International Business Machines Corporation is an information technology multinational company based in the United States. The headquarters of IBM is situated in Armonk, New York. It operates in more than 170 nations across the globe (Fortune, 2016). It was found in 1911 by Charles Ranlett Flint and Thomas J. Watson. The company produces a variety of products including hardware, software, and middleware for computers, mainframes, exchanges, and other information technology products. It is also known for its research and development and a large number of patents it has filed (IBM, 2016). The company also invented various products such as floppy disk, automated teller machines, and much more. Over the years, it has acquired various competitors and spun-off various divisions with low-profit levels. In 2018, the company generated revenue of $79.59 billion and had more than 350,000 employees (IBM-2, 2019).
Following are the four dimensions of the Ansoff Matrix for IBM:
Market Penetration
Under this activity, an organization promotes existing products in existing markets. The first strategy the company uses in this regard is to market its products through various marketing channels to organizations and individual users to motivate them to purchase the company products. It acquires various competitors. It is a market leader and outsources non-core activities to allow it to focus on research and other core activities. Existing customers are offered after-sale services and installation services to encourage them to increase their usage. After a certain time, they are reminded of newer models they can purchase. The products the company produces are also improved by launching variants after the initial launch to reflect advancements. IBM also offers discounts on various products that require users to purchase activation keys and subscriptions. The company also has strategic alliances with various manufacturers to ensure product quality. These efforts help increase sales and revenue.
Market Development
Market development is the act of launching existing products in new markets. Although IBM already operates in a large number of nations, it still has the potential to geographically spread into other nations. The company establishes sales centers and provides direct sales in these nations. The products are imported from its manufacturing sites through these sales staff. Another strategy the company uses is to launch product variants that target specific market segments. For example, different servers come in various capacities targeting smaller and larger businesses both. The smaller products are also priced less to target consumers that do not have large budgets. This is another market segment the company targets. In each case, the market development efforts have been successful and increased brand reputation.
Product Development
In this strategy, the organization promotes new products in its existing markets. Since IBM is an information technology company, product development is done in various ways. The basic strategy it uses is to launch new products. These include newer models of the products it already sells having improved functions and newer technologies ensuring a higher level of creativity and innovation. These products are launched regularly and the production of earlier models is terminated. The launch of new products passes through various product development steps which help ensure product quality and design. The products have to live up to the company’s reputation. Once a product passes the various tests, it is launched. An aggressive marketing campaign is carried out to promote the product. The company is known for its research and development efforts to launch new products. Dedicated teams have been deputed that solely focus on product development through research. This plays an important role in the innovation and creativity associated with the brand name.
Diversification
Diversification is the strategy of launching new products in new markets. IBM has already diversified in various ways. It has diversified into related industries such as software, hardware, computers, servers, telephone exchanges, and so on. It can also vertically diversify by establishing its own manufacturing units rather than outsourcing production. It can also establish its retail stores, distribution systems, and other supply chain components. This will help increase the hold the company has over its supply chain. The company also holds the potential to diversify into unrelated industries such as consumer electronics, automobile, aviation, heavy machinery, and so on. The successful history, strong research and development teams, and excellent cash flow provide the company with an excellent base to execute these diversification strategies
References
Fortune, 2016. IBM Is Blowing Up Its Annual Performance Review. [Online] Available at: http://fortune.com/2016/02/01/ibm-employee-performance-reviews/ [Accessed 15 Jan. 2020].
IBM, 2016. IBM Marks More Than a Quarter Century of Patent Leadership with Record Year”.. [Online] Available at: https://www.ibm.com/blogs/think/2019/01/ibm-marks-more-than-a-quarter-century-of-patent-leadership-with-record-year/ [Accessed 15 Jan. 2020].
IBM-2, 2019. Annual Report 2018. [Online] Available at: https://www.ibm.com/annualreport/assets/downloads/IBM_Annual_Report_2018.pdf#page=68 [Accessed 15 Jan. 2020].