Strategic Management

IBM Case Analysis

IBM Case Analysis

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OBJECTIVE
In the very high pace of the technological growth in the sector of
Information Technology, IBM is surely one of the pioneering
organizations. We, the team, have decided to work upon the
managerial practices, i.e. work culture, human resource policy,
marketing strategy, organizational structure, and business lines of
IBM, achievements and awards and SWOT analysis of the
Company

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INTRODUCTION
International Business Machines Corporation abbreviated IBM and
nicknamed "Big Blue" (for its official corporate color), is a multinational
computer technology and IT consulting corporation headquartered in
Armonk, New York, United States. The company is one of the few
information technology companies with a continuous history dating back to
the 19th century. IBM manufactures and sells computer hardware and
software (with a focus on the latter), and offers infrastructure services,
hosting services, and consulting services in areas ranging from mainframe
computers to nanotechnology.
IBM has been well known through most of its recent history as the world's
largest computer company and systems integrator, with over 388,000
employees worldwide, IBM is the largest and most profitable information
technology employer in the world. IBM holds more patents than any other
technology company and has eight research laboratories worldwide. The
company has scientists, engineers, consultants, and sales professionals in
over 170 countries. IBM employees have earned five Nobel Prizes, four
Turing Awards, five National Medals of Technology, and five
National Medal Of Science. As a chipmaker, IBM has been among the
Worldwide Top 20 Semiconductor Sales Leader in past years.

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COMPANY PROFILE
HISTORY OF INTERNATIONAL BUSINESS MACHINES
The company which became IBM was founded in 1896 as the
Tabulating Machine Company by Herman Hollerith, in Broome County,
New York (Endicott, New York or Binghamton, New York), where it still
maintains very limited operations. It was incorporated as Computing
Tabulating Recording Corporation (CTR) on June 16, 1911, and was
listed on the New York Stock Exchange in 1916 by George Winthrop
Fairchild. CTR's Canadian and later South American subsidiary was
named International Business Machines in 1917, and the whole company
took this name in 1924 when Thomas J. Watson took control.
18751925: The origin of IBM
IBM's history dates back decades before the development of electronic
computers. Of the companies merged to form what later became IBM,
the oldest was the Tabulating Machine Company, founded in 1896 by
Herman Hollerith, and specialized in the development of punched card
data processing equipment. Hollerith's series of patents on tabulating
machine technology, first applied for in 1884, drew on his work at the
U.S. Census Bureau from 187982. Hollerith was initially trying to reduce
the time and complexity needed to tabulate the 1890 Census. His
transition to the use of punch cards in 1886 laid a foundation for
generations of equipment and a core component of what would become
The company which became IBM was founded in 1896 as the Tabulating
Machine Company by Herman Hollerith, in Broome County, New York
(Endicott, New York or Binghamton, New York), where it still maintains
very limited operations. It was incorporated as Computing Tabulating
Recording Corporation on June 16, 1911, and was listed on the New
York Stock Exchange in 1916 by George Winthrop Fairchild. CTR's
Canadian and later South American subsidiary was named International
Business Machines in 1917, and the whole company took this name in
1924 when Thomas J. Watson took control of it.
International Business Machines Corporation, abbreviated IBM and
nicknamed "Big Blue is a multinational computer technology and IT
consulting corporation headquartered in Armonk, New York, United
States. The company is one of the few information technology companies

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with a continuous history dating back to the 19th century. IBM

manufactures and sells computer hardware and software (with a focus on
the latter), and offers infrastructure services, hosting services, and
consulting services in areas ranging from mainframe computers to
nanotechnology.
IBM has been well known through most of its recent history as the world's
largest computer company and systems integrator. With over 388,000
employees worldwide, IBM is the largest and most profitable information
technology employer in the world. IBM holds more patents than any other
U.S. based Technology Company and has eight research laboratories
worldwide. The company has scientists, engineers, consultants, and
sales professionals in over 170 countries. IBM employees have earned
five Nobel Prizes, four Turing Awards, five National Medals of
Technology, and five National Medals of Science. As a chip maker, IBM
has been among the Worldwide Top 20 Semiconductor Sales Leaders in
past years.
In 2002, IBM strengthened its business advisory capabilities by acquiring
the consulting arm of professional services firm. The company has
increasingly focused on business solution-driven consulting, services and
software, with emphasis also on high-value chips and hardware
technologies; as of 2005 it employs about 195,000 technical
professionals. That total includes about 350 Distinguished Engineers
and 60 IBM Fellows, its most-senior engineers. It should be noted,
however, that IBM and some other U.S. firms use the term 'engineer' in a
broad sense, applying it to technicians from diverse disciplines that may
not be graduates from Engineering Schools of recognized Universities.
In 2002, IBM announced the beginning of a US$10 billion program to
research and implement the infrastructure technology necessary to be
able to provide supercomputer-level resources "on demand" to all
businesses as a metered utility. The program has since then been
implemented.
In the same year its hard disk operations was sold to Hitachi.
IBM has steadily increased its patent portfolio since the early 1990s,
which is valuable cross licensing with other companies. In every year
from 1993 to 2005, IBM has been granted significantly more U.S. patents
than any other company. The thirteen-year period has resulted in over
31,000 patents for which IBM is the primary assignee. In 2003, IBM earned
3415 patents, breaking the US record for patents in a single year.

