Team Blan? MGT: 489.12 Submitted to: Yurika

Team Blan?MGT: 489.12Submitted to: Yurika Uematsu Bhuiyan (YUB)Department Of Management, SBENorth South UniversityNAME IDWasif Azim Khan 123 1337 030Md. Rafiuzzaman 141 0443 030Sadia Afrin Rinty 142 0300 030Ali Arafat Sehikh 142 0389 030Asib Muztoba Khan 142 0688 030Sadik Irfan Shaikat 142 1142 030Nandik Tanaz Rahman 142 1311 630Sadia Afrin Meher 142 1770 030Sarah Khan 151 1237 030 Date of Submission: August 31st, 2018 Letter of TransmittalAugust 31, 2018Yurika Uematsu Bhuiyan LecturerDepartment of ManagementSchool of Business & EconomicsNorth South UniversitySubject: Submission of report on IBM Cloud. Dear Ma’am:It has been a great pleasure for us to submit our final report on “IBM Cloud.” We have prepared this report as a partial fulfillment of the course “Strategic Management”.

We have learned a lot while preparing this report. We hope that it will help us in our future practical life. In preparing this report, we have tried our level best and worked with most sincerity to gather everything that we have learnt throughout the semester and make it as well structured report as possible. We will be obliged, if you kindly accept this report.

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If you have any questions and/or comments regarding the interpretation of this report, please feel free to ask us. Thank you for your immense support throughout the course, and we are ready to make clear regarding any confusion or further clarification from this report.Sincerely Wasif Azim Khan Md. Rafiuzzaman Sadia Afrin Rinty Ali Arafat Sehikh Asib Muztoba Khan Sadik Irfan Shaikat Nandik Tanaz RahmanSadia Afrin MeherSarah KhanAcknowledgement It has been a great opportunity for us to work on such an interesting topic such as “IBM Cloud.” On the time of preparing this report we have gone through different websites, online journals and articles, which helped us, get acquainted with relevant references. However we have mainly focused on the topics required and important to our research material.

We would like to express our gratitude to our MGT-489 course faculty, KH. Yurika Uematsu Bhuiyan (YUB), our mentor who has always provided and given us her time when we required help for our report by sincerely guiding us all throughout the time of my research. Through her advices we have been able to see the specific sector from different angles. Her great advices enabled us to prepare this report more intriguing. We have tried with utmost sincerity to gather all relevant documents regarding this subject. We hope it is as accurate as it should be and appropriate with the desired requirements.

Furthermore, we do not claim all the information on this report to be perfect. Any shortage, shortcomings, factual errors, false opinions, can be arguable.Thank youExecutive SummaryThis report deals with the cloud based platform of IBM, which is a virtual storage system developed by IBM technologies to provide storage over the internet for B2B companies especially dealing with huge computer server systems. In this report it is shown how IBM cloud is coming up with their business strategies to cope up with the market since they are new in this segment of the business and how they financially are performing over the years. Here we will see how IBM has used management and marketing strategies to place their product and position in the market to make the best of it, through the Porter’s five forces and PESTLE analysis. Also this report states how IBM cloud could perform in the near future and how they are surviving in the current stage by competing with its rivals.

IBM has been in the IT sector for decades but the cloud computing has great potential in both performance and quality; however all they need is the correct marketing strategies to reach the desired customers and show their potential in terms of sales. Furthermore cloud computing is the most widely used storage technology, with the reputation that has garnered over the years it can once again become leaders in the market with the cloud computing. We can learn about how ethical IBM can be in doing all their operations, how they decide to proceed with the strategies they seemed fit for their cloud based platform. The corporate strategy to go into a joint venture with DigitalOcean, the selection of differentiation strategy but later following the competitors to the low-cost one instead, how the functional levels are going to work to make these changes possible and lastly the technological strategy at play with the decisions taken.

The hierarchy they will maintain in order for smooth operations after the venture has been implemented and how they will promote the air of innovation that has been one of their best feature. These will be more carefully prioritized during the governance, ethical aspect and control of the company’s culture and origination.Contents1.

0 INTRODUCTION 11.1 History: 11.2 Growth and Development: 12.0 INTERNAL ANALYSIS 22.1 Resources: 22.

2 Capabilities: 23.0 EXTERNAL ANALYSIS Industry Analysis 33.1 Identification of Industry: 33.3 Competitive Force Analysis: 33.3.1 Threat of new entrants: 33.

3.2 Intensity of rivalry: 43.3.4 Threat of substitutes: 43.

3.5 Bargaining power of buyers: 43.3.6 Bargaining power of suppliers: 44.

0 INDUSTRY LIFE CYCLE ANALYSIS 55.0 PESTLE ANALYSIS 55.1 Political: 55.2 Economic: 65.

3 Social: 65.4 Technological: 65.5 Environmental: 65.6 Legal: 76.

0 SWOT ANALYSIS 76.1 Strengths 76.1.1 Brand Value: 76.

1.2 Customer Base: 76.1.3 Operating in Multiple Countries: 76.2 Weakness 76.2.

1 High Cost of Production: 76.2.2 Failure of Employee Retention: 86.

2.3 Dependency on Cloud Service Provider: 86.2.

4 Burst able Instances and GPU: 86.3 Opportunities 86.3.

1 High Demand for Cloud Services: 86.3.2 Boosting Security Levels: 86.4 Threats 96.4.

1 Imitable Products: 96.4.2 High Competition: 96.

4.3 Weak Property Protection in Developing Countries: 97.0 IBM’S CLOUD BUSINESS 97.1 Customer Groups: 97.2 Customer Needs: 97.

3 MISSION STATEMENT 107.4 GOAL: 108.0 FINANCIAL ANALYSIS 118.1 Current Ratio: 118.

2 Net Profit Margin: 128.3 Return on Investment (ROI): 138.4 Working Capital: 138.


0 COMPETITIVE ADVANTAGE: 1712.0 Business Model of IBM Cloud: (B2B) 19BUSINESS MODEL CANVAS 2013.0 RECOMMENDATIONS 2113.1 Recommendation to utilize strength to eliminate threats 2113.2 Recommendation to capitalize opportunities to reduce weakness 2214.0 CORPORATE LEVEL STRATEGY 2215.

