International Business Machines Corporation Analysis | Free Essay Example

International Business Machines Corporation Analysis

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Topic: Business & Economics
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Introduction

The International Business Machines (IBM) Corporation is a multinational corporation with branches in the US, Europe, and Africa. In 1911, Thomas Watson and Charles Ranlett Flint established the corporation in Endicott, New York, as a public company.

Since then, several changes have taken place in the company’s organizational structure, leadership model, strategic planning, and control of various aspects regarding the running of the company. This paper explores four elements – leadership, planning, organization, and control of the company as it operates currently.

Organization

The organizational structures for different companies depend on the goals that the companies have for their establishment, the players involved in the company’s operations, and the environment in which a company is established.

Adair explains that the size of an organization determines the number of divisions that a company’s management settles on and the number of employees each division ought to have depending on the amount of work for each division (36).

The IBM Corporation has more than four hundred thousand employees, numerous consultation points in over one hundred countries including France, Argentina, and the United Kingdom, and as many as twelve research laboratories worldwide (Kelley 42).

Consideration of these facts has led to the adoption of different organizational structures in the different branches depending on methods of operations that result in optimum revenue collection as per the environment of operation.

However, the general structure takes the form of a chain of authority in which employees are answerable to the general managers, while the general managers answerable to the executive managers, who are in turn answerable to the Chief Executive Officer (CEO). The CEO is answerable to a board of directors who conduct business with the company’s stockholders and profitability as their main agenda (Kelley 46).

Morgan explores a model that most multinational corporations apply, viz. a collaborative organization (81). Morgan elaborates aspects that constitute a collaborative organization, and key among them is the dissemination of information within and outside a company, sometimes with members of other professions (72).

The collaborative organization takes the concept of teamwork and extends it to include parties outside the organization depending on the need of a company at the time.

In applying this concept to the case of IBM, although the company’s original business operations involved software and hardware development, it has often engaged the input of another profession, which sometimes leads to the acquisition of other companies, as is the case with PricewaterhouseCoopers’ consultancy.

Planning

In most cases, the kind of planning that a corporation adopts depends on goals, and business environment coupled with how the two interact to determine profit generation. For instance, one of IBM’s goals is the expansion of markets for its products and services worldwide. This goal has seen the company expand into territories beyond that in which it was established and open branches in countries in other continents.

Mostly, such planning requires the management of companies to be strategic in their approach, which explains why IBM has branches in some countries and not in others. About the business environment, most businesses consider elements such as demand for products, services, and expenses that a company would incur if it chose a specific location to open a branch (Adair 62).

For IBM, it may be cheaper to manufacture some of its products in Africa. However, even though a vast majority of the population is computer literate, the main markets for computer hardware and software remain in Europe and the US.

The company would thus have to factor in costs such as transportation and taxation, both of which raise prices for consumers, thus making products undesirable in comparison to similar products from different manufacturers. The resources available to IBM in Europe and the US have made it possible for the company to utilize its innovative abilities leading to products such as the automated teller machine (ATM), Lenovo, and the ThinkPad (Kelley 66).

The task of strategic planning often falls on the top management, often with consultations with other members of staff and the board of directors. The staff members provide the logistic requirements for the plans while the board evaluates the viability of such plans for the sake of stockholders and other investors.

This aspect ensures that a company does not undertake the execution of plans that later result in losses. Sometimes, the management seeks expert advice on matters in which it lacks expertise such as legal implications of specific actions in different countries.

Leadership

The IBM Corporation’s leadership strategy culminates to the application of an interactive model that requires its leaders to consult with other members of the organization before making major decisions to ensure objectivity and alignment with the company’s goals. The concept of interaction is especially important for companies with branches as many as IBM has in separate locations, for purposes of synchronicity and efficiency of operations.

The company recognizes its involvement in technological development as an added advantage in terms of researching market trends and consumer needs, and it puts this advantage to good use, which enables leaders to develop strategies that improve the company’s sales and reputation.

The company also considers employees who have worked at the company when choosing leaders, as part of its strategy to ensure consistency in success. This strategy also ascertains the level of dedication that the candidate for leadership has towards the success of the company in addition to ensuring that s/he can handle changes that occur whenever there is a need for transition.

For instance, the current CEO of the company has been an employee at the company in different departments, which has greatly improved her understanding of the corporation’s needs and transition process.

Adair posits that some specific attributes define an effective leader including self-drive, the ability to associate with other players in the company, adaptability, and most importantly the ability to recognize and work towards the organization’s best interests (87).

A board of directors exists at the company to balance power and instill objectivity in decision-making. Currently, the board entails thirteen directors with backgrounds in different professions, thus creating a solid foundation for the generation of expert advice and objectivity during the evaluation of strategic plans.

Control

Control of the IBM Corporation mainly lies with the top management when considering matters of daily operations. However, since the company is a public company, the control of financial interests lies with the shareholders, as they own the company as well as controlling votes regarding most crucial issues that arise from time to time.

The CEO is answerable to the board directors while the board operates on behalf of shareholders. Although other investors own a share of the finances of the company depending on their agreements with the company, such financial right does not translate into voting rights during decision-making.

Voting rights essentially indicate the ability for rights’ owners to make decisions on crucial aspects of a company’s operations, especially regarding monetary matters. Usually, different shareholders possess varying numbers of shares based on the amount of money they invest in a company.

The number of shares often directly translates into the number of votes a shareholder has during decision-making, and thus, the amount of power that the individual has in the company. The distribution of shares among shareholders ensures the presence of a distribution of power, as is the case with the requirement for accountability by the Chief Executive Officer and the board to the shareholders.

The essence of such a distribution of power lies in the concept of moral hazard. The concept operates on the presumption that people are usually more willing to take great risks when the overall consequences do not put them at a disadvantage.

In the case of IBM, the leadership of the company suffers less damage financially in comparison to the shareholders, thus creating a window for risky financial decisions. However, the chain of accountability ensures that the directors and CEO make sound financial decisions in a bid to safeguard the financial interests of shareholders and other investors.

Conclusion

The IBM Corporation has undergone numerous changes since its establishment. However, its ability to adapt through the placement of the different organizational structures has enabled it to become a success story that other organizations can emulate. The organizational aspects raised in this paper include leadership, planning, organization, and control.

Works Cited

Adair, John. Develop Your Leadership Skills -Creating Success, London: Kogan Page, 2013. Print.

Kelley, John. Smart Machines: IBM’s Watson and the Era of Cognitive Computing, New York: Columbia University Press, 2013. Print.

Morgan, Jacob. The Collaborative Organisation: A Strategic Guide to Solving Your Internal Business Challenges using Emerging Social and Collaborative tools, New York: McGraw Hill, 2012. Print.