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Protection of the company's intellectual property has grown into a business

in its own right, generating over $10 billion dollars to the bottom line for the
company during this period. A 2003 Forbes article quotes
Paul Horn, head of IBM Research, saying that IBM has generated $1 billion
in profit by licensing intellectual property.
In 2004, IBM announced the proposed sale of its PC business to Chinese
computer maker Lenovo Group, which is partially owned by the Chinese
government, for US $650 million in cash and US $600 million in Lenovo
stock. The deal was approved by the Committee on Foreign Investment
in the United States in March 2005, and completed in May 2005. IBM
acquired a 19% stake in Lenovo, which moved its headquarters to New
York State and appointed an IBM executive, Steve Ward, as its chief
executive officer. The company retained the right to use certain IBM
brand names for an initial period of five years. As a result of the
purchase, Lenovo inherited a product line that features the ThinkPad, a
line of laptops that had been one of IBM's most successful products.
As of 2004, IBM had shifted much of its focus to the provision of business
consulting & re-engineering services from its hardware & technology
focus. The new IBM has enhanced global delivery capabilities in
consulting, software and technology based process servicesand this
change is reflected in its top-line.
On June 20, 2006, IBM and Georgia Institute of Technology jointly
announced a new record in silicon-based chip speed at 500 GHz. This
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was done by freezing the chip to 4.5 K (269 C; 452 F) using liquid
helium and is not comparable to CPU speed. The chip operated at about
350 GHz at room temperature. IBM acquires SPSS in July 2009 for $1.2
billion.

ACHIEVEMENTS & AWARDS

IBM stands 14 in Fortune 500 companies with a revenue scale of
$103,630 million with profits of $12,334 millions.
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AWARDS :
Corporate Citizenship: IBM was ranked the no.1 ethical
corporation by Covalence, the Swiss ethical ranking agency, above
581 businesses across 18 sectors, The rating is based on capture
of information from media and the internet, matching corporate
offerings to specific societal expectations.
Corporate Citizenship: IBM Singapore won seven awards at the
Singapore HR Awards 2009 including the category of Corporate
Social Responsibility.
Corporate Citizenship: IBM was named one of the "50 Most
Socially Responsible Corporations" by MacLean's, a Canadian
weekly magazine.
Environment: IBM Canada Ltd. has been selected as one of
Canada's Greenest Employers. This special designation recognizes
the employers that lead the nation in making environmental values
part of their organizational culture. Winners of this competition have
developed exception earth-friendly initiatives and are attracting
employees and customers because of their environmental
leadership.
Accessibility: IBM Spain was recognized as the best company for social
action in 2008 by the Randstad Foundation.
Corporate Citizenship: Stan Litow, Vice President, IBM Corporate
Citizenship & Corporate Affairs, was chosen to ring the opening bell at
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the NY Stock Exchange on February 23, International Corporate
Philanthropy Day. He accepted the National Philanthropy Award from the
Committee Encouraging Corporate Philanthropy, which recognized IBM's
On Demand Community.
Corporate Citizenship: In Taiwan, IBM was ranked No. 2 in the
Corporate Citizen Survey of the foreign company group of
Commonwealth Magazine's 2009. For the last three consecutive
years, IBM has been selected as one of the top 10 corporate
socially responsible companies.
Corporate Citizenship: IBM Poland has been awarded the status
of 'Best Practice for Business and Society' by the Responsible
Business Forum, the country's largest corporate organization
focused on corporate social responsibility.