0 BUSINESS LEVEL STRATEGY 2315.1 Business Model Improve: 2415.2 Marketing Campaign: 2415.3 Service: 2415.

4 Focus differentiation strategy: 2416.0 FUNCTIONAL LEVEL STRATEGY 2516.1 Marketing: 2516.

2 Research ; Development: 2516.3 Information Technology: 2516.4 Human Resource Management: 2517.0 TECHNOLOGY STRATEGY 2618.0 REVISED BUSINESS MODEL 2718.

1 Key Partners: 2718.2 Key Activities: 2718.3 Value Proposition: 2718.

4 Customer Relationship: 2718.5 Customer Segments: 2718.6 Key Resources: 2818.7 Channels: 2818.

8 Cost Structure: 2818.9 Revenue Streams: 2819.0 COMPANY GOVERNANCE 2820.0 STRATEGIC CONTROL SYSTEM 2921.

0 IBM’s Culture Supports The Strategic Control System or not 3022.0 GLOBAL LEVEL STRATEGY 3023.0 ETHICAL VALUE PROPOSITION 31Bibliography 32 1.0 INTRODUCTIONInternational Business Machines (IBM) is a reputed computer manufacturing and information technology giant recognized mainly for their involvement in manufacturing server hardware, software, mainframe computers, cloud-based services and cognitive computing solutions.1.1 History: During their adolescence period the pioneer of this company was The Computing Tabulating Recording Company (CTR) which was incorporated of mostly 3 companies; The Tabulating Machine Company, the International Time Recording Company and The Computing Scale Company an American base for their establishment by Charles Ranlett Flint during the year 1911.

International Business Machines or most commonly known as the brand IBM was the name given to the merger by a fellow general manager whom Flint hired in 1914 by the of Thomas Watson Sr. from CTR in 1914, he was hired a year after the formation.1.2 Growth and Development: IBM facilitated their own punch card processing equipment for designing and manufacturing calculators in the year 1930s.

In the year 1944, IBM together with Harvard University worked on Mark 1 computer; the first machine to compute long calculations without human intervention, with in a blink of an eye (Bellies, 2017). During the year 1970s, the making of the popular mainframe line along with the System/360 broke their forecasted sales making them a sensation in the industry over night. As more innovations came along, IBM first launched its PC during early 80s making another hit in the market and a turning point for the company.

IBM then pushed into IT services, launching its initial IBM Global Services while outsourcing IT and management consulting outside of the firm. As the era of software surfaced during this time period, IBM sold its two of its hardware businesses to Lenovo which included its PC division and x86 servers. In the year 2010, IBM invested upon cognitive solutions and cloud computing platform emphasizing analytics, cloud, mobility and security, taking another step toward the wind of modernization (Tech Target, 2016).2.

0 INTERNAL ANALYSIS2.1 Resources: These are related to the tangible and intangible components of the firm:• IBM has crossed the 100,000-patent milestone and this has been one of its biggest achievements.• IBM has reinvented the mode in which they convey their cloud storage capabilities by storing data that involves greater durability and security of the information, keeping tabs on their huge business rivals by accumulating data on their customers and lastly providing superior quality of the data retrieved based on evolving demand.

They have furthermore induced automated tools to integrate activities such as Artificial Intelligence (AI) and Internet of Things (IOT). • There is a high influx in customer loyalty attained by IBM due to their ability to create high brand value that has captured customers mind as one of the trusted brand and the foremost. • IBM encounters fast paced formations and improvements in over 180 countries all across the globe due to their integrated R&D facilities. 2.2 Capabilities: IBM consists of a functioning organizational structure, organization culture and human resource process which allow the firm’s complete utilization of the resources available and incurred. The capabilities of IBM are given below in details:• The consistent need to flourish and innovate via the essential and rational organizational culture of IBM whose focal point is on every client they make a part of the company; this is treated as part of their achievements.

Every IBM employee is nurtured with aspects that relate to developing trust, respect others and personal responsibility for their work (Rowland, 2017).• Recruiting fresh talent is the mission of every mentor who is assigned this role by the HR head office, this shows where such talent is needed and to what extent. On the basis of this need they are trained how to use new technologies and participate in a competitive environment in the long run. The recruitment is done via the use of Watson, a perceptive tool which is based on the obligatory talents of the candidates during recruitment; candidates from varying social backgrounds are welcomed with open arms (James, 2018).• IBM indulges in activities that keep their employees satisfied with their morals and principles. They have an extensive benefit package that ranges from medical facilities along with retirement (dental, eye vision and disability) to employee’s stock purchase option which sometimes entitles flexible spending accounts as well as protection of their income from harm.

They also provide assortment of pay programs which reward employee’s based on their individual performances rather than group work; this can range from 10-15% of annual fee based on their salary. (The American Business Awards). There are a few other benefits which involve Special Care for Children Assistance Plan, Adoption Assistance Plan, Employee Assistance Program, Work-life Family resource program and Transnational Medical Program especially for their employees. 3.

0 EXTERNAL ANALYSIS Industry Analysis3.1 Identification of Industry: In consideration to the sector of cloud computing Internal Business Machines has positioned themselves among the top in the industry. Due to which they are now able to provide cognitive solutions and cloud platform with comprehensive offering a variety of software solutions from different stages of business aspects primarily for tracing supplies that reach the customers who are centered in other industries. In previous times they mostly revolved around developing mainframes, hardware and software. 3.

3 Competitive Force Analysis: To take into account the degree of competition in the industry currently. Porter’s Five Forces model has been used for the analysis.3.3.1 Threat of new entrants: The variations in threat ranges from low to moderate. Taking into account the companies who are operating in the cloud computing industry have already garnered considerable economies of scale and hence created a strong brand loyalty which acts as an entry barrier for newer entrants.

