...Name: Professor: Class: Date of submission: Turnaround strategy for Kodak Introduction The rapid changes in business environment and increased domestic and global competition have made the business environment to be more unstable. Organizations of different sizes are struggling to survive if they do not change according to the changing business environment. Many organizations have realized the need to change in order to survive in the changing business environment. Businesses which do not change are getting into trouble due to some factors some of which are internal while others are external. The businesses can easily get a turnaround if they properly diagnose the symptoms leading to failure and take collective action. The concept of turnaround can be described as taking action when a firm is facing a financial disaster or to prevent the firm from having a financial disaster. Turnaround does not only involve transforming which has declined but also those whose management fell the results are not satisfactory (Mason & Gerard, 160). Kodak one of US most recognized company which has been in operation for over a century has been struggling for years due to its slowness in adapting to the changing business world. The company had been one of the leading image solution providers in the world for many years. Established in 1880 by George Eastman Kodak become one of America’s well known company by helping to establish the market for camera film and the becoming the market...
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...9-805-130 REV: JULY 8, 2009 LYNDA M. APPLEGATE ROBERT AUSTIN ELIZABETH COLLINS IBM's Decade of Transformation: Turnaround to Growth This is my last annual letter to you. By the time you read this, Sam Palmisano will be our new chief executive officer, the eighth in IBM’s history. He will be responsible for shaping our strategic direction as well as leading our operations. . . . I want to use this occasion to offer my perspective on what lies ahead for our industry. To many observers today, its future is unclear, following perhaps the worst year in its history. A lot of people chalk that up to the recession and the “dot-com bubble.” They seem to believe that when the economies of the world recover, life in the information technology industry will get back to normal. In my view, nothing could be further from the truth. Lou Gerstner, IBM Annual Report, 2001 In 1990, IBM was the second-most-profitable company in the world, with net income of $6 billion on revenues of $69 billion, and it was completing a transformation designed to position it for success in the next decade. For the world leader in an industry that expected to keep growing spectacularly, the future looked promising. But all was not well within IBM, and its senior executives realized it. “In 1990, we were feeling pretty good because things seemed to be getting better,” one executive remarked. “But we weren’t feeling great because we knew there were deep structural problems.” Those structural problems revealed...
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...9-805-130 REV: JULY 8, 2009 LYNDA M. APPLEGATE ROBERT AUSTIN ELIZABETH COLLINS IBM's Decade of Transformation: Turnaround to Growth This is my last annual letter to you. By the time you read this, Sam Palmisano will be our new chief executive officer, the eighth in IBM’s history. He will be responsible for shaping our strategic direction as well as leading our operations. . . . I want to use this occasion to offer my perspective on what lies ahead for our industry. To many observers today, its future is unclear, following perhaps the worst year in its history. A lot of people chalk that up to the recession and the “dot-com bubble.” They seem to believe that when the economies of the world recover, life in the information technology industry will get back to normal. In my view, nothing could be further from the truth. Lou Gerstner, IBM Annual Report, 2001 In 1990, IBM was the second-most-profitable company in the world, with net income of $6 billion on revenues of $69 billion, and it was completing a transformation designed to position it for success in the next decade. For the world leader in an industry that expected to keep growing spectacularly, the future looked promising. But all was not well within IBM, and its senior executives realized it. “In 1990, we were feeling pretty good because things seemed to be getting better,” one executive remarked. “But we weren’t feeling great because we knew there were deep structural problems.” Those structural problems revealed...
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...| | |IBM’s Decade of Transformation: Turnaround to Growth | |Team 5 Case Analysis | | | | | | | |“More importantly, the passion that had come from surviving its ‘near-death experience’ and then riding the wave of what many in the company | |were beginning to call the ‘next big thing’ captured the imagination and focused the energy of a demoralized workforce looking for a reason to| |reengage in building for the future.”—Lou Gerstner | | | | ...