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Corporate Citizenship: IBM Romania has been recognized with a

'diploma' award from the Romanian Donors Forum and the Trust for Civil
Society in Central and Eastern Europe for being one of the top corporate
socially responsible companies.
Accessibility: IBM Spain and Association Semilla's joint Social GNU
project has won the title of best 'Best IT Project' at an awards ceremony
hosted at the Ministry of Industry.
Corporate Citizenship: IBM China was awarded a certificate of
appreciation for their outstanding contribution to education by the China
Ministry of Education (CME) at the Spring Festival Reception for more
than 30 multinational companies.
Corporate Citizenship: For the seven consecutive year, IBM Hong Kong
has been awarded with "The Caring Company Award" by the Hong Kong
Council of Social Services.
AWARD ASSOCIATED WITH IBM:
Impact Best of Show Award - Cross View, Inc.
The Impact Best of Show Award recognizes Cross View, one of the
IBM sponsors of the Impact conference, for the solution that best
demonstrates the unique power of using IBM SOA and WebSphere
components to solve customer business challenges.
SOA Cost Optimization Award - Miracle Software Systems, Inc.
The SOA Cost Optimization Award recognizes Miracle Software
Systems, Inc. and its web methods to WebSphere Message Broker and
WebSphere Process Server migration solution for exploiting IBM SOA
and WebSphere and providing a proven solution that helps customers
achieve cost optimization, agility, and increased ROI (Return on
investment).
Business Process Management Award Ascendant Technology
The Business Process Management Award recognizes Ascendant
Technology for its Invoice Workflow for Accounts Payables as the most
exceptional solution in helping customers to improve their efficiency,
elasticity, and control of their key business processes across the enterprise.
Green Partner Award - Enterprise Information Management
The Green Partner Award recognizes Enterprise Information

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Management (EIM) for its GreenCert solution for excellence in helping

businesses through use talent, natural resources, and technology in
smarter ways. IBM's GreenCert play an important role in helping address
business challenges, including rising energy costs, regulatory mandates,
and customer demand for eco-friendly products. GreenCert measures the
reduction in greenhouse gases an energy company realizes when it
takes steps to reduce emissions.
Distributor Excellence Award
The Distributor Excellence Award recognizes Tech Data Azlan as a
high value-add distributor who is leading the charge in building their
Business Partners' ability to leverage IBM SOA and WebSphere software
capabilities in creative, leading edge, and exciting way.

ORGANIZATIONAL STRUCTURE IN IBM

Projectized Organization
Any organizational structure in which the project manager has full authority
to assign priorities, apply resources, and direct the work of persons
assigned to the project.
A project organization is generally a temporary thing. It will only exist from
the projects start until its end. All the project team members are coming
from different organizations of part of the organization. They will all have a
temporary assignment to the project. So, they have not only a project
manager, but also their 'normal' boss, who orders him around when the
employee is not in the project. These 'normal bosses' are an important
group of stakeholders.
The projectized organization should be a result from the project strategy;
it should be constructed in such a way that the strategy can be
implemented within the environment of the project. A very obvious example:
if the strategy contains an aspect of having independent reviews, the
organization should support its independence, by creating a separate
working group with no ties to the other team members.
The project team that does the work should be as small as possible.
Small is beautiful, and effective. Don't start inviting everyone to the
organization. Only people who have an added value and will spend a
significant amount of time to the project can be in the core organization.
Try to avoid going overboard on working groups. Working groups can
drown a project in communication overhead. If there should be that much
discussion anyway, postpone the project and first make up the minds.

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Next to the people who do the work, are the people that have some
influence on it, but do nothing; a large part of the stakeholders. The project
organization can be used to satisfy some wishes of stakeholders
to create the much needed win-win situations. In its most simple form, you
can create a project trashcan where you put in the people who just want to
be involved in the project (to save their territory), but which you
have no use for.Current members of the board of directors of IBM are:
Cathleen Black President, Hearst Magazines
William R. Brody President, Johns Hopkins University
Kenneth Chenault Chairman and CEO, American Express Company
Juergen Dormann Chairman of the Board, ABB Ltd
Ayan Barua CEO, PICSimon Shum Siu-hung CEO, Lenovo Computer
Ltd.
SOME OTHER INMPORTANT PERSONALITIES ARE:
Shanker Annaswamy, Country Manager & South Asia Head
Rajesh Nambiar, Vice President & GM, Global Delivery, IBM India
Dave Seybold, Vice President and Partner Global Delivery, Consulting &
Application Services, IBM Global Business Services India
Arnab Saha, General Manager, Business Development, Global Delivery