On the other hand to set up a SAAS (Software-as-a-service) constructed firm is not as difficult compared to the high levels of investment in emerging technology and acquiring a benchmark which turn up to be the main barriers. 3.3.2 Intensity of rivalry: The existence of competition in this industry is thriving at a rapid rate which causes the companies to review their past results and make forecasts accordingly which in turn results in an excess productive capacity due to the slow demand rate. Therefore there rises a price war between companies to reduce the fore mentioned gap creating aggressive competition in the industry.

3.3.4 Threat of substitutes: In regarding to the threats from substitutes they are quite high. Substitute variety might solely be open-source computing and IT. Cloud computing is assumed to be more costlier than open source cloud computing and due to the existence of entrants who are on the search for new product variety, which might cause the eruption of a better substitute that would provide better services causing disruption within the industry.

3.3.5 Bargaining power of buyers: There exists high competition and price war which contributes to the bargaining power of buyers to also be high. There is a variety of companies from which to select resulting in switching costs to be low, and in regards to competitive analysis which is highly driven by the demand of buyers and their bargaining power.

3.3.6 Bargaining power of suppliers: Due to the existence of a large number of customers the suppliers tend to have a low to moderate bargaining power since they already know that price sensitivity exists. Although, open-source computing is mostly seen in SMEs the suppliers have a bargaining power with those companies and it is rising at an alarming rate.

4.0 INDUSTRY LIFE CYCLE ANALYSISOn the basis of competitive analysis it shows that cloud computing industry is at a shakeout stage. The reasons for this are as described below:• The companies have a high production capacity which resulted in a price war and they have also attained economies of scale through increased levels of production. • Higher intensities of demand at a rate that is not historic have made it reached nearer to the maturity stage.

• The existence of strong rivalry in the sector of open source computing allows SMEs to come up with refined IT at a comparatively lower price in regards to the cloud computing ones via Paas, Saas and Iaas models.There is an increase in the research of substitute products due to technological knowhow being copied which results in the threat of entrants being low to moderate. The company could be said to be in its growth stages for cloud computing but the scenario is different since the entire industry has surpassed this threshold and is moving toward a new one.

IBM is still on the race since they have not given up and is still making come back with its innovation like block technology.5.0 PESTLE ANALYSIS5.

1 Political: The authority and the other government related sectors all over the world are adopting E-Technology to develop E-Government attributes for constructive data protection which blends with IBM’s responsibilities in-terms of technology for both cloud and cognitive computing. Hence, the regulations regarding “Data Protection” which are imposed by the administration (Government) are properly maintained than before on a private and state level, this results in facing increased political support. As for corporate taxes are taken into consideration, $4.1 Trillion worth of transactions were conducted over the web for both retail and wholesale according to the US Bureau of the Census. This has been a challenge for the state to imply traditional tax structure to virtual services.

(Tax Analysts, 2017) 5.2 Economic: Since IBM functions in more than 150 countries, variation in-terms of the Foreign Exchange Rate can affect the company’s overall cost structure. It also encounters an increase in demand as it is in a position to supply feedbacks and alternative measures to issues such as reducing cost with the help of cloud computing which has remarkably decreased investments and maintenance in-terms of IT infrastructure for large entities. 5.3 Social: Values are developing all around the globe and has an impact on the lifestyle of individuals across the globe, it plays an important role, whether it a positive one or a negative one.

