International Business Machine Corporation (IBM) was funded in 1924 in the Unite Stats by Thomas J. Watson. IBM as the world biggest Information Technology assistance service and business company. It is well known that IT market exist several large and powerful company such as Microsoft and HP. The WPP (2016) reported, based on BrandZ 2016, IBM receive rank of 10th out of the 100 which IBM at the leading position. According to such consequence, it is clear that IBM has own advance strategic position and business development. This assessment mainly to evaluate IBM’s competitive strategic. Base on the strategy, this article will critical analysis the strategy and give personal view. This report is divided into three parts. Firstly, this report will review the theory of generic competitive strategy. Secondly, combine the situation of IBM with competitive strategy and give the view of the selection of competitive strategy. Finally, it will base on these parts to give accommodation.
Basic, the generic competitive strategy mainly to connect with Porter. Porter believe the position of an enterprise in its industry determines its profitability. However, for an enterprise to maintain a high economic efficiency for a long time requires a competitive advantage which mainly refer to cost advantage and differentiation. These two advantages come from the ability of the enterprise to deal with the five forces from the environment. According to enterprise apply such advantage in narrow or
M2(Unit 37) - Assess the social implications of business ethics facing a selected business in its different areas of activity
Porter’s model aims to enable managers not only to understand their industry environment but also to shape their firm’s strategy. The five competitive forces are threat of entry, power of suppliers, power of buyers, threat of substitutes, and rivalry among existing competitors. “As a rule of thumb, the stronger the five forces, the lower the industry’s profit potential- making the industry less attractive to competitors. The weaker the five forces, the greater the industry’s profit potential – making the industry more attractive” (Rothaermel, 2013, p. 65). It is recommended that managers position their company in an industry in such a way that relaxes the constraints of strong forces and
Porters Generic Competitive Strategies: The relative position of a company within its industry concludes whether the profitability of the firm is above or below the industry’s average. The above average profitability of the firm is fundamentally showing the sustainable competitive advantage in its long run. According to Michael Porter, competitive advantages originate from the value of a firm and there are two types of competitive advantages, which a company can own. These are low cost or differentiation. For any company, in
According to Porter (1985) a company can apply three generic types of strategies to protect itself while competitive force is a key issue of the management. To achieve this position a strategy based on competency must be accomplished
IBM needs to grow revenue and stay competitive in the dynamically changing computer marketplace of the 1990’s by maintaining technological leadership and accepting the organizational transformation which needs to be undertaken for them to excel. IBM needs to recapture their previously held powerful position in the personal computer and microprocessor markets and regain value in the company which will increase its stock value and competitive advantage in the marketplace.
Apple computer, Inc. is one of the largest tech companies in the world. The company was established on April 1, 1976, and incorporated on January 3, 1977. Apple computer had been using this name for the first 30 years then removed the word “computer” on January 9, 2007. Apple has produced a lot of innovative products and has successfully become one of the top leaders in the field of technology. Apple itself produces hardware which includes Macintosh computers, iPods, iPhones and iPads. In order to support their own hardware, Apple has also created software including Mac OS X operating system, iOS mobile operating system, iTunes, a professional photography package, a suite of professional audio and film-industry, final cut studio, logic
model can be applied to any segment of the economy to search for profitability and
To attain competitive gain, organisations can differentiate their merchandise and services from their competitors they can also choose to lower their costs in order to compete with other contenders. By aiming their produces to a wide-ranging target, they are essentially covering most of the marketplace or if they choose, they can decide to concentrate on a narrower target within the market (Lynch 2003). While doing so may reduce their market range it essentially reduces their other competitors. Porter stated that there are three generic strategies that an organisation can follow to achieve competitive gain over other organisations. These are:
51]. The model suggests a successful businesses strategy to wart-off competition by careful application of an “environmental analysis”. The Porter model proposes five elemental strategic defenses against five potential forces: threat of new entrants, rivalry among competitive firms, bargaining power of suppliers, bargaining power of buyers, and the threat of substitution products.
Successful use of the Porter Model Analysis includes identifying the sources of competition, the strength and likelihood of that competition existing, and strategic recommendations for the action a company should take to develop barriers to the various forms of competition (Prahalad and Gary, 1990). With the realization about intensity and power of competitive forces, organizations can develop options to influence them in a way that improves their own competitive position. The result could be a new strategic option, e.g. a new positioning; differentiation for competitive products of strategic partnerships.
“Competitive strategy involves positioning a business to maximize the value of the capabilities that distinguish it from its competitor’s” (Porter 1980:47). A successful business plan requires first and foremost the formation of an appropriate strategy. Through the implementation of a suitable strategy, the company is able to obtain its own industry niche and gain an understanding of its customers (Porter 1985). Whichever strategy is adopted it must be adequately integrated within the firms goals and missions to achieve a competitive advantage (Parker and Helms 1992).
According to Porter, strategies allow organizations to gain competitive advantage from three different bases: cost leadership, differentiation and focus. Porter calls these bases as generic strategies.
Porter’s generic strategies describe how a company attains competitive advantage across its chosen market scope. There are three generic strategies-cost leadership, differentiation and
Compaq Computer Corporation was a company founded in 1982 that developed, sold, and supported computers and related products and services. Compaq produced some of the first IBM PC compatible computers, and were the first company to legally reverse engineer the IBM Personal Computer. They possessed a large marketplace and were a severe competitor for the technical giant Hewlett Packard. Both of these organization were at a crossroads with regards to their financial futures and they were competing against the other for market penetration of the personal computer.
The generic strategy allows the firm to react to the five forces better than their competitors (Worthington & Britton, 2006). According to Porter (1985), an organization can enjoy competitive advantage by focusing on the generic competitive strategies. The organization could enjoy competitive edge by either offering the product at low cost or differentiating the product from the competitors or by focusing on a specific market. Porter (1985) emphasized that the generic strategies should be at the centre of the strategic plans.