3. MANAGEMENT PRACTICES
3.1 IBM BUSINESS LINES
IBM manufactures and sells computer hardware and software (with
a focus on the latter)
Offers infrastructure services:
Helps identify problem areas and determines where further in-depth
analysis is required. It also help to remediate and repair issues that have
been identified, including those related to application infrastructure,
services management and identity and access management.
Hosting services:
IBM provides one of the most comprehensive application hosting services
in the industry from basic support to global deployments.
With IBM Application Hosting services, you can leverage the leading
applications that can help reduce your time to market or boost customer
satisfaction without the usual upfront infrastructure costs or the ongoing
implementation and management headaches.
Consulting services:

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IBM business strategy consultants support clients in the translation of

innovative and core competencies into real business value by formulating
strategies, managing change, and realizing benefits.
Working collaboratively with clients, we provide solutions to the business
needs that your organization is confronted with, such as growing revenues,
streamlining costs and linking strategy to execution.
Recently entered into an outsourcing business (customer services and
technical support) a unit called IBM DAKSH is specially set up for the out
sourcing business. Dealing in customer service, technical support, billing
assistance etc.
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Green sigma:
IBMs goal with the Green Sigma TM offering is to partner with clients to
drive innovation, achieving economic benefits for the business and
reducing impact to the environment. This focus on ways to develop
processes to bring down the carbon intensity of products and processes
and create a lean green business"

HUMAN RESOURCE POLICY

The Human Resource (HR) policy must be able to deliver deliberate
insights to business units, enabling the organization to more effectively
source, evaluate and motivate employees in an increasingly turbulent
business environment.
At the same time, HR needs to continue to provide administrative services
that are reliable, cost-effective and responsive to the needs of business
units around the globe. HR must perform both roles effectively to contribute
to the long-term success of the organization.
This perspective shaped a series of discussions that took place in March
2006 with more than 25 senior HR executives from around the globe.
Over four days, HR leaders from various industries, including utilities,
financial services, retail and government - to name a few - engaged in a
dialogue to share insights and best practices on a variety of topics. These
included issues such as changing workforce demographics, the role of
workforce analytics in developing strategic insights, and the structure and
competencies of the HR policies of the future.
Across industries, changing business conditions, demographics and
globalization have raised the need to understand and manage the
dynamics of talent, from sourcing to resource management to recognition

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systems. To allow HR to focus on these more strategic issues, the next

generation HR organization must promote the use of shared services and
employee self-service to move away from its traditional role of answering
questions and resolving disputes.
Further, the HR organization needs to work more effectively with other
vendors in its extended enterprise, providing the tighter coordination that
is needed to deliver administrative services. Finally, HR needs to look
inward at its own talent model, to help ensure that its employees have the
20 capabilities, skills and confidence to provide strategic guidance to the
business.
The roundtable participants highlighted the clear need for the HR function
to focus its limited time, energy and resources on four critical areas:
Understanding the impact of both globalization and changing
workforce demographics on the supply of talent.
Determining the drivers of employee retention and developing
strategies for retaining top performers.
Engaging with the corporate strategy process to determine the need
for critical skills and capabilities
Balancing the supply and demand for talent on a dynamic basis
within and across business units.
Implications for the next generation HR organization
For the HR organization to take on these new responsibilities, it must be
able to shed some of its more routine tasks and restore its internal
capability. Many organizations have moved to using outsourcing vendors to
perform routine administrative tasks, while others have continued to retain
these activities in a shared services environment.
The key steps toward achieving this include:
Getting out of the business of answering questions, shifting to
dealing with issues that are more strategic. Spend less time managing
routine transactions and interactions that too often fill the days of HR
professionals. Place the nexus of addressing administrative issues in one
place. Track employee inquiries to determine whether HR policies and
procedures are easy to understand and apply, and whether they need
improvement. At the same time, increase the availability and use of
employee and managerial self-service.
Developing relationships across organizational boundaries: More
and more, companies are looking to outsiders to take over administrative

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components of the HR function - particularly non-core tasks such as payroll

and benefits administration, as well as employee service center
management, recruiting, compensation administration and HR data
management. It is increasingly important to view these companies as part
of a larger extended enterprise.
Building capability in the HR talent pool: Improve or acquire the skills
needed for a greater strategic orientation in several ways: bringing in
professionals from outside the company; attracting existing employees from
outside the HR function to join the HR team; providing education to existing
HR professionals; and fostering opportunities for outside development.
To prosper in a new environment, HR professionals need a more strategic
perspective on their services and capabilities. The window for evolving into
a more strategic HR organization is now - miss it, and more than the power
and prestige of the HR function will be at stake.