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...System/360, “transformed the industry”, along with IT innovations such as development of the FORTRAN, the hard disk, the floppy disk, IBM supermarket checkout station, and an early version of the automatic teller machine”. Mr. Watson’s vision and or innovation required acquiring talent by making IBM, “the best place to work”. The late 80’s and 90’s became riddled with problems as a result of a lost vision and increasing costs. IBM’s lost vision included not predicting the problems of converting from a lease-oriented business into a sales oriented business, need for network consultants, and the evolution of the PC. Finally, costs went up faster than revenues causing lower profits. 2) What did Gerstner do when he assumed the role of CEO in April 1993? Evaluate Gerstner’s approach in crisis management. How well did he perform as a turnaround manager? What challenges did he face as he attempted to position the company for growth? In 1993, Gerstner put the customer first, consolidated costs and looked to the future. His approach to the crisis in 1993 was to get involved with IBM’s customers. Gerstner attended sales meetings, created “one IBM” (reorganization), and directed executives to “bear-hug” customers in order to retain their business. He also sought to send a message to customers that employees will be held to high performance standards. “One IBM”, was designed to cut costs while meeting customer needs. Examples include outsourcing PC manufacturing and cutting IT operations...
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...SECTION 3: Business Model Open Innovation. IBM Case-study (from Closed to Open, and further development.) IBM Overview: IBM before 1992 and the crisis from 1945 to 1980 International Business Machines Corporation (IBM) was founded in 1911 and got its name in 1924. It merged different technologies (such as Herman Hollerith’s Electric tabulating machine and Willard Bundy’s time clock ) and their respective companies. From 1914 it had been managed by Thomas Watson, Sr. and in 1956 command of the company was assumed by Thomas Watson, Jr. . From the creation of computers in the WWII to the ‘80s IBM was the top player in the computer business. It exploited the Closed Innovation model and grew to be the most successful company in its industry. IBM’s research was totally internal and the path to market for the output of its research had to be entirely within the firm. Research and Development were separated, so to encourage the researchers to pursue their own intellectual agenda. This lead to many scientific discoveries, including five Nobel Prizes and six National Medals of Science. Moreover, IBM first manufactured “core memories”(a first form of electronic memory) and revolutionized the computer market with its “System 360”. This new class of computers soon became the dominant design, and IBM realized an extensive vertical integration. IBM offered customers a complete solution for their needs and it had extremely high switching costs, as typical of Closed Innovation. From 1980...
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...IBM Case Study 1. What factors led to IBM’s success during the 1960s and 1970s and its problems during the late 1980s and early 1990s? Watson Jr. hit a home run when he invested $5 billion to develop the System/360 computer family, which utilized an integrated semiconductor chip and modular components. Taking full advantage of this innovative momentum, IBM debuted other products during that time which enabled the company to rise to the top of the IT industry. These products included hard and floppy disks, a new computer language and the company’s first personal computer. In the mid 1980s, IBM started to run into trouble when its returns and market share began to slide. Customer needs were changing and emerging technologies led to the demise of IBM’s main product focus—the mainframe. Customers were looking for interconnected mainframes and mobile personal computers with distributed data sources and applications. Instead of devising a strategy to satisfy customer demands and set itself apart from competitors, IBM chose to transition from a lease oriented business to a sales oriented business. This lack of customer focus was coupled with an inefficiently designed workforce that would rather fight with each other than work together. Additionally, the company was so successful in the past that no attempt was made to cut costs/expenses and identify/correct inefficiencies. Adding more salt to the wound was the fact that top level executives were so far removed from daily operations...
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...Topic: How a new strategy saved and created a bright future for IBM in 90s. Statement of problem: In the early 1990s, IBM suffered in dramatically declining in the revenue of the mainframe sales, and the stock price also dropped. During the period, the personal computer was the most popular products in Information Technology market, and the mainframe was already outdated. Last but not least, IBM could not reduce its cost according to its size and bureaucracy. As a result, many people believed that IBM could only fell or be divided to smaller companies. Louis V. Gerstner, Jr., who was the new CEO, saved IBM and implemented different strategies in the company. Objective & Method: The purpose of the study is to evaluate how a new strategy affected IBM. Except the abstract, the term project will be separated to four parts: problem statement, strategy formulation and strategy planning of solutions, the summary of results, and recommendations. The term project should reach the following goals through in the four sections. 1. Problem statement will describe IBM’s previous business situation and introduce how problems had generated before Gerstner arrived. 2. The solutions from Gerstner will be deeply analyzed according to the theories from strategy formulation and strategy planning in the textbook. 3. The summary of results will be presented after IBM transferred. 4. The project will offer some recommendations to IBM in the last section. References: The main data resources will...
