BY DR. TANAI CHARINSARN

AUGUST  31, 2016

Big company: Strategies for success that cannot be overlooked

The company we will discuss today is a company that has a significant influence on the global IT industry. It is IBM (International Business Machines), which was founded over 100 years ago. IBM started as a computer business, utilizing technology to make more money. IBM's products range from typewriters to computers, and the company has consistently grown. However, IBM began to face problems as it tried to do everything but couldn't do everything well. Every business unit had its issues.

During this period, IBM's main hardware, Mainframe, began to see reduced demand from consumers who were increasingly using server systems. The PC business unit also suffered due to the fact that IBM didn't have its own CPU (Control Processing Unit) and the software came from Microsoft. This led people to prefer building platforms on Microsoft's software, ultimately causing IBM's software to lose market share and become irrelevant.

IBM started losing more than 8 billion dollars, and its cash flow was depleted in 1993, reaching a historic low in the United States. However, IBM quickly turned things around the following year, making a profit of over 3 billion dollars. The business continued to grow steadily, to the point that even Warren Buffet, the world's most successful investor, decided to invest in IBM's technology sector. This was a notable decision since Buffet had previously declared he wouldn't invest in technology stocks due to the rapid changes in the industry and high investment costs. Nevertheless, Buffet didn't consider IBM just a technology company but rather saw it as a service company. He foresaw that the future of technology would be increasingly complex, and people would need experts and teams to solve their technology problems.

How did IBM do it? Lou Gerstner, a top IBM executive, wrote a book called "Who Says the Elephant Can't Dance?" This book is about IBM's transformation at the time and how they survived their crisis. The book's title is fitting as it illustrates that, when individuals come together and work as a team, they can accomplish much more. Lou Gerstner advised that each business unit should become a subsidiary company, fostering focus and competition among them. If a unit couldn't generate profits, it was closed down. He also believed that working together created more negotiating power for the business since customers wanted solutions to their problems, not just products.

IBM chose to reduce manufacturing costs by cutting unnecessary expenditures, closing factories, and laying off employees who weren't related to future business plans. They decided to exit the PC business, selling it to Lenovo, a very wise decision considering that Lenovo wanted to enter the global market. IBM's decision to sell its PC business at a time when it was still profitable allowed them to sell it at a high price. IBM transitioned into a service company, focusing on providing technology solutions, not just products.

IBM's culture and organizational factors contributed to their long-term sustainability. They created a new culture, "Win-Execute-Team," which aimed to focus on the collective success of all units. Each unit had to work together to succeed, using their expertise to help one another. IBM began selling as a total solution, including hardware, software, and after-sales support. They returned to their core, which was the technological expertise of their employees, who were used according to customer needs. This strategy led to sustained growth, and that's where IBM stands today.