case30 - t C ASE ffiffi IBM I N 2 OO9 Since h e b ecame C...

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CASE ffiffi t.. IBM IN 2OO9 Since he became CEO of IBM in 2003, Sam Palmisano has worked hard to build a new global computer services company, which in 2009 was the largest and one of the most profitable in the world. In 2009,IBM had a market capitalization of more than $ttg billion and employed more than 319,000 peo- ple worldwide in more than 150 countries. \7hat kind of business model and strategies has Palmisano and his top management team pursued that allowed IBM to regain its position as an industry leader and wiped out memories of its disastrous performance in the 1980s? In addition, what challenges lie ahead if the company is to retain its competitive advantage and leading position in the global business computer services and consulting industry and keep rivals such as HP, Accenture, Dell, and Oracle at bay? That was the question Palmisano was grappling with in the spring of 2009 as the effects of the recession rhat started in 2008 started to bite into IBM's revenues and profits. Asrnms':; ilssx" $xaru ["] As discussed in "The Fall of IBM," John Akers' vision of IBM's future was for the corporation to be broken up into 13 different companies that would be spun off to operate independently-essentially dismantling the IBM empire. \fhile IBM's rop man- agers developed a timetable to do this, Akers still faced the problem of how to keep it afloat in the short run. In his final desperate attempt to keep IBM viable, Akers continued to make drastic cost reductions, and between 1,991, and 1993 an addi- tional 80,000 employees were laid off as IBM sought to lower its cost structure. Its workforce was now less than half at its peak. The restructur- ing charges associated with these layoffs resulted in record losses of more than $15 billion for IBM, and its stock price plunged to record lows as investors decided the future lay not in mainframe computers but in networks of servers and client PCs. Moreover, by this time, its personal systems group that manu- factured its PCs and the servers it was developing had become a liability. Competitors such as Dell, GatewaS and Sun had gained a major low-cost advantage over IBM's PCs and servers, and the PC division was losing money. By 1993, IBM's performance still showed no signs of improvement, so Akers resigned; the board of directors searched for a successor with the strate- gic skills necessary
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case30 - t C ASE ffiffi IBM I N 2 OO9 Since h e b ecame C...

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