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...addition to how the infrastructure of the information systems should be managed and configured, on top of how a company can deploy a strategy to streamline its business processes and stay ahead in the market. A point in case was how IBM able to move from a company that was going down the drain to getting back on its feet and becoming once again successful in the world market arena. This was through the various strategies that they undertook during the course of the meltdown such as acquiring the idea of the “e-business strategy”, streamlining, integrating and centralizing IT enabled enterprise processes. Not only do processes and activities lead to a successful company, leadership comes up as one of the paramount factors in the success of an organization. One of the points to note is the change in leadership that did a great a job to steer the IBM to greater heights. People like Gerstner played a vital role in bringing back IBM to life through their well cultivated leadership skills and strategies. Under the leadership of Gerstner, IBM was transformed from a company that primarily manufactured mainframes to a company that offered complete IT solutions. The company was able to change its focus from being product centric to being customer centric. IBM realized the need to continuously reinvent the business model of a company amidst rising competition and changes in the business environment. Unnecessary costs were cut down in the...
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...weaknesses of this argument. The Importance of Behaving Entrepreneurially The strengths in number far outweigh the weaknesses for this argument; however this essay will explore the impact these factors have on companies. Smaller, more entrepreneurial businesses are rising through the ranks, and if the larger firms are to keep up and retain their market position, they need to follow suit, by behaving entrepreneurially. My key arguments here is organisations do need to behave more entrepreneurially due to globalisation, hyper competition, economic turbulence, technological change, industries merging, ever-changing customer needs and markets becoming saturated. This essay will mainly focus on the analysis of three large companies; IBM (International Business Machines), Marks & Spencer and Continental Tyres. I will analyse where the companies were going right or wrong, and where they could have become more entrepreneurial. I will touch upon relevant theories that firms have used and will mention other companies that aid my analysis on behaving entrepreneurially in larger businesses. Entrpreneurial Culture- What is it? There are two main cultures that concern this argument; the Traditional Culture and the Entrepreneurial Culture (see appendix 1.1). In a traditional culture, employees are expected to adhere to all instructions given, to not make mistakes, to not fail, to not take the initiative, and to stay within their limits. This type of culture is a very restricted...
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...Ibm Decades of Transformation 1) What factors led to IBM’s success during the 1960’s and 1970s and its problems during the late 1980 and early1990s? IBM’s success in the 1960’s and 1970’s was driven by the vision of CEO Thomas Watson Jr. as evidenced by IBM’s $5 billion development investment into the System/360, “the biggest privately financed commercial project ever”. The System/360, “transformed the industry”, along with IT innovations such as development of the FORTRAN, the hard disk, the floppy disk, IBM supermarket checkout station, and an early version of the automatic teller machine”. Mr. Watson’s vision and or innovation required acquiring talent by making IBM, “the best place to work”. The late 80’s and 90’s became riddled with problems as a result of a lost vision and increasing costs. IBM’s lost vision included not predicting the problems of converting from a lease-oriented business into a sales oriented business, need for network consultants, and the evolution of the PC. Finally, costs went up faster than revenues causing lower profits. 2) What did Gerstner do when he assumed the role of CEO in April 1993? Evaluate Gerstner’s approach in crisis management. How well did he perform as a turnaround manager? What challenges did he face as he attempted to position the company for growth? In 1993, Gerstner put the customer first, consolidated costs and looked to the future. His approach to the crisis in 1993 was to get involved with IBM’s customers...