Individuals are trying to be as flexible as possible. There is an increase in demand for services and products which are cloud based. Adding more to that is they are establishing social entrepreneurs and socially responsible investors that exchange data, facts and statistical resources to developing and underdeveloped economies around the globe. (Vanacek, 2012)5.4 Technological: Countries who are going through a booming session, including developed countries are creditworthy for the technological section. With the help of cloud computing and other computing applications, this resulted in a decrease in demand for large IT infrastructure. This results in achieving ease of use, low cost structure and security for the consumer’s. (Darko Shuleski, 2016)5.5 Environmental: Countries who are concerned about being “Eco-Friendly” will accept this technology willingly since they can go paperless and in return contribute their part of going green. Companies can allocate their hardware and make proper use of the machines; this can help decrease costs and save energy which will be beneficial. (Steve, 2012)5.6 Legal: There is a reduction in breaching contract in-terms of property violations in the Information Technology (IT) sectors because of the advancement in Intellectual property protections in recent years. However, there are still plenty of gaps in developing economies which can be concluded as both an opportunity and a threat for IBM especially in its laws being implemented and the ones being taken to terms over the course. This is a critical issue since failure to secure user’s information might result in legal problems with the country they are operating in. (Pavolotsky, 2010)6.0 SWOT ANALYSIS6.1 Strengths6.1.1 Brand Value: The Brand name “IBM” has a strong goodwill itself which results in the company to charge a premium price for its offerings and still retain their customers considering the customer’s faith on the brand and the way it has arrested their mind.6.1.2 Customer Base: The goodwill helps the form to maintain a strong customer base with high brand loyalty, quality of the product and innovation. Despite whatever variation the economic condition is going through, it can be suggested through both previous and recent statistical data that their customers are found to maintain high loyalty with the company. 6.1.3 Operating in Multiple Countries: IBM is currently operating in over 200 countries all over the world; this gives them access to a much larger market and customer base than a national model can ever offer. This accessibility to more customers gives them the chance to modify and cater their products to potential customers in a better way, by avoiding errors. 6.2 Weakness6.2.1 High Cost of Production: IBM provides expensive services and software solutions. This is because mediums such as cloud storage are made with proper care and a lot of money is invested on the R;D and IT sectors. 6.2.2 Failure of Employee Retention: IBM fail to retain their key employees due to numerous reasons which includes competitors such as Google, Microsoft and other firms attracting key employees with lucrative offers, where as IBM fail to increase pay or providing them with proper monetary or non-monetary incentives which quite clearly doesn’t keep them satisfied at work. Surely they are able to recruit new talents but it takes time and money to make their talent shine to become a part of the capabilities.6.2.3 Dependency on Cloud Service Provider: Being entirely reliant on a cloud service provider results in being a major issue in the long run, provided that the cloud environment is not entirely resistant to disruption, emergence of disruptive technology and other issues. These disruptions are a consistent fact and results from problems such as storms, software updates and hackers. (Tsidkulo, 2016) 6.2.4 Burst able Instances and GPU: Major competitors like Google and Microsoft have special features such as burst able instances such as CPU and GPU which IBM does not have. These instances assist in gathering CPU credits when not active and acquire those credits when they are active. In terms of GPU, this helps on Accelerated Networking which allows on a single root input/output virtualization based network deployment (Sandbu. 2018).6.3 Opportunities6.3.1 High Demand for Cloud Services: Technology constructs an individual’s life and the end users of the product are tempted with the pros/advantage this specific segment offers in reducing complications in a person’s life and making it as simple as possible. It is most likely needed in the business level where quantity is never an issue no matter whatever the size is. Not only can this be easily stored, but the data can also be properly maintained and protected from harm by outsiders.6.3.2 Boosting Security Levels: While Cloud Computing and Cloud Storage have substantial risk associated with the user’s background information, it still acquires few characteristics such as standardization and increased of visibility can convert this into an opportunity by boosting security and protecting the privacy of the users. (Anonymous. 2009)6.4 Threats6.4.1 Imitable Products: Regardless of achieving multiple patent records, the company is subjected to having their products and services imitated by their competitors. This resulted from an increase in technological advancements which made imitating cheap and less complicated especially legally in some countries. 6.4.2 High Competition: The biggest threat that can be imposed on IBM is the competition it faces from some of the strongest rivals like Google, Microsoft, Amazon and others, who compete head on with IBM since they are from the same IT sector of Cloud computing (Sandbu. 2018).6.4.3 Weak Property Protection in Developing Countries: Secured intellectual property protection is a privilege of developed countries that can be seen extensively. IBM might fail to strengthen their property protection in developing countries. (Siebeck, 1990)7.0 IBM’S CLOUD BUSINESS7.1 Customer Groups: During recent times, over 80% of the local American companies raised the use of this specific segment. As estimated in the year 2018, statistically the number of cloud-based service users all over the world currently is close to 4 Billion. Users of Public, Private or Hybrid Cloud which also belong to IBM’s customer group are also included.7.2 Customer Needs: Users of this specific segment fundamentally look for Infrastructure and these users require services 24/7 which is approximately 99.9% of the time. However, failing to live up to or meeting the expectations of the agreement will result in forcing the providers to recompense the users.”Safety” is one of the prime essentials of the customers. Cloud Security Alliance (CSA) certified organizations consider the importance of customers more since certain caliber is needed and certain quality is to be sustained in-order to secure the certification in the first place. 7.3 MISSION STATEMENT?There is no other company like IBM and there is no business professional like the IBMer. We are experts in nearly every technical scientific and business field. We are citizens of, and apply our expertise in more, than 170 countries. Yet we are united by a single purpose: to be essential. We do that by creating the most advanced technology to change how our clients work and run their businesses. And through them, IBMers change how the world works. The world is at a major turning point: technology is enabling entirely new forms of business operations, business models, industries and outcomes. We have exponentially more power to reach the full potential of our life’s work than any humans before us. This is our vision for the future — our belief in the rise of you. ?7.4 GOAL: Talks about satisfying customers and surpass competitors with the proficiency of Cloud along with the incorporation of cognitive means. It has established this specific segment to assist its consumers to make developments in the real world by solving practical issues which can be managed and handled digitally. IBM Cloud also ensures proper security along with many other attributes. There is a research program held by IBM known as “IBM 5 in 5” which reflects a few set of goals with-in the next 5 years. The goals are as stated below: • Cryptographic anchors and block chain technology will assure a product’s originality- the entire process starting from the place it originated to the customer’s hands. • The scale of cyber attack increases every year. New measures of attack will make today’s security mediums bitterly insufficient for such attacks. • Small AI-powered robot microscopes will constantly observe the state of water to save the dirty oceans. • AI bias will erupt, only the unbiased AI will survive in the end.