1. What factors led to IBM’s success during the 1960s and 1970s and its problems during the late 1980s and early 1990s? 3 pts. 2. Q: What did Gerstner do when he assumed the role of CEO in April 1993? A: Gerstner realized that rather than break up the company, he could turn it around by going to market as “one IBM.” To prevent customers from leaving in droves before he completed the turnaround, Gerstner called on each senior executive to go out to a group of customers and “bearhug” them. He made the executives personally responsible for their assigned customer accounts and accountable for any problems that arose. At the same time, he asked each of the executives to write two papers, one on the executive’s business and the other on key issues and recommendations for solving problems and pursuing opportunities.
Q: Evaluate Gerstner’s approach to crisis management. How well did he perform as a turnaround manager? A: I’d have to give credit to Gerstner. He seemed to know where the problems lied within the company and viewed himself from a customer standpoint, rectifying customer concerns but from a corporate head standpoint. Based on the following information, this is how he did it:
“The sales organization, which had been organized by geography and product, was reorganized into global sales teams. In response to numerous customer complaints, a customer relationship manager and a dedicated sales and service team were appointed for each key customer account. These teams were grouped within larger vertical industry teams, and product specialists were assigned to each.
The product specialists served as boundary spanners, moving back and forth between focused product groups and key account teams, taking product knowledge to the field and customer input back to the product groups. Product specialists reported to the product organization, but incentives rewarded increased sales of their products through industry sales teams.” It is as if Gerstner knew the problematic areas that made the company fail to meet satisfactory levels and although it was a tough call, Gerstner’s turnaround plan seemed a success and as a masterplan!
Q: What challenges did he face as he attempted to position the company for growth? 5 pts. A: The changes Gerstner proposed was met by some or much opposition. Many that had been around the company for quite some time, felt as though the changes that Gerster was implementing meant the demise of the company that they knew. The methods of which Gerstner was using from a manager’s standpoint seemed a bit unorthodox and didn’t fit well with the IBM culture and business model. Here is what was mentioned as a challenge Gerstner faced:
“One group of managers—those who ran IBM’s country organizations—found the move to “One IBM” especially difficult. They believed global managers could not be relied upon to make the right choices for local markets and that initiatives and instructions from IBM corporate needed to be “customized” for particular countries. The differences came to a head when Gerstner found out that his notes to employees were being rewritten by country managers to “better fit their environment.” The senior executive responsible for the country managers was fired, and many country managers resigned. Those who stayed were rapidly elevated to key positions. Despite pockets of resistance, Gerstner was impressed by employees’ capacity to absorb change:”
So based off the
3. Why do large established companies, like IBM, find it so difficult to build successful and sustainable new businesses? 3 pts. 4. Evaluate IBM’s approach to leading mature, high growth, and emerging business opportunities. What are the organization design and leadership models required to manage each type of business? How should a company like IBM (or AT & T, for example) manage the innovation process? 7 pts. 5. What challenges did Sam Palmisano face as he assumed control of IBM in March 2002? Can a company like IBM (or AT & T) be organized for both innovation and efficient operation – can it be both “big” and “small”? What advice would you give Palmisano at the end of the case? 7 pts.
NOTE: You must respond to these questions in your own words i.e. do not copy straight from the case study – provide your interpretation and analysis.
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