MARKETING STRATEGY
Todays marketplace involves substantial risk and full of surprises.
We can consider a few recent twists and turns in marketing point of view:
Bricks and Clicks not simply clicks: Despite an early lead by
Internet pure plays with their plentiful brand awareness campaigns, brick
and- click enterprises now-a-days seem to have the major advantages.
Private trumps public: Creative marketing tactics could not save the
multitude of public interactions launched over the last few years. With the
exception of a few, large industry stalwarts, enthusiasm surrounding public
exchanges has now shifted to private models that enable true business
value to be more readily achieved.
Inside turns out: Companies are discovering that internal assets, such
as online employee training, can be turned into effective marketing tools.
Business-model experimentation does not always produce expected
results. In fact, to many executives, todays marketing expenditures can
feel more like wagers than investments.
Through IBM works with leading marketers across a variety of industries,
IBM has honed in on five pragmatic tips that can help position a business
for solid performance even in turbulent times also.
Creation of Global Brand Blueprint
Many leaders establish a central framework for their brand
one that clearly communicates what elements should remain
constant across geographies and what elements can vary in order

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to capitalize on local insights.

A blueprint should be global not only in geographic terms,
but also in marketing dimensions. It should address the entire
marketing mix from advertising to the Web presence. Example
a companys website might vary in appearance, even functional
area across different geographies.
Architect Consistent Customer Experience
An experience is not simply about the quality of services received during a
business transaction, but also it is the overall feeling a consumer has after
each encounter with a company. IBM has developed a methodology that
can help the companies architect the exact type of emotional imprint they
would like to leave with customers at each and every touch point. This
Experience Architecture begins with a ornamentation a easily
understandable set of target emotional outcomes, marketing and
operations into alignment and reinforce the brand blueprint.
Gain a Single View of the Customer
While providing the customer with a single, consistent view of the
enterprise is critical; enterprises must also develop an overall view of each
customer. A consolidated view benefits both the customers and the
business. IBM practices on some practical ways to achieve a unified picture
of the customer:
Look At The Details: Analyzes when, where and how customer data
can be gathered.
Establish Rules: Create a governance framework with the
management policies and practices that encourage customer
centricity.
Build Common Ground: Set up consistent processes for customer
relationship management across all sales and service organization.
Take Leadership Seriously: A strong leader, who is accountable for
all touch points, must be appointed. IBM has established an
executive position Chief Experience Officer, for this particular
matter.
Insist On Robust IT Infrastructure
Marketing in a complex business environment requires sophisticated IT
support. Marketers cannot go far without the right technology platform for
implementing marketing initiatives. To position themselves and retaining

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their positions most flexibly, IBM is putting in place a hub-and-spoke

architecture. This allows them to build a spoke whenever new application
needs to be integrated with a hub a preferable alternative to
constructing point-to-point connections between the new application and all
other systems.
Partner In Innovative Ways
As businesses search for the right relationship to capitalize on future
opportunities, IBM evaluates potential partners from several perspectives:
Pick an appropriate mix of global and local partners
Find a spot in someone elses net value
As one of the worlds most recognized brands, IBM make out the
constant challenges of being on the market frontline.

WORK CULTURE
Employees are the essence of each and every organization. IBM has one
of the largest professional workforces around the world. IBM is the one of
the most admired company in the world, and is also retaining the
position. It is possible only with the support of the quality of the leaders
and managers. IBM brought the expertise of their people, a workforce
that is responsive to market requirements, with the skills and expertise to
deliver value to clients, is resilient to market forces and delivers strong
leadership into the market.
There are mainly three-fold initiatives for the employees because of
Which IBM is able to retain its position as one of the Worlds top
Employer over the years:
Capability: Rigorous and ongoing career/skills development
programs
Climate: A challenging, empowering work environment, with worldclass
infrastructure
Culture: Sensitive to a global workforce
The attributes that qualify these 3Cs are the Top Reasons that people
come to work at IBM.
CAPABILITY Molding Global Leaders and Fostering
Employee Talent: To be a leading international company, it is important to
develop an organization of global leaders and dynamic international
employees. IBM is committed to the employee wellbeing and career
growth.
CLIMATE: Flexibility At Work and Employee Wellness

