IBM SWOT Analysis examines the strengths, weaknesses, opportunities, and weaknesses of the IT company in order to understand the company's current form.
International Business Machines or as we normally call it IBM is one of those staple names in the business world which hold aspiration. Surely you know plenty about it. IBM has also been nicknamed “Big Blue,” and it was formed as a merger of various smaller companies offering different services.
IBM is famous for its mainframe computers, however it was not really able to achieve the same popularity with other types of computers. This was one of the contributors to hurting the company’s market position hence it started losing importance. The company had to downsize in the 90s because it was unable to respond to the technological changes of the era. Since then, the company’s structure and services have changed considerably; it went through a phase of acquiring other companies and also selling its own manufactured products. Today IBM is very different from what it was like in the past. To understand some of the aspects of the company’s current form, read the following IBM SWOT Analysis.
History of IBM
The company started in 1911 as the Computing-Tabulating-Recording Company (CTR) and was later renamed to its current name, IBM. It is an American corporation, and its headquarters are situated in New York but the company functions and operates all over the world.
IBM was not doing well in its earlier years, and the corporation’s course was going through troubled waters. Thomas Watson was the man behind regenerating the company and transforming it into one of America’s most prominent manufacturers.
IBM has had a vibrant history, and it has managed to rise through the ranks in almost all markets it ventured into. For example, IBM acquired Electromatic Typewriters, Inc. in 1933 and became the leading supplier in the field. The firm also helped in the construction of high-speed calculators during World War 2.
IBM entered the computer market in a very strategic manner. The company worked on expanding its size; eventually there came a point where investment in development became elementary for IBM to look into and that too in huge quantities. IBM then started to take the lead in the computer market and its marketing techniques were phenomenal. The brand’s dedication to product development and its drive for product/service extension helped revolutionize the company into the colossal name that we so admire today.
What are some of the strengths that IBM has?
Reputable Name
IBM is one of the oldest names in the tech industry, and everyone knows what this brand entails. Even though they might have lost the market share they once held, certain qualities are associated with the brand that it is notable for. It is one of the most known computer companies not just in the US but all over the world, currently most known for its mainframes.
IBM also worked on manufacturing the Summit, which is presently being used at the Oak Ridge National Laboratory in Tennessee, USA. Summit is considered the second-fastest supercomputer in the world.
Brand Value
IBM as a brand is still valuable. Brand Finance puts out reports in which it lists 500 of the world’s most valuable brands after testing almost 1000 brands on various factors. IBM came 43rd in the list that came out in 2020.
Business Model
IBM has always tried to align its business model with keeping good relationships with customers whilst also giving due importance to shareholders. It has tried to come up with IT solutions that provide value and innovation to people. This is one of the reasons the brand still sticks by.
Research and Development
IBM has an excellent capacity to invest in research and development because of the size of the company. They use this opportunity to its maximum by investing billions of dollars in research facilities every year. This way, they can understand the changing dynamics of the tech industry better to approach new avenues.
Investing in research helps companies stay up to date with new technologies and the demand of the consumers. By investing in development, the companies can then work to fulfill these demands and keep up with shifting trends.
Employee Training
IBM has developed a culture where they give their sales staff training so they can pitch the company’s products to the customers in the most effective manner by explaining the benefits that come with specific items.
The company has also made an effort to build a strong distribution network.
Mergers and Acquisitions
IBM has acquired many companies over the years and also sold some of its products to other companies. All of these decisions have brought value to the company in one way or another. Merging has always been a strategic business move for brands to sustain themselves by increasing profits.
What are some weaknesses that IBM struggles with?
Drop in Popularity
As discussed previously, the company has faced significant drops too. They might be 43rd on Brand Value this year, but last year they were 40th; their numbers are falling. They are losing brand value and market share. This is a weakness because the company failed to keep up with the market which was in its grip at one point in time.
Legal Problems
IBM has had its fair share of legal disputes. IBM has been sued by companies like Bridgestone America and Iusacell over different matters of concern. If this situation persists, the image of the brand can take a severe hit.
