Strategic analysis of IBM from 2000 to 2005 Essay

Strategic analysis of IBM from 2000 to 2005 - Essay Example 133). The company has recently adopted an integrated supply, manufacturing and distribution operation into one operating unit. In addition to its own manufacturing operations, the company uses a number of contract manufacturing (CM) companies to manufacture IBM-designed products. In their website, IBM stated that it spends nearly $2 billion a year with diverse suppliers, for example, greater than any other technology company. Yet more than managing their expenditures, IBM had emphasized a responsibility to hold themselves and their suppliers to high standards of behavior. This means complying with all applicable laws and regulations. They seem to support a strong commitment to work with suppliers to encourage sound practices and develop sound global markets. Despite their company's strong performance in the recent years, IBM is aware that it competes with several large players in the various industries it operates in. In the consulting and outsourcing industry, it faces stiff competition from Accenture and Capgemini. In the application infrastructure software business, IBM faces competition from BEA Systems, Oracle, Sun Microsystems and Microsoft. In software, IBM is second to Microsoft, the world's largest software company. ... This is useful, because it could assist people in understanding both the strength of an industry's current competitive position and the strength of a position the industry is looking to move into. In analyzing the IBM's competitive environment, Porter's Five Forces will delineate that there are five important forces that determine competitive power in a situation: Supplier Power, Buyer Power, Competitive Rivalry, Threat of Substitution and Threat of New Entry. Supplier Power In their website, IBM mentioned that it developed an IBM Global Procurement, which is part of the Integrated Supply Chain organization. This arm of the IBM acquires goods and services for IBM and its clients. This is done with flexibility to sense and react to changing market dynamics. With few exceptions, this organization is the only group authorized to commit IBM funds to external suppliers. Furthermore, IBM explained that their Procurement fulfills its mission by using Global Commodity Councils to strategically source goods and services through a network of international, regional and emerging suppliers for IBM's varied businesses. Procurement is conducted in an environment of pervasive e-procurement across all steps of the acquisition process - from initial market segment intelligence and strategic sourcing, to tactical order placement, invoicing and electronic payment. With enhanced supplier interaction, Procurement takes responsibility to maintain IBM's competitiveness by enga ging suppliers to provide competitive advantage in cost, technology, innovation, speed to market, quality, and supply assurance. This responsibility includes activities such as supplier selection, negotiation