Table of Contents
2.0 Overview of IBM.
3.0 Analysis of the competitive forces driving the e-commerce industry as per IBM case study.
4.0 IBM capabilities in gaining the key success factors in the e-business market in which IBM is competing for
5.0 Evaluate the sustainability of IBM’s competitive advantages.
6.0 How might IBM use collaborative strategies to improve its competitive position in the eCommerce industry
6.1 Product-Market Growth model (Ansoff matrix).
6.2 Porter’s Generic model used to improve IBM’s competitive positions.
7.0 To what extent IBM is well placed to deal with the potential future changes in the e-business market
E-business and e-commerce have been playing an important role in the present business world. Sellers and buyers use these techniques to sell and buy products and services through Internet and Webs. There has been seen an explosion of e-commerce and e-business technologies in the current digital business world, where IBM has been contributing a lot to the development of e-commerce and e-business technologies and services. This report has first focused on the analysis of the competitive forces driving the -e-commerce and e-business industry as per the IBM case study. Secondly, the report has analyzed IBM’s capabilities of gaining the key success factors in the e-business market where it is competing. Next, the report has critically evaluated the sustainability of IBM’s competitive advantages. Thirdly, the report has analyzed and discussed the possible strategies for IBM to improve its competitive position in the current market of e-commerce. Finally, the report has analyzed how likely IBM is capable to deal with potential future changes in the e-business industry.
2.0 Overview of IBM
The International Business Machine (IBM) is the world-leading computer technology and IT consulting corporation founded in 1911 in the USA. has been sustaining the helping develop e-business and e-customer services. IBM manufactures and sells e-business and e-commerce technologies including hardware, software, and services including infrastructure services, consulting services (IBM, 2014). According to research conducted by Fortune (2014), IBM is the second-largest US firm in the case of the number of staff with nearly half a million and fourth-largest in terms of market capitalization. In terms of profit, it is number nine and in the case of revenue, it is the 19th largest corporation in the US. It is the number 18 most innovative company among the US organizations. IBM is operating in more than 170 countries worldwide serving millions of consumers every week. Only in 2014, its revenue was $92.793 billion, operating profit was $19.986 billion, net profit was 12.023 billion, and total assets were $117.53 billion.
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3.0 Analysis of the competitive forces driving the e-commerce industry as per IBM case study
According to Kotler (2005), the competitive forces driving the e-commerce industry can be analyzed using Michael Porter’s business strategy model shown in the following diagram:
The threat of new entrants or barriers to entry into the market by new entrants can come from cost advantages, learning curve, access to points, economies of scales, government policies, capital needed, brand identity to the consumers, switching costs, expected retaliation, access to products and distributions (David, 2014).
Diagram: Porter’s Five forces Model Source: Porter (2008)
The intensity of rivalry is impacted by a number of industry characteristics including big numbers organizations, slow market growth, high fixed costs, high storage costs with highly perishable products, low switching costs, low switching costs, low levels of products differentiation, higher strategic stakes, high exit barriers, diversity of rivals, and industry shakeout (David, 2014).
The bargaining power of buyers is influenced by consumers’ information and buying volumes, bargaining leverage, brand identity, price sensitivity, product differentiation, consumer incentives, substitutes available, the threat of backward integration, and industry response to consumer feedback (David, 2014). Threats of substitutes come from switching costs, price performance, consumers’ inclination to substitutes, and trade-off of substitutes (David, 2014). Supplier bargaining powers are influenced by suppliers’ concentration, suppliers’ information and volumes, inputs differentiation, the impact of inputs on differentiation and costs, the threat of forwarding integration and presence of substitute inputs, and total purchases in the industry with its associated costs (David, 2014).
IBM can consider Michael Porter’s model to analyze its competitive forces driving its eCommerce. The study conducted on IBM Annual Report (2014) reveals that threats of entrants are low in the case of IBM because of the low probability of new entrants into the e-commerce industry. Very few organizations can be able to enter into the business solutions sectors like IBM. The key reasons are: a) IBM is widely recognized around the globe with its reputation, goodwill and brand image; b) one-stop shopping from IBM; c) unique, innovative and creative products ranges; d) high start-up; and e) continuous research and development in its products and services. These issues decrease the threat level of IBM and make barriers for the new entrants.
The case study of IBM discloses that the threats of substitutes are moderate on IBM e-commerce. Although there is room for substitutes in the solutions business and eCommerce industry, IBM has a very strong customer retention level and loyalty which decrease the threat level. In addition, there is less probability of differentiated competition to enter one-stop shopping experiences which also reduces the risk level. However, the open-source software and hardware in the e-commerce industry have increase threat levels for IBM e-commerce. In addition, some consumers do not require one-stop shopping which also increases the risk level for IBM.
According to the analysis of IBM Annual Report (2014), supplier bargaining power with IBM is low. In the eCommerce industry suppliers have very little power because of: a) the less able to supply all parts of a particular solution or to produce a particular software or hardware by a single supplier, which decrease their bargaining powers………………………..