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Programs: IBM believes in empowering employees as partners to

success, offering a global work culture and best workplace amenities. At
IBM, cubicles are out and mobile offices are in.
Workforce flexibility is a competitive advantage for IBM. It helps make the
Employer of Choice for new hires, and enables them to retain their top
talent. Some of IBMs workplace flexibility programs include individualized
daily work schedule, Flexible Work Week,
Regular Part-Time, Leave of Absence, and Remote/Mobile Work Options.
IBM strives to make life more convenient for the employees so they can
save their energy and be more productive
at work. The idea is to ensure IBMers work better even when they are
home, or on the move. Most mobile employees are provided with IBM
laptops, which function like their office cabinet, containing all their files,
presentation materials, and a whole extent of support services that they
need to meet their clients and other requirements. Be it downloading files,
checking and replying to mail, or linking to the electronic library, IBMers can
dial into the IBM network, and get connected, through the nearest landline
telephone.
CULTURE:
Workforce Diversity: Diversity in IBM means welcoming all the people to
the workplace regardless of factors unrelated to job performance. The
mission of IBMs Global Workforce Diversity is to guide in creating a
business environment, which recognizes our individual differences as a
competitive strength and a critical requirement for our success in the global
market. This environment enhances the success of the employees,
enhances the ability to satisfy their clients and advance IBMs continued
growth. IBM's definition of diversity includes all human characteristics that
make us unique as individuals. It includes everyone and excludes no one.
Race, gender, geographic origin, culture, lifestyle, age, disability, economic
status, marital status, and religion are just some of the characteristics that
define them as people. IBM has received numerous awards for workforce
diversity. Recently, Jyotindra Mehta, an employee of IBM, was awarded the
Helen Keller Award in 2004, by the National Center for Promotion
of Employment of Disabled People.

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4. ENVIRONMENTAL SCANNING (PEST)

Overview of Egypt climate
Egypt has entered a new era of opportunity. Political, economic and
social reforms have brightened up the economic climate, encouraging
private enterprise and a surge of new investment, increasingly from
abroad. It's business sectors have risen to the challenge
Egypt is looking for developments and new technologies
Political Forces
Egypt has a perfect relation to USA and EU in different fields. The
political life is totally stable in Egypt and people live in piece
Egypt witnesses political reform
Foreign investors are regarded by the government as a big
investment opportunity and laws have recently streamlined
procedures, making the purchase procedure easy.
Egypt topped the list of reformers in the region and worldwide
according to the World Bank and IFC's.
The use of other non-tariff barriers on imports and export restrictions
has also been reduced. Bureaucratic barriers, however, still hamper
investment
Economic Forces
Economic reform and investment: creating jobs, Improving economic
governance and the overall business climate, building up the private
sector, financial sector and tax reforms, boosting inward investment

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The government of Egypt is committed to transforming the countrys

economy through the promotion of foreign direct investment over the
long term
It has recently introduced new reforms to customs, income and
corporate taxations, while privatizing certain sector industries, and
developing an export market for their natural gas deposits.
Foreign capital investment has a place in the country's economic
development
so new projects financed with foreign capital were protected, capital
was freed for re-export within five years of its investment in Egypt
new projects financed with foreign capital are exempt from taxation
for five to ten years; in addition, payments of interest on foreign loans
are not taxable and investors are exempt from certain customs duties

Unemployment Rate

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Unemployment
rate

Year

Rank Percent Change Date of Information

2003

12.00 %

84

2001 est.

2004

9.90 %

98

-17.50 %

2003 est.

2005

10.90 %

102

10.10 %

2004 est.

2006

9.50 %

95

-12.84 %

2005 est.

2007

10.30 %

118

8.42 %

2006 est.

2008

9.10 %

114

-11.65 %

2007 est.

2009

8.40 %

114

-7.69 %

2008 est.

Definition: This entry contains the percent of the labor force that is without
jobs. Substantial underemployment might be noted.
Source: CIA World Factbook - Unless otherwise noted, information in this
page is accurate as of September 17, 2009
Agriculture counts for the maximum employment in Egypt. 42% of the
employed population in Egypt is involved in agriculture. However
there is very little demand for employment in this sector. Moreover
agricultures contribution to employment in Egypt has also declined
over the years.
In Egypt, unemployment has also been the result of
underperformance of labor markets. This is also the reason for
decline in labor income in Egypt. Unemployment among literates is
much higher (almost ten times) than that among illiterates in Egypt.
According to reports of ALO (Arab Labor Organization), higher
unemployment among the educated is a trend of the entire Arab
world.
In 2007, Egypt had an average unemployment rate of 8.3% as per
the estimates of the national economic research center of Egypt.

