensifies the bargaining
power of buyers. The cost of changing is also included in this aspect of the external
analysis of IBM. Such cost is moderate in the information technology industry. For
instance, even though changing a provider of business machines may be costly,
customers, especially large ones, can still do so to a limited extent. Thus, this aspect of
the Five Forces analysis reveals the moderate significance of customers’ bargaining
power in IBM’s strategic plans.
03. Bargaining Power of IBM’s Suppliers (Moderate Force)
Suppliers’ impact on IBM’s business and the industry environment is assessed in this
aspect of the Five Forces analysis. Suppliers have leverage in terms of their direct
effect on the company’s supply chain, as well as the quality and price of materials
available to the information technology business. In this external analysis, the following
are the intensities of the external factors that maintain the moderate force of the
bargaining power of IBM’s suppliers:

 High overall supply (weak force)

 Moderate size of individual suppliers (moderate force)
 Low ability to substitute supply (strong force)

The supply chain area of IBM’s operations management is under the influence of the
moderate force of the bargaining power of suppliers. Also, this bargaining power of
suppliers is one of the bases used for supplier-support programs included in IBM’s
corporate social responsibility (CSR) strategy. The high overall supply is an external
factor that weakly intensifies this force. For example, an individual supplier’s change in
operations has low impact on the overall supply level, thereby also having low impact on
IBM. On the other hand, the moderate size of individual suppliers has a correspondingly
moderate contribution to supplier power. For instance, because of the scale of its
operations, a global supplier of raw materials for the manufacture of computing
hardware can have a considerable but moderate impact on IBM. The power of suppliers
is also strengthened because of the low ability of the company to substitute its supply,
based on the specific material requirements of the business. Based on this aspect of the
Porter’s Five Forces analysis of IBM, suppliers are a major strategic consideration in the
industry environment.
04. Threat of Substitutes or Substitution (weak Force) 
The business performance of IBM is subject to the force of substitutes, as determined in
this aspect of Porter’s Five Forces analysis of the information technology industry
environment. Substitution threatens the company in terms of reduction in revenues. This
external analysis considers the potential of successful substitutes to put established
firms out of business. The external factors that lead to the moderate intensity of the
threat of substitution against IBM are as follows:
 High cost of changing (moderate force) (due to high psychological costs or higher
economic costs)
 Moderate availability of substitutes (weak force)
 Moderate perceived level of product differentiation (weak force)

For the enterprise server solutions, the cloud services itself can be an important
substitute. This means that IBM’s cloud offerings would be threatening the revenue of
its other hardware business. As a result, the company has gradually shifted focus from
the hardware and legacy systems and moved to the cloud and AI services. Due to the
ease of business offered by cloud service providers, many companies are shifting to
cloud storage solutions. Thus, even though the number of substitutes is limited, the
value proposition is lucrative enough for customers to switch. Customers cannot derive
the same utility (in terms of quality and performance) from a substitute product as they
derive from the IBM at the Crossroads’s product. Further, even though the customers
would need to incur expenses to switch, in the long run they would save by reducing
expenditure on in-house maintenance of hardware. So, the threat of substitutes is a
strong force for the hardware sector of IBM’s offerings. For the other offerings, however,
there are no major substitutes, and it is a weak force. Therefore, this aspect of the
Porter’s Five Forces analysis of IBM suggests the significance of substitution in
influencing business performance.
(Nếu thầy hỏi thì đọc thêm còn không thì thôi)
How IBM at the Crossroads tackle the Threat of Substitute Products or services?

 IBM at the Crossroads can reduce the Threat of Substitute Products or services
by clearly emphasizing how its offered product/service is better than the available
substitutes.
 It should provide convincing reasons to the customers by offering a better
experience and high value for money.
 It can raise switching costs by working on loyalty.
 Lastly, it can improve the quality, maximize value for money and set a strong
differentiation basis to discourage customers from using the substitute product.
05. Threat of New Entrants or New Entry (Moderate Force)
The effect of new entry on business performance is addressed in this aspect of the Five
Forces analysis of IBM. New entrants or new firms add to the overall level of
competition and can reduce the company’s share in the information technology market.
IBM must consider the following external factors that contribute to the moderate
intensity of the threat of new entry in the industry environment:

 High imitation potential (strong force)

 Moderate cost of changing (moderate force)
 High cost of entry (weak force)

Just as it contributes to the force of competitive rivalry, the external factor of high
imitation potential has a strong contribution to the threat of new entrants in the industry
environment. For example, new entrants could succeed by developing information
technology products that are highly similar to IBM’s. On the other hand, the moderate
cost of changing has a considerable contribution to the intensity of this force. This
indicates that IBM’s customers are moderately likely to use new entrants’ products.
However, the high cost of entry, which pertains to the cost of establishing operations in
the industry, weakens the threat of new entrants. Nonetheless, new entry motivation
may remain, based on the technological integration trend in different industries, as
determined in the PESTEL/PESTLE analysis of IBM. Still, the combination of the
external factors in this aspect of the Porter’s Five Forces analysis leads to the moderate
force and significance of the threat of new entrants.
References if thầy ask
 Dobbs, M. (2014). Guidelines for applying Porter’s five forces framework: a set of
industry analysis templates. Competitiveness Review, 24(1), 32-45.
 Dobbs, M. (2012). Porter’s five forces in practice: Templates for firm and case
analysis. In Competition Forum (Vol. 10, No. 1, p. 22). American Society for
Competitiveness.
 Grundy, T. (2006). Rethinking and reinventing Michael Porter’s five forces model.
Strategic Change, 15(5), 213-229.
 International Business Machines Corporation – 2016 IBM Annual Report .
 International Business Machines Corporation, Form 10-K .
 Miller, F.P., Vandome, A.F., & McBrewster, J. (2011). Porter Five Forces
Analysis. VDM Publishing.
 Roy, D. (2011). Strategic Foresight and Porter’s Five Forces. GRIN Verlag.
 U.S. Department of Commerce – International Trade Administration – Software
and Information Technology Services Industry Spotlight.
 Walder, J. (2013). A critical evaluation of Michael Porter’s Five Forces
Framework. GRIN Verlag.