CASE
IBM : Restructuring The Sales Force
In 1993, IBM’s Board of Directors decided the time was right for dramatic action. The once proud company had seen its sales fall from almost $69 billion in 1990 to $64,5 billion in 1992. In the same period, profits plunged from $5,9 billion to a loss of $4,96 billion. In April 1993, the Board hired Louis V. Gerstner, Jr. to serve as its new Chairman and Chief Executive Officer and to turn the company around.
Just three months into the job, Gerstner announced his first major strategic decision. He identified IBM’s sales force as a key source of problems. Observes expected that he would restructure the sales force because it was too large, unwieldy and slow to meet changing customer needs. Gerstner
…show more content…
Observers felt that the new system might run into problems in international markets where country heads had held strong, autonomous positions. But Gerstner and his managers had been frustrated by their inability to control the country heads. The new system would shift the salesperson’s loyalty to the industry group head. It would also transform account executives from order takers to business advisers.
IBM indicated it would fill half of the new industry posts with outsiders who had experience in the consulting industry. This was a major change from IBM’s traditional policy of promoting from within. IBM also changed the compensation system to base 60 percent of commission on profitability and the remainder on customer satisfaction as measured by customer surveys. Earlier, only six percent of a salesperson’s salary above the base salary (the bulk of a person’s pay) reflected the profitability of his or her sales.
Observers warned that it would take months or years to implement the changes and that the changes would cause upheavals and power struggles. They also noted that what IBM was trying to do was not new to the computer industry. Digital Equipment Corporation tried the industry based salesforce idea in 1993 and abandoned it in less than a year. Apparently, DEC felt that the new structure had not helped reverse a sales slide. However, IBM’s salesforce changes are
First he appealed to present facts, specifically identifying the opportunities and benefits for his multinational approach while stating its direct impact on the stated objectives of achieving increased logistical efficiency and return. Yet he was also successful influencing executive stakeholders by persuasion in appealing to their personal values as it pertained to ego and position. He rarely took credit for his own ideas, rather emphasizing and positioning his strategy as the collective decision of the group or executives that were in charge. The example is when he know there was little initial support within the USMG organizations for taking his new multinational approach, he turn to Xerox senior managers for support instead though his line manager.
In the seven years (since 1994), that Lou Gerstner reigned over IBM, the company’s earnings per
Kathryn McNeil’s was recently hired and her undertakings as an IBM product manager were complex and extensive. She dealt with the stream of stock for all IBM PCs across the nation, which arrived at the averaged to $40 million every month. To do this, she spoke with the IBM Corporate Headquarters Team regularly to place requests and ensure that each retail outlet had a six-week supply of PCs available. The procedure included arranging conveyance dates and guaranteeing that conveyed items met client details. When IBM reported another product, McNeil evaluated the plausible effect it would have on current items and decided the amount of the new change that ought to be bought. She additionally gave the Sayer administration staff with every day, week by week, and month to month examinations of the product offerings as reports and spreadsheets. At last, McNeil remained in near contact with the field delegates who sold the PCs at the different Sayer-claimed retail outlets all through the nation. She issued declarations to the field delegates when there was a change or an issue with an item, and her phone was an open line for any illustrative who had a question or consumer loyalty issue that required McNeil 's consideration. Her reports were dependably on time and sensibly elegantly composed, great
Theodore Levitt’s 1983 article about the globalization of markets is one of the most discussed essays on this subject. Many companies have become disillusioned with the sales in the international marketplace as old markets become saturated and new ones must be found. Levitt in his essay asserts that well-managed companies have moved from
The Daniel Gill, the chairman and CEO faces the possibility of changing the organizational structure of Europe, Asia/Pacific, and the Western Hemisphere. The current organization includes an International Division which oversees production and marketing for countries outside the United States. The goal of changing the organizational structure of these three regions is to increase sales growth internationally and decentralize responsibility away from headquarters to field operations.
To answer the many external environmental factors affecting IBM’s personal computer business they must raise structural complexity and decentralize decision making through increasing the number of departments and personnel which individually address such boundary spanning environmental points as pricing, customer representation, and new technologies. Human resources must be effectively utilized as key personnel must be recruited both quickly in the transformation and in the future.
Q1. What is the primary objective of IBM’s advertising? How have the objectives of its advertising changed over the years?
To adapt to the fast changing pace of business, IBM CEO Louis Gerstner took the
On April 1, 1993 Louis V. Gerstner took over as IBM’s chairman and CEO. Gerstner was able to recognize the flaws in IBM’s model to have the company being run as several independent parts from one another. From the beginning he was able to recognize that “IBM was greater than the sum of its parts … and the entire
IBM has weaknesses in the transformation of its business model. It is lack of flexibility in the transition because of its large company
Mr. Fisher, President of Central Steel Door, made many mistakes in his efforts to hire a sales manager in Europe. First, advertising in the International Herald Tribune is only going to attract Americans who lack the intelligence and in-country expertise the company needs to successfully compete in unfamiliar markets. Second, he fails to make the most of these candidates that these ads generate by asking them for referrals and offering an incentive. He fails to use the limited success of the ads to successfully network into the international community. Third, the lack of sensitivity ot living costs in Belgium and Germany for sales manager led to them quickly resigning. Fourth, Mr. Fisher didn't coordinate with the Belgian government to ensure employment taxes were paid on time, leading to a bill for back taxes of thousands of dollars. Fifth, the hiring of ten local people to staff distribution centers and the firing of five of them not only had to be communicated months in advance to local government authorities, Central Steel Door is legally obligated to pay them for a full year of their salaries based on German law. Sixth, the ignorance of local, regional and national laws ends up costing the company more than it made on any sales in the region ruing the case study's timeframe. Seventh, Mr., Fisher neglected to consider how the cultural differences between the Untied
Within this new business environment that GE was facing, customers needs, wants and expectations of what products can offer them is forever changing. Immelt saw and understood this from the amount of time spent with customers, and implemented this idea within GE through the IT
TOC o "1-3" h z u HYPERLINK l "_Toc331191870" Executive summary PAGEREF _Toc331191870 h 3
IBM’s marketing efforts missed the mark. No one ever looked at the IBM ‘s PC as being inferior, but IBM did nothing to sell it.