Strategic Management and Strategic Competitiveness
IBM is a multinational technology and consulting company based in America with its headquarters located at Armonk, New York. The company is involved in the manufacture of software, hardware as well as offering consulting, hosting and infrastructure Services. The Company was founded by Charles Ranlett in 1911 and it currently serves about 170 countries. In addition to that, as of 2014, the company had revenue of approximately US $92.793 billion and a net income of US $12.023 billion (Wheelen, 2011).
In today’s world, business is driven by technology. Such changes have not only enabled business organizations to become more effective and efficient but also added extra challenges to the business. IBM is one such organization which has been impacted by globalization and changes in technology. to start with, due to changes in technology, the IBM customers have been in a position to interact rapidly with the employees of the company instantly despite their geographical location (Hitt, 2012). The organization due to technological advancements has been able to set up intranet to allow its customers and suppliers view the business internal data for instance the items that are available, status of ordering among other things. Therefore, information can be shared between people thanks to technology which has helped replace the postal processes.
Globalization in IBM on the other hand takes place when the business reaches its customers worldwide despite the geographical boundaries (Wheelen, 2011). This has hence impacted the company because; it is capable of competing for customers with other competitors in the same country and also worldwide. in addition to that, thanks to technology , the world has opened up opportunities to the company to access global customers and suppliers hence creating an environment of hyper-competition in the industry of computer and software. Besides that, IBM can benefit from globalization in that; it can be able to access cheaper materials and labor. This is because in today’s society, globalization enables such a company contract manufacturers in Thailand and China easily. Besides that the shipping costs is still less for the finished product.
On the other hand, globalization and technological changes can also have negative impacts on the company. First of all, it has created lower wages for employees since the company just like any other is searching for the cheapest form of labor for its work across the globe. Therefore, in most cases, it will pay the employees lower wages for the job done even when it should be paying higher rates. Besides that, thanks to technology and globalization, the company has created high discrepancy between the rich and poor. This is so because; it is able to take advantage of all the things globalization can offer and unlike it, there are those people who cannot get such an opportunity and so they are left out in the poverty cycle as they cannot utilize the globalization benefits (Hitt, 2012).
Above-average returns are the returns in excess of what an investor expects to earn from making other investments with same risk amounts.IBM can hence earn its above-average returns through the industrial organization model when the company implements a strategy dictated by the general characteristics of the competitor environment and industry. The model suggests that the returns are determined by external characteristics and not by the company’s unique capabilities and resources. On the other hand, the resource-based model assumes that every organization is a collection of unique capabilities and resources. It is hence this uniqueness that the company bases its strategy and abilities to earn above-average returns. Capabilities change with time and so they must be dynamically managed to help pursue the above-average returns (Wheelen, 2011).
The overall success of IBM is influenced by the vision and mission statement in that; the vision statement provides a picture of what the company wants to be and what it wants to achieve in broad terms (Hitt, 2012). It hence articulates the organization’s ideal description and shapes its wanted future. It also points a direction of where the company wants to be some years to come. IBM’s vision aims at creating success for its clients through dedication and this reflects on the company’s aspirations and values so as to capture the mind and heart of each of their employee and its stakeholders as well.
On the other hand, the mission statement is based on the vision. However, the mission is what specifies the business in which the firm intends to compete as well as the customers it wants to serve. The company’s mission statement talks of it striving to lead in the manufacture, development as well as invention of the most advancement in the industry (Wheelen, 2011). This influences the overall success of IBM in that; it helps the company strive for its desired financial results from serving its customers while at the same time trying to attain its set future. This is to say that the above-average returns are the results of the company’s efforts to achieve it mission. In addition to that, having an effective mission has positive impacts on performance as measured by profits, sales growth, net worth and employment.
Every organization has a system of stakeholders with whom it establishes and manages relationships. These groups of people are capable of affecting the organization’s mission and vision and are affected by the achieved strategic outcomes. They can affect the overall success of IBM by enforcing claims on the performance of the company through their ability to withhold participation that is crucial to the survival, profitability and competitiveness of the company. They can be classified into three main groups; capital market stakeholders, organizational stakeholders and product market stakeholders. The capital market stakeholders can impact the overall success of IBM in that, if they are dissatisfied with the organization’s performance, they can reflect their concerns through selling their stock for instance which can have negative effects on the success of the firm since stakeholder play a big role in making the company successful (Hitt, 2012).
The company should hence respond to the dissatisfactions of the stakeholders in time depending of the kind of relationship it has with them (Wheelen, 2011). On the other hand, product market stakeholders involve suppliers, customers, unions and host communities. In order for the company to be successful, it needs to meet the needs of these groups and so the groups can benefit whenever the company engages in competitive battles can strike a balance between these groups of people, then it can be successful as its success depends on how it handles these groups.
Organizational stakeholders on the other hand involve employees who expect the company to provide a stimulating, dynamic and rewarding work environment. This hence influences the company success in that; when the company constantly develops the employee skills, the employees become satisfied working for the organization and this motivates them to do better hence benefiting the company. Rewards on this group of stakeholders also increase their performance rates and eventually the success of the company (Hitt, 2012).
Hitt, M., Ireland, R. D., & Hoskisson, R. (2012). Strategic management cases: competitiveness and globalization. Cengage Learning.
Wheelen, T. L., & Hunger, J. D. (2011). Concepts in strategic management and business policy. Pearson Education India.
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