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The government, the private institutions and the labor force need to
co-operate in order to solve the problem of unemployment in Egypt.
Some of the important measures of solving the problem of
unemployment are
Social Forces
improving quality of life and living standards for citizens
Rich cultural and historical interest, dating back some five thousand
years.
Friendly nature of the Egyptian people.
Increase in internet users
Technological Factors
Egypt still an evolving market, not yet saturated with technological
aids.
The government bolster the use of technology & try to modernize its
sectors by introducing technological aids
Egypt today has a state-of-the-art communication system, including
three mobile phone companies servicing a subscriber base that has
seen exponential growth
Increase number of companies that need ERP systems
Legal Procedure
Standardized company
Legal Form: Sharikat that Massouliyyah Mahdoodah
City: Cairo
Registration Requirements Summary:

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The founder deposits the company documents at the reception desk,

where they are reviewed immediately by a lawyer. A registry
employee reviews the documents, and issues a detailed invoice for
all fees associated with the company's establishment.

General Factors
Egypt is the first recipient in North Africa and the second largest
recipient in Africa after Nigeria of Foreign Direct Investment, namely
accounting for $13.2 billion, which equals 45 % of FDI in the Middle
East North Africa (MENA) Region. Click here for more details
With introduction of the new tax law and the liberalization of the
economy, the highest tax rate in Egypt for individuals and companies
is only 20%. Also certain industrial sectors are even exempted from
taxes on revenues and profits.
Egypt was awarded the title "Top Reformer of the Year" in the World
Bank's Doing Business Report 2008, making it a popular investment
target.
In the fiscal year 2007/08 GDP rose about 7.2%, mostly contributed
by tourism, IT, construction, industry and transportation.
Unique strategic location provides excellent access to the markets in
Europe, the Arabian World, Africa and India.
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 Holding a major role in the production of Arabic media, in addition to

the rapid development in internet access and mobile networking,
Egypt has an immense potential to be the driving force in information
technology in the region.
Egyptian real estate is indeed the most lucrative investment due to
inexpensive land and construction prizes and also as tourism
guarantees continuous real estate demand in addition to the demand
for private use.
Amid the international economic crisis, Egypt's economy remains
unaffected due to the strong liquidity of its banks as compared to the
US and Europe.
In spite of tragic terror attacks in the past, Egypt has always managed
to stabilize its economy quite quickly. Despite the Dahab and Sharm
El Sheikh bombings, FDI doubled from 2006 to 2008.
Political stability and low crime rate. Egypt's stable political climate
and low crime rate (Cairo is one of the world's safest big cities) make
it an attractive foreign direct investment (FDI) destination in a region
that otherwise tends to be quite volatile.

5. Porters Five forces model of competition

1. Rivalry among competing firms
2. Barrier to entry
3. Potential development of Substitute products
4. Bargaining Power of suppliers
5. Bargaining Power of buyers

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1. Rivalry among competing firms

The strength of competition in this industry is very high; the main
rivals are HP, Microsoft, Dell, they compete with international,
national, regional, and local. There are many strong competitors.
2. Barriers to entry
The threats of entry is low because the costs of R&D, support
products and services, manufacturing, and distribution are very high

3. Threat of substitutes
Up till now there are no substitutes for computers or Laptops, so the
threat of substitutes is low.
4. Bargaining Power of suppliers
There are many Chinese suppliers, bargaining power is low.
5. Bargaining Power of buyers
The power of buyers is high because of switching costs for buyers
are low, there are also many product choices for the buyers.

6. Financial Ratios
Quick ratio
Current assets-inventory/liability
Quick ratio=45,764-2,989/38,338=1.12
The quick ratio analysis is good, as IBM will still manage to cover its
liabilities without relying on sales revenues

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Debt to Equity Ratio

Total debt/Total stockholders' equity=75,604/30,451=2.5.
-IBMs debt ratio of 69% seems less onerous debt-equity ratio 0f 220%
which means creditors have more than twice as much money in the
company than equity holders. Ratio is not a pure measurement of a
companys debt because it includes operational liabilities in total liabilities.
Companies with a large amount of purchased goodwill from heavy
acquisition activity can end up with a negative equity position
-The ratio is high. A high debt/equity ratio generally means that a company
has been aggressive in financing its growth with debts. It is above the
industry ratio, which is under 0.5
Long term debt to equity ratio
Long term debt/total stockholders' equity
Long term debt to equity ratio=37,257/30,451=1.2
It is a bit high, means a higher proportion of debt is used for the
permanent financing for the firm as opposed to investor funds.

