Managing Financial Resources

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Henley Management College [pic] Assignment Managing Financial Resources IBM HMC17 Author: Peter Neirynck Learning Team: Regional Group B – TIE team Date: October 29, 2007 Management Summary This paper analyses critically the financial performance management within IBM Software Group Belgium and IBM Southwest IOT. In order to understand how the financial reporting is an enabler for the execution of the corporate strategy, we analyse the published financial information, the budgeting cycle and short term decision process inside IBM, each on various levels from business unit to geo-level. The main finding is that the financial processes are very well structured within IBM, and lead to correct financial…show more content…
The majority of the Company's enterprise business, which excludes the Company's original equipment manufacturer (OEM) technology business, occurs in industries that are broadly grouped into six sectors: financial services (banking, financial markets and insurance), public (education, government, healthcare and life sciences), industrial (aerospace, automotive, defence, chemical and petroleum and electronics), distribution (consumer products, retail, travel and transportation), communications (telecommunications, media and entertainment, and energy and utilities) and small and medium business (mainly companies with less than 1,000 employees). [2] [pic] Figure 3: IBM 2006 Corporate Results[3] Based on the 2006 results, IBM generated $91.4 billion, with a net income of $9.4 billion. IBM’s earnings per share went up with 23% to $6.06, gross profit margin improved with almost 2 points. IBM has consistently generated return on invested capital significantly above the average for the S&P 500 over the past several years, with ROIC of 34 percent in 2006 (excluding the Global Financing business). [pic] Figure 4: Margins & Earnings per share[4] 3 IBM IOT Southwest IBM implemented in 2005 a new operating model for EMEA to transform the business for growth. The new model gives IBMers working closest to clients more authority, accountability and flexibility. The new operating model for EMEA comprises two business
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