• Quantum Computing will be available and mainstreamed, it will be used on a large scale by professionals to solve issues once considered to be impractical to solve.8.0 FINANCIAL ANALYSIS8.1 Current Ratio: Current Ratio establishes the relationship between the current assets and current liabilities of the firm, this process helps to measure the ability of a firm to meet it current obligation. Year 2015 2016 2017 IndustryCurrent Ratio 1.24:1 1.21:1 1.33:1 1.52:1Interpretation: Interpretation: The ideal current ratio is 2:1. It indicates that the current assets should be twice more than its current liability in order to meet satisfaction. Higher the current ratio, more liquid will be the asset of the firm to cover up its current liability in time. Here we can see that the current ratio meet to its highest point in year 2017 with compare to the previous two years. But it also denote that IBM has a huge amount of ideal money. So it’s high time, IBM uses its short term asset in more proper manner and also consider not go in liquidity crises by doing so. The current industry average is 1.52. So it can be clearly stated that IBM is not doing well like its competitors.8.2 Net Profit Margin:Net Profit Margin measures the percentage of companies gross earning by the year on its sales for that year. Year 2015 2016 2017Net Profit Margin $13,190 Million $ 11,872 Million $ 5,753 MillionInterpretation: Here we can see a very strong growth of the firm both in terms of generating profits and increasing profits by multiple folds in the years that follows. This boost of profits has been possible due to the rapid expansion of the business in the year 2016 and improved the market shares by swiftly moving into more territories and serving a larger number of customers than before. However this profit margin after the year 2015 started declining due to some inappropriate decision taken by IBM on the later part of the year 2017. 8.3 Return on Investment (ROI):ROI ratio shows the the return on the owners investment, it establishes the relationship between net profit after interest and tax has been deducted on the owners investments. Year 2015 2016 2017 IndustryReturn On Investment 0.11937 0.10106 0.04589 0.0298Interpretation: Return on investment shows how profitable a company is relative to its total assets. The ratio indicates how the management efficiency to utilize the total resources to make profit in the year 2015. However from then onwards, we see the decrease of its ROI. This can be mainly due to the facts that the cloud sector of IBM has not utilized its resources properly resulting in a small decline in its ROI, which might also worry the shareholders. It is a bad sign for the company’s reputation and there is a high chance of losing investors until they utilize their resource in a proper manner. So it’s high time they take proper initiative against this issue at hand. Adding more to that, the Industrial average in this sector is 2.98 which are comparatively lower than what IBM has. So it is assumed that IBM is doing well in terms of giving return to the investors’ based on their investment against their competitors. 8.4 Working Capital:This indicates the compaies liquidty amount at hand, showing the relaionship betwwen current assets and current liabilities. Year 2015 2016 2017Working Capital $ 8,235 Million $ 7,613 Million $12,373 MillionInterpretation: Working capital is defined as current assets minus current liabilities. From the derivations IBM’s cloud computing has a strong asset standpoint resulting in an increase in owners capital amount. As a result they have high liquidity and as well as huge ideal sum of liquid cash. IBM should use this money effectively in order to grab more future opportunities, bearing in mind that they should not exceed their liabilities over assets.8.5 Operating Profit Margin:Operating profit ratio reveals the firms overall efficiency in operating the business. This ratio indicates the relationship between net profit and sales for a year. Year 2015 2016 2017 IndustryProfit Margin 0.14927 0.13815 0.067796 0.1639Interpretation: Profit margin is very important in operating performance measurement. This ratio is helpful in identifying the portion of its revenue that remains after deducting all other expenses of the company. Here IBM ratio was higher in the year 2015, later it couldn’t keep up with the pace of the market and suddenly it started to decline. In 2015 and 2016 the net profit margin was close to the industry average which was 16.39%. In the year 2017, it declined drastically, this will make shareholder dissatisfied and if it continues like this it will lose it big investors. So it is high time to take the right initiative to increase net profit margin.9.0 IDENTIFICATION AND ANALYSIS OF THE COMPANY’S DISTINCTIVE COMPETENCIES: The distinctive competencies of a company are the most crucial part for a technology based firm and IBM no stranger to this, the main capabilities of IBM are its innovation, quality and responsiveness to change with the changing environment, with the help of them they are able to meet customers’ requirements and fulfill their desires. IBM’s strength lies within its cognitive computing and the service it provides with cloud computing. For a prolonged number of years the name IBM stands out as a reputable company in the tech industry. This influx of reliability exists due to their proficiency and understanding of the technological sector relating to the aspects of its ability in overcoming changes and still operates at the optimal level. IBM has the distinct capability to retain their customers on the grounds of loyalty due to their brand status and providing services such as which customers avail to, further reinforcing their loyalty towards IBM. Due to the existence of a proper cloud and cognitive system IBM can benefit from storage and learning prospects in both their operational and market segments. A number of aspects act as their core competencies in the market such as innovation, business standard, flexibility of their machinery and hiring the right labor for the correct job, these shows their capability to adopt as a whole industry.The cognitive Watson technology is merged with IBM in the year 2016 which enabled the users of IBM Cloud to have direct access; the users can perform errands with the information on this platform which is an artificial intelligence platform (Fast Company, 2017) (IBM, 2017). It provides the feature of processing verbal communication to undertake such tasks as pattern recognition, analysis of visual content and machine learning. This innovation of IBM has facilitated many retailers in flourishing their sales and also the unions with their predicament, in order to have innovation to grow and bear fruit it is necessary to also hire people who are innovative by nature. IBM plans to hire employees that have non-traditional education, as in that they are not required to have four years of traditional education but rather the desire to work in this sector. These people who have passion and are willing to work are more likely to be a better candidate for innovation to bloom and represent this in their work (Umoh, 2017). Although there is no specific competency that allows IBM to be different from their competitors apart from those already stated, however due to its large volume of data management and speed has had an impact in the cloud computing service. 10.0 Competitor Analysis:• Above par R&D department.• Existence of a number of research labs across different continents.• Containing a strong and reliable information system.• An efficient material management procedure and expert human resource.• Uniting with its primary activities, the company has managed to structure its entire value chain in an efficient and proper manner. 