Competition
The competition in the tech industry is giving IBM a tough time. Even though IBM is investing a lot of money into research and development, it still does not come at par with some other names in the market. Other companies have managed to bring more innovation that IBM has not really been able to compete with.
IT companies have been giving intense competition to IBM that it is struggling to fight with.
Inefficient Financial Structure
If we take a look at the company’s finances and assets, it shows that they can utilize their finances more efficiently than in the current situation.
What are some opportunities that IBM can benefit from?
Expanding a Consultancy Business
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.
Other Expansions and Acquisitions
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.
Technological Advancements
The IT industry is very fast-paced and IBM can use this fact to its own advantage. The company has countless chances to start introducing new services and products. Once the company picks up on this opportunity and starts exploiting it to the fullest, they can transform their brand.
In fact this way, IBM can overcome one of its most significant weaknesses by converting them into opportunities for itself. They can start coming up with innovative solutions, just like the other IT brands in the market. This process will help IBM compete better as well.
Interpreting Market Trends
The biggest opportunity for any company is if it picks up on consumer cues and understands customer behavior. By understanding what the market needs right now, IBM can align itself along those lines and make decisions that help increase its market share and profits.
IBM is already putting money into research; if they properly evaluate what consumers are spending on with increasing rates and then invest in it, this will help the company streamline and diversify its products and services according to what is desirable in the market presently.
What are some threats facing IBM?
Market Competition
The competition waiting for IBM in the market is almost endless. Different companies are competing with a variety of services. Some of the biggest names that compete with IBM are Amazon and Hewlett-Packard. Microsoft and Oracle are big competitors for IBM’s software business. Cisco and Dell are some of the big competitors when it comes to technology. And these huge names are not all; there are many other competing firms too, like CA, SAP, EMC, etc.
This has proved to be a considerable threat for IBM so far because it has mostly failed to keep up with the intense competition in the IT industry. This will continue to be a threat until the company evaluates where it stands and what it needs to do to keep itself up in this type of situation.
Recession
There is no company that has managed to remain unaffected by the COVID-19 pandemic and the ensuing recession. First, the lockdown halted production, and everyone was confined to their houses. The work-from-home situation really impacted the quality of the work in the beginning because of how hard it was to adjust to these new circumstances. The lockdown also gravely affected the mental health and motivation of employees.
Right after the lockdown started improving, the world witnessed an economic recession. Inflation has blown up, and people have less and less to spend. People prefer to buy necessities for the pandemic rather than spending on luxuries like technology, with whatever money they have.
These developments have really affected business, and it is hard to cope up with them; IBM has been suffering the brunt of it too. Now, what really matters is how well IBM holds up as compared to its competitors in dealing with the effects of the pandemic.
Currency Fluctuations
The global economy is not stable—the constant currency fluctuations and changing prices of labor and raw materials impact companies’ finances as well. Having a globalized market also makes things more complicated than they were, to begin with. These are all problems that turn out to be a considerable threat.
Laws, Regulation, and Economic Policies
Laws and policies are also changing constantly and are different in various countries too. Regulation on the market and the industry also causes such changes. These can cause serious obstacles to the working of any company. These laws and policies are often inefficient and place unnecessary restrictions on companies which they are then forced to comply with.
IBM SWOT Analysis: Conclusion
The future of IBM looks pretty uncertain right now. It was once one of the biggest names in the IT industry, but IBM has lost its edge and rapport over the years. The company gave in to the threats and weaknesses, and the struggles that it did overcome to stay up to date were not enough compared with other competitors. Whether IBM will be able to gain back the position it once had and become a leading name in the tech world once again, we can not say right now. We just have to wait and see if the brand can do something to change its current course or if it will keep going down in the market.
A SWOT Analysis is an analysis of a company’s strengths, weaknesses, opportunities, and threats. It is a business tool that is used to manage companies in a better manner because it helps in understanding them from various aspects. Conducting a SWOT Analysis opens up your eyes to many new perspectives.
Just reading through other SWOT Analyses can also prove beneficial because it helps you in understanding other companies. It also helps in learning how to conduct your own SWOT analysis. This is why we have SWOT Analysis examples on our website as well as SWOT Analysis templates to help you in case you want to work on one.