Activity ratio
Inventory turnover=Sales/Inventory of finished goods
Inventory turnover=92,950/8,967=10.3
Turnover time=365/10.3=35 days
This means that it takes IBM 35 days to sell its finished goods.
Fixed assets turnover=sales/fixed assets
Fixed assets turnover=92,950/60,291=1.5

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High ratio means that the company has been more effective in using the
investment in using the investment fixed assets to generate revenues.
Profitability ratios
Gross Profit Margin=Sales-COGS/Sales
Gross Profit margin41, 950-92,950=0, 45
This ratio is used to assesses the profitability of a firms' core business ,
excluding the fixed costs, each dollar of the companys revenue is available
to meet expenses and profits after paying for goods and services to be
sold.
Operating profit Margin
Operating income/net sales
Operating Profit Margin=12,524/92,950=0.13
IBM makes $0.13 (before interest and taxes)on each dollar of sales
Net profit margin
Net Income/Sales
Net profit margin=8,619/92,950=0,092
Return on assets (ROA)
Net income/Total assets
Return on assets (ROA)=8,619/106,055=00.81 or 8.1
This ratio tells how much profit the company generates for each $1 sales.

Return on stockholders' equity

Net income/Total stockholders' equity

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Return on stockholders' equity=8,619/30,451=0.28

Leverage ratios
Debt to Total Assets Ratios=Total debts/total assets
Debt to total assets ratios=75,604/106,055=0.71
Low level of risk, the company has more assets than debt

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7.SWOT/TOWS
MATRIX

Opportunities
1-The video game market
revenue is projected to reach
$12 billion in 2008 and $66
billion in 2012
2-Mobile phone market is
expected to grow in Egypt
3-Handheld computer markets
are expecting to grow
4-Egyptian government
launched its development
strategy of computer for
everyone

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Strength

Weakne

1-its Image or brand name

2-Good organization culture
3-IBM revenues increased 7% to $69.92 billion in
2006
4-A unique revenues to engage their employees in
an online intranet using its Jam technology
5-strong strategic planning to be an innovationcentric globally
6-IBM operates in 170 countries with about 60% of
its revenue being generated outside the US.
7-IBM concentrated on becoming stronger in high
value added business
8-IBM ranked number hosted service provider in
western Europe
9-IBM is supercomputing leader as provider of 35 of
the worlds 100 most powerful supercomputers
10-Global integration
11-Flatter organization

1-Declining in
revenues of
services and
systems
segments in
2-Decline in
revenues of
public, indust
small , and
medium busi
industries in
by 9.6%
3-Decline in
revenues in A
Pacific area b
5.7%
4-Total asset
gradually
decreasing fr
109M to 103
2006
5-Mergers an
acquisitions
issues

S-O Strategies

W-O
Strategi

1-Enterning the video game console market by

producing video game console (S7O1)
2-Entering the mobile phone market, (S7,O2)
3-Enter the handheld computer market(S7,O3)

1-Sponsorsh
and training
programs wit
Government(
O4)

Threats
1-Unrelibility of the Egyptian
Government
2-Competitors are strong
3-Economics fluctuation could
crimp consumers' spending
3-Small & Medium business
demand fails to accelerate.
4-Low switching costs

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S-T
1-Further IBMs leadership in innovation
initiatives(S9,W2)
2-Capitalize on technological, business and social
trend and the need of enterprises to innovate in
addressing those trends(S9,W1)

W-T
1-Leverage
the internal
business
transformat
ion process
(W5,T2)

8. Recommended Strategies
At IBM, we strive to lead in the creation, development and
manufacture of the industry's most advanced information
technologies, including computer systems, software, networking
systems, storage devices and microelectronics.
We translate these advanced technologies into value for our
customers through our professional solutions and services
businesses worldwide..
9. Objectives
Drive revenue growth through new market, new offering and new
products both developed and acquired.
Focus on productivity to improve margin
Deploy cash to fund growth and provide shareholder returns via
dividends/buybacks
Sustain growth, increase profitability and maintain competitive
advantage

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