11.0 COMPETITIVE ADVANTAGE:Competitive Advantage acts like an USP, IBM’s unique selling proposition is its highly durable cloud storage considering having a good Research and Development sector. “Security” is one of its prime concerns as-well, almost 4 years back; security was the only obstacle for other companies who wanted to enter this sector. The “Hybrid Cloud” which was facilitated by the R;D sector helped them to achieve top position and emerge as the market leader. Among the Competitive advantages that they have, the biggest advantage is the “Brand Name” itself, even though the statement “No one has been fired for hiring IBM” is no longer accurate and trustworthy, it still remains a strong force in the market and a reliable IT provider. Among the building blocks for competitive advantage, “Innovation” stood out as the first block which reflects “Safety” and “Durability” on the cloud storage, something which the other competitors found hard to imitate. According to Forbes article on competitive advantages of IBM (2016) it is stated that, “IBM has set the industry standard themselves since in most cases they have excellent innovations and legacy system that keeps their customers stick to them, resulting in continuous stream of revenue. ” The second building block is “Customer Responsiveness.” IBM achieved a record of over 9,000 patents in the year 2017 which was almost 10 times more than its arch rivals such as Bandwith and a couple of more companies. Also marked the company’s 25th consecutive year of U.S. patent leadership and crossed the 100,000 patent mile-stone (105,000.) More than 50% of this patent came from the initial growth in cloud computing, cyber-security, block-chain etc. All of these offers are directed towards assisting and supporting clients and issues that they deal with. These two building blocks which are extracted from the Information System and R&D serve as a core competitive advantages which helped IBM cloud differentiate its products and offerings from its major competitors such as Microsoft and Google allowing them to have dominance in that industry resulted in helping them be the market leader. 12.0 Business Model of IBM Cloud: (B2B)BUSINESS MODEL CANVASKey Partners· Component Manufacturers· Employees · Financial Institutions.· Business Enterprises· Shareholders. Key Activities· Providing IT Business solutions.· B2B· Customer support.· Continuing Technological Innovation.· Provide cloud storage.· RFID. Value Proposition• Firewall Security.• Cutting Edge Technology.• Technological mobility.• Ease of accessibility Customer Relationships• Highly paid customer executives. • Customer support 24/7.• International 24/7 Customer Service.• AI Chat Box. Customer Segments• Highly Sophisticated IT Firms.• Software Modules for large scale Manufacturers• Cloud Computing & Storage for Mid-level entities. Key Resources· Technological platform· Employees. · Advanced Firewall. Channels· Worldwide Web.· Word of mouth· Social media channels Cost Structure· Server Maintenance. · Office Utility.· R&D Cost.· Server Cost.· Employee Salaries.· Insurance.· Technological set up and running costs. Revenue Streams· B2B · Cloud Subscribers. · Technological Partners.IBM’s business model has constructed a unique network system known as “Watson.” Due to IBM’s involvement in huge R&D investments, it has catered the ability to impose differentiation strategy in their production. This in turn has led them to gain a competitive advantage over other industry giants such as Microsoft and Google. High security and substantial cloud storage helps them leading from the front. They have incorporated artificial intelligence in their production process which guarantees the recruitment of skilled employees. Adding more to that, in-order to reach out to potential customers, their Marketing team equally provides good service. 13.0 RECOMMENDATIONSThe technology sector is changing rapidly over the past decades that we have witnessed with our own eyes. It is one of the most lucrative sector to invest and prosper but at the same time if the firms pretend to stay obtuse with one aspect, then there is a high chance that they might eventually turn into ancient history. So in-order to be in the race, it is essential to adapt with the changing market.13.1 Recommendation to utilize strength to eliminate threatsThe biggest strength of International Business Machine is its brand name, in 2018 IBM ranked at 32nd in the Brand Finance report with a brand value of $32,478 million (Haigh, 2018). The competitors in the market like Amazon, Google, and Microsoft are able to better cater to the customer’s needs and wants thus we can see that despite having a high brand loyalty and customers support the growth and profit are not enhanced in the case of the company. In order to reach its target market in 200 countries IBM should use its Integrated Marketing Campaign (IMC) more efficiently for positioning their products in customers mind and make people aware about them so that more people become part of their customer base and to influence the user’s marketplace (Alessandro Gandolfo, 1999). This will make them standout in the highly competitive market of cloud computing. Furthermore by significant improvement in their technology in Software as a Service (SaaS) (use the provider’s application is used through a web browser or interface), Infrastructures as a service (IaaS) (is the very basic of cloud computing) and Platform as a service (PaaS) (permits further development of the service through the internet) the company will be able to differentiate themselves from the frauds (Han, 2013) (Barabas, 2018). These will aid to boost up the strength of the company further and by using the strength of IBM the threats that are brewing can be conquer that are imitating of the products and high completion with powerful companies. Developing economies could be in a better position protecting intellectual property are often translated as an aim to deprive the developing economies of the advantages of technological advancements.13.2 Recommendation to capitalize opportunities to reduce weakness One of the main weaknesses of IBM is that for providing the Infrastructure as a service IaaS it still faces some hindrance, it has been facing issues related with its security, the sensitive information of the users are under the threat of getting leaked and this factor can make it vulnerable to its competitors. So perfection of the IaaS by either collaborating with others like IBM has recently done with Maersk by launching a digital joint venture, were via the help of block chain the security is maintained (Moller, 2018). Businesses recently are prone to adopt cloud since the maneuvering of large amount of data is especially on a global scale without the issue of dealing with thousands of paper work. If the user’s information is protected than the customers who were previously reluctant to adopt this service can be converted to loyal users. Moreover apart from making a strong position this will help in building a better position in the minds of the consumers regarding the brand and its value in the entire market. 14.0 CORPORATE LEVEL STRATEGYIBM has a name of its own that defines its long journey since its birth, quality has been its main focal point and with the support of this quality they have been able to differentiate themselves. However their security is getting questioned and also they are failing to keep their production cost to a minimum, as an outcome we see that the profitability and growth of the firm has not been able to justify itself. Recently the Danish transport and logistics giant conglomerate Maersk has joined hands with IBM to resolve the issue with its container shipping. This joint venture is mutually beneficial in the sense that millions of dollars spent in the transit can be reduced by nearly 40 % (Huillet, 2018). The block chain technology that has been perfected by IBM cloud for the enterprises by transforming it speed, security and transparency to boost the supply chain platform into a paperless yet informative dealing (White, 2018). One of the leading providers of the block technology since 2016 has been IBM. Another alternative for the company, since security has been one of the weaknesses of IBM so in order to overcome this they can go in a joint venture with DigitalOcean which is among the leading cloud infrastructure providers; combining their knowledge and expertise in the technological sector they can be equally be benefited (Weinberger, 2017). Firstly by eliminating a competitor from the race and joining hands to target bigger fish in the sea to hunt them down, secondly since their cost of production is high by going into a joint venture with DigitalOcean you are getting a more vast number of customers to serve who were previously unreachable to you, the higher the number of consumers you are catering, the cost gets lower simultaneously. A lower cost of the service can attract customers who were reluctant to accept this due to its high cost and beat its competitions that has been successfully been able to offer customer a low fee (Mellor, 2018). Lastly coming back to the weakness, that is the security DigitalOcean follows a seven security measures to protect the servers; by SSH key authentication, firewalls, VPN, private networking, encryption service auditing, intrusion detection system and isolating execution environments (Ellingwood,2015), in return it is getting the expertise from IBM along with their platform. 