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...get you started. 1. Case Study I-1 IBM’s Decade of Transformation: Turnaround to Growth (starts on page 5) This case study addresses several problems over the history of IBM, so it’s more like a series of little case studies. Focus your attention on the state of IBM when Louis Gerstner took over in April 1993, and address how he could have proceeded from that point. Of course the actual answer is the creation of One IBM, but what other options could he have pursued? Only use the exhibit data through 1994, and you can ignore the discussion of EBOs and other events well after 1994. Since IBM is both a user of IT, as well as an innovator and creator of IT equipment, they have an unusual position compared to many organizations. Focus on the problems IBM faced during this time and the alternatives they faced for dealing with the problems. What is the origin of the problem? Is it a technical issue, or customer relations, or competition, or something else? What functional areas within IBM were responsible for handling each problem (e.g. HR, accounting, marketing, engineering, etc.)? Some areas to consider: • What caused IBM to lose money in the early 1990’s? What options did they face to handle that problem? • Why was the System/360 platform significant? How did it affect the IT industry? • How was marketing for the IBM PC different from the way it handled mainframes? • Was IBM a leader in client/server and networked computing? • In Exhibit 2, look for...
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...In 1993 the American iconic company IBM hired a new turnaround CEO named Lou Gerstner. In this Harvard Business Review article entitled Diversity as Strategy, Harvard Professor David A. Thomas writes about an aspect of Gerstner’s strategy is really a story about people, starting with the diversity of people within IBM, and the positive replication into their global markets. These markets include customers, employees, and the search for new talent to recruit. Gerstner realized that an organization the size of IBM must embrace diversity, to not only influence people, but as a strategy to open the doors to new opportunities both internally and externally. Gerstner launched a Diversity Task Force initiative with the goal, “to uncover and understand the differences among the groups and find ways to appeal to a broader set of employees and customers” (Thomas, 2004. Pg. 1). Gerstner explained that it was more than just about the talent pool, and that it was a market based issue. Realizing the diversity in the markets, and IBM’s need to expand in the markets, would require the people representing IBM to be as diverse and multi-culture oriented as the markets. The first usable takeaway from the articles emphasis on culture change is the idea of Constructive Disruption. It’s an interesting approach to how IBM, and most employers really, approached employee management issues. Companies had become very careful at not distinguishing differences among groups of diversity to remove...
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...Reaction Report of IBM case 1. Description of the Case: New facts and illustrations - Nobody believed that IBM would face a crisis because it had achieved huge success before 1990. However, the company finally faced difficulties. In order to save the IBM, Gerstner was new in office as a CEO in 1993. He started innovative measures such as decreasing cost, communicating clearly, restructuring organization, and connecting with key customers to solve the problems. In addition, he reorganized as one IBM and created the foundation for growth, and then shift to high growth and the search for “the next big thing”. As a result, shifting its strategy from marketing and selling specific products and services to marketing and selling solutions to problems that have yet fully defined, IBM becomes the company which Warren Buffett prefers most from the collapsing company by competition with cheaper PC made by Chinese and American company such as Compaq and dell. From this case of IBM in early, we can learn that large established companies such as IBM can be difficult to build successful and sustainable new business. First of all, being elated by existing success, employees couldn’t notice the change of market. In addition, well-aligned business model is necessary for success, but tight alignment can also make it difficult to change. If business models fail to successfully evolve overtime, misalignment with the environment can occur. 2. Key questions and issues of case & Analysis 1)...
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...Book Review Leading at a Higher Level examines the concept of leading with a higher purpose, which requires a compelling vision and a philosophy that the development of people is equally important to that of performance. Author Ken Blanchard challenges readers to lead by asking themselves who they are, what they stand for, and how they can take the initiative even if they don’t have position power. When I first started Leading at a Higher Level I expected it to be well written and informative based on my knowledge of the author Ken Blanchard’s work. Leaders in any realm of life can become self-serving when the driving reason for being in business is based solely on profit. While profit is a legitimate goal, neglecting to see leadership as part of a higher calling diminishes the capacity to influence others and impact the greater good. A better definition of leadership, according to the author, is the capacity to influence others by unleashing the power and potential of people and organizations for the greater good. Leadership should not be done purely for personal gain or goal accomplishment: It should have a much higher purpose than that. Leadership can be defined as the process of achieving worthwhile results while acting with respect, care and fairness for the well-being of all involved. When that occurs, self-serving leadership is not possible. It's only when you realize that it's not about you that you begin to lead at a higher level. Being a successful leader is...
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