Strategic Analysis of IBM

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Please find attached herewith notes, ideas and step by step guidance so that you can develop the solution easily. The solution provides guidance notes on developing strategic alternatives for Corporate Level Strategies and Business Level Strategies. You can further develop on these and use the notes, ideas and research assistance using the references provided herein.

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Guidance on developing Alternative strategies for IBM

Problems and Issues at International Business Machines (IBM)
IBM has seen the loss of its net revenues by 18.75% in the last 3 years and the revenues are as is evident from financial statements with NASDAQ (2017). The billionaire investor Warren Buffet has also reduced his shareholding in the company as he believes that the company has lost ground against its major competitors and IBM has underperformed in the market in the last 6 years (Kim, 2017: May 5). The company also lags in terms of market share with IBM along with Google and Microsoft are together commanding only 23% market share as compared to market leader Amazon with 40% market share (Zacks, 2017: Apr. 19). IBM shareholders are losing confidence in IBM's business model since cloud computing has been launched which is hybrid cloud computing and not as successful as Amazon and Google's cloud computing (Bosa & Taylor, 2017: May 6). The legacy businesses such as mainframe and power PC hardware is dragging its business down whereas the strategic imperatives business such as cloud computing is growing but not at a faster rate (Wagner, 2017: Apr. 18).

First of all, it is essential to conduct a SWOT analysis and identify the strengths and weaknesses of IBM to develop alternative strategies. The following insight can assist in identification of alternatives:
Strengths
1. Brand Value - IBM is sixth ranked brand with a brand value of $52.5 billion although it has declined most as compared to other brands by 19% as per the Interbrand Best Global Brands list 2016 (McIntyre, 2016: Oct. 5).
2. Good Inventory Management - The company has good inventory management as the inventory turnover ratio of IBM was 25.55:1 as on 31 March 2017, the average being 20.44:1 (CSI Market, 2017). This is above the ideal inventory turnover ratio of 5:1. This shows that the company has been able to move its inventory very fast.
3. Leadership in Security Applications - IBM has attained leadership in certain segments such as security applications wherein the company is positioned as leader in Identity governance and administration in the magic quadrant as reported by Gartner's research (Burnham, 2017: Feb. 2017).
4. Profitability - The company has been able to hold on to its profitability as the company had a net profit of $11.872 billion in the year ending Dec. 2016 (NASDAQ, 2017) and although there has been decline of around 29% but this is in consistence with the decline of 18% in sales and the increasing expenditures.
5. Adequate Liquidity - The company had adequate liquidity despite reduced profit as is evident from the fact that although the current ratio of the company as per the data from NASDAQ (2017) is 1.21:1 which is less than the ideal ratio of 2:1 but the Liquidity ratio is 1.17:1 which is greater than the ideal ratio of 1:1.
Weaknesses
1. Inability to compete - The company's net income has been continuously declining as is evident from the financial statements as per NASDAQ (2017) wherein the company's net income has declined from $983.67 billion in 2013 to $799.19 billion in 2016 which depicts a decline of 18.75% in 3 years.
2. Cloud Infrastructure - IBM has total 55 data centers out of which 22 are based in United States of America (Hardcastle, 2017: Apr. 27). Each new location of IBM has capacity of around 6000 to 10,000 servers ...