15.0 BUSINESS LEVEL STRATEGY To expand market share and for maximizing profitability company needs to pursue strategies in several ways. Cloud has gained its competitive advantage by differentiating its product from its competitors and it helped them to capture a positive position among its target customers mind, however achieving a low cost is also there line of thought.15.1 Business Model Improve: Business model is the vital part of any business to flourish, so it really needs to be more evaluated and clear so that everyone has an idea of where it is headed in the long run. As R&D and Service is the main factor of Cloud these two sectors really need to undergo vast technologically research so that they can stay in the race in the future.15.2 Marketing Campaign: As there are already so many storage options present in Google, Microsoft & Apple so Cloud really need to up its game plan for attracting their customers and also retaining them. They should design a different and a better marketing campaign showing their core benefits as well so that people are more aware. It is very difficult to get a group of target customers to buy the correct product that will be for their benefit so the integrated marketing campaign might be able to solve this issue and the proper customer’s will be aware about our product, in order for them to buy it.15.3 Service: As Cloud is on its shakeout stage it should ensure to provide superior service quality to built brand loyalty even further. It should develop its technological knowledge which result in reduce the barrier which can easily be achieved by their experienced research and development team. As the company is mainly focusing on securing data, it is basic to emphasize innovation which ensures more customers to show desire about Cloud computing service and cognitive functions rather than focusing on their weakness for which joint venture has been considered a solution in the corporate level.15.4 Focus differentiation strategy: Cloud should focus on innovation more facilities so that it can create more value to its users. As there is similar technology like Cloud is available, differentiation will distinguish the industry from its competitors. They should provide better functions at supreme level and make the use of the product much easier so that the users can get accessibility. Ensuring innovation will enhance the quality and help to grow the demand a leading too high profitability. However here lowering cost seems to work best since for technological good reduction of the cost is the best policy. Having a high fixed cost bad low marginal cost is the key here like what the competitor have been doing.16.0 FUNCTIONAL LEVEL STRATEGY16.1 Marketing: The main focus of the marketing team should be on the customers so that they are able to relate to the research and development team regarding the customer needs so that they can work in accordance with this information. Work closely with the research part to better cater to customers desired needs this can be accomplished by getting customer feedback. By integrating both brands positioning and advertising Cloud computing can cause the perceived value in the eye of the customers to change and look them in a new light.16.2 Research ; Development: Cloud needs to focus on their research and development team to make the strategy level functional; as a result when they come up with a goal in mind it should be really effective and lucrative. Cloud helps to get all the data in a very systematic way without any difficulty. 16.3 Information Technology: Information system maintains the coordination among all the departments in an organization. Cloud service can develop their information system further by adopting latest information technology which helps those to innovative in terms of ideas and technologies. As their work is mainly focused with R;D it is very much required to maintain coordination between these two departments.16.4 Human Resource Management: Cloud service needs people with innovative ideas to achieve the target that they have planned for the next few years to come. Highly innovative ideas meet the customer needs so cloud needs to provide more training and motivation program so that they able to show more and more creativity and better quality. Hiring skilled managers, engineers, will help cloud to reach its customers with the superior knowledge about the whole idea of the service.17.0 TECHNOLOGY STRATEGYIn the new market IBM sustained itself by transferring the Business Model from traditional hardware business to cloud computing and cognitive roles, this is how they created place with their customer’s through cognitive service to the technology sector and providing the cloud computing. IBM had to concentrate on other factors rather than transferring them, which assisted them in becoming successful in their part. Moreover, they had sufficient resources to make the cloud computing service potential to achieve this huge success, despite their existing technology required observation and management which is insufficient.To set the standard in the cloud computing market, IBM is going for a joint venture with DigitalOcean which is a lucrative opportunity to reach an innovative excellence through new technology, mainly by investing its resource and capabilities on the right R&D process. By following the ways mentioned below the business potion can be improved further with the attribute of its technology:• By accurate key encryption technology will be relaying on favorable protection of data and information.• Contradiction of service security, traffic screening and uncovering trespass on, averting them, it can be assured by cloud setups and joining is guaranteed for it.• By monitoring the system on a daily basis it can protect the customer’s data and information from being stolen and indirectly assure more safety for them.• Major problems will be regulated proactively by creating in depth stage of tracking and management where ever the difficulties arise in the system.• Reshaping a similar cost structure strategy along with their existing innovation strategy will help to increase the existing market share of the company.18.0 REVISED BUSINESS MODEL18.1 Key Partners: IBM’s key partners are the component manufacturers, employees, financial institutions, DigitalOcean after the joint venture with them according to our corporate level strategy, business enterprises and shareholders. 18.2 Key Activities: The key activities are desire to provide solutions to IT business problems so that they can operate smoothly, with continuous improvement of technology and innovation at its crest. It mostly gets involved in B2B business and also offers customer support moreover serving longer read range and faster data transfer with its RFID is also the key part of its day.18.3 Value Proposition: They delivers the user with advance security but after the joint venture this can be improved further, user friendly features and highly developed technology that are innovation at its best. 18.4 Customer Relationship: IBM believe in customer satisfaction and creating better relation with them by providing full time customer service with the help of their expert employees who are trained to handle customers with care and also keeps this bonding as tight as possible through thick and thin.18.5 Customer Segments: Customers of IBM are mainly the highly experienced IT firms, were some require software modules for extensive manufacture, cognitive computing and providing storage for mid-level. The customer segments might not change drastically for the cloud computing but the building block technology can attract customers.18.6 Key Resources: IBM’s key resources are essential stage of technological field; employees of IBM and advanced protection after the new strategies are in place. 18.7 Channels: The media will be used across the global web, through word of mouth and social media, here taking this mean will surely help to reach to our customers. This medium is most effective as bombarding people with the information is bound to make a group of people to turn and listen despite only a hand full can actually pass through the funnel tube. 18.8 Cost Structure: IBM’s cost require server preservation, office efficacies, R&D expenses, server expenses, employee’s wages, insurance, technological setup structure and running expenses along with these the joint venture will surely effect the cost composition during the initial days. 18.9 Revenue Streams: Basically revenues are generating from B2B business, the user or cloud subscribers and technological partners that will stay the same but due to the merger there may perhaps be certain discrepancies. 19.0 COMPANY GOVERNANCECorporate governance is the arrangement of standards, practices and procedures by which a firm is coordinated and controlled. Corporate administration basically includes adjusting the interests of an organization’s numerous partners, for example, investors, administration, clients, providers, lenders, government and the network. Since corporate administration additionally gives the structure to achieving an organization’s destinations, it envelops for all intents and purposes each circle of administration, from activity designs and interior controls to execution estimation and corporate divulgence. There is no need to bring a change in IBM’s company governance to support the strategies stated because IBM already has a strong corporate governance that starts from the board to its own cyber security system. The governance system of IBM makes it a stronger team to tackle and implement the strategies that it makes for the future purposes. The cyber security system is very important as the cloud based system is being focused here and when the matter is totally technological it’s very important to have technological based security which IBM has. IBM holds meeting every year and they have segments which they discuss about what strategies to implement and how to work on them so that they do not run into risks and also has a succession planning so that they can discuss how they can aim their success through their implemented strategies. All these states that they have strong corporate governance already and for the strategies stated they would not need any change to make those strategies work. However with the impending joint venture with DigitlOcean there might be n issue with the corporate governance but that could be resolve with understanding and corrective measures.20.0 STRATEGIC CONTROL SYSTEMStrategic control is concerned about following the procedure as it is being actualized; distinguishing any issues regions or potential issue zones, and making any essential changes. Henry Mintzberg, one of the preeminent scholars in the region of key administration, discloses that regardless of how well the association design is and its procedure, an alternate system may rise. Beginning with the proposed or arranged techniques, he related the kinds of systems in the accompanying way; planned techniques that get understood; these might be called consider systems, planned systems that do get understood; these might be called hidden techniques, acknowledged techniques that were never expected; these might be called eminent methodologies. Perceiving the quantity of various ways that proposed and acknowledged techniques may contrast underscores the significance of assessment and control frameworks with the goal that the firm can screen its execution and make restorative move if the genuine execution varies from the expected systems and arranged outcomes. Based on the strategic plan given the best strategic control system would be premises control because it is about how businesses plans on tackling situations in the future and as IBM’s cloud-computing needs a lot of exposure and marketing so it meets its consumer demand target it needs a premises control. This strategic control system would help IBM to learn what they might be dealing with in the future and what kind of competition they might be facing. With this strategic control system they will be able to come up with contingency plans for their cloud-computing system so that they can make changes in the future and build fail safe system and backup for their servers which is very important for the cloud based system. 21.0 IBM’s Culture Supports The Strategic Control System or not IBM’s culture stands for “Thinking”, respecting for each individuals, excellence and the best customer service in the industry. Yes the existing company’ culture will complement the strategic control system. IBM’s motto includes aggressive response to customers’ requirement. The cloud storage business sector just kicked off and it is still in the growth stage. There are many competitors out there such as Amazon cloud, Google cloud services. IBM believes in continuous innovation. They emphasis on innovation in each of their quarterly meetings, thus their motto “THINK” which is embedded in their culture. Thus we can say that their culture supports the strategic control system as IBM is constantly responding to customer’s requirement and reshaping themselves as per customer’s demand (Lombardo, 2017).22.0 GLOBAL LEVEL STRATEGYThe cloud storage business is still in shakeout stage. Enterprises are still getting used of the benefits of cloud storage. Many customers perceive IBM as very expensive and not approach them at all. IBM can provide variation on cloud services based on different enterprise’s size and how they perform, then charge them as per basis. Since their B2B approach should be on a global scale, they also need to take in concern about the internet connectivity issues in various regions. So their cloud services should be designed in such a way so that it can function everywhere globally. The cloud computing and cognitive services should be globally standardized something like Intel has been able to do, since low cost can increase customer usage of the product and help the company to sustain in the long run.23.0 ETHICAL VALUE PROPOSITIONIBM is constantly evolving and innovating themselves. Continuous innovation has rewards but also comes with a lot of responsibility. IBM should be well aware of its intellectual rights and how to protect them. There is a lot of information involved here which needs to be kept secret and must not get leaked. IBM should provide motivational training and also training based on ethical code of conducts so that there is no corporate espionage or imitation of one of innovative ideas in the market before IBM themselves launches it themselves. The company should also influence its employees to share any information freely without any hesitation and report any matters that jeopardize the company’s ethical stance (IBM, 2017).BibliographyAlessandro Gandolfo, F. P. (1999). European Journal of Innovation Management. From direct to hybrid marketing: a new IBM go-to-market model , 2 (3), 109-117.Barabas, J. (2018, August 14). IaaS, PaaS and SaaS – IBM Cloud service models. Retrieved August 14, 2018, from IBM:, J. (2014, November 27). IBM’s Emerging Market Strategy Has 3 Pillars. Retrieved August 19, 2018, from Harvard Business Review: Ellingwood, J. (2015, March 5). 7 Security Measures to Protect Your Servers. Retrieved August 19, 2018, from DigitalOcean : Company. (2017, February 13). Why IBM Is One Of The Most Innovative Companies Of 2017. Retrieved August 19, 2018, from MOST INNOVATIVE COMPANIES: (2018, January 18). Cloud adoption, IBM Cloud’s top picks of 2017 and more! Retrieved July 19, 2018, from The Developer Work:, D. 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