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Emerging Business Opportunities At IBM A Case Solution
Veteran people on EBO management system rather than young and less experienced ones were recruited. Debates were carried out in order to classify people for leading all three different horizons of growth. Competencies were scrutinized, and then decision made, and people were placed as leaders for different units. Moreover, recruitment and selection was an issue because there was an inherent fear among people of being judged in limelight based on their performance in the new roles. Therefore, picking and choosing was done.
Following questions are answered in this case study solution
Why did IBM (and large companies like IBM) find it so difficult to create new businesses?
What is your evaluation (strengths and weaknesses) of the “Horizons of Growth” (HOG) model? What are the distinguishing features of emerging, H3 businesses and their environments?
How did the EBO management system evolve over time? What was accomplished during:
• The Thompson era? Why was Thompson chosen?
• The Corporate Strategy era?
Discuss the 4 key elements of the current EBO management system? What is your evaluation (strengths and weaknesses) of the EBO management system?
Would you recommend the HOG model for your company? Why or Why not, must provide separate and specific answers for his/her company. Be sure to show student name and company name for each answer). If your company is already using this or a similar system, briefly describe how your company has implemented separate management systems.
Provide specific recommendations on how should Harreld:
• Deal with those businesses now reaching H2 status?
• Increase the number of EBOs? Be creative!
Case Analysis for Emerging Business Opportunities At IBM A
1. Why did IBM (and large companies like IBM) find it so difficult to create new businesses?
Creating new businesses come as a tough challenge to companies like that of IBM. Growing companies and corporations are comparatively more responsive towards emerging business opportunities than the established, big corporations with the majority of businesses categorized as mature or the market as saturated.
Large companies have a tendency of considering short-term results driven executions a lot and reward the management based on it, whereas long-term strategic business building is not paid the due share of attention. Secondly, these corporations are usually too involved in existing and/or mature business units that eventually broaden the barrier towards considering a new one. In addition to this, there is immense significance from the company on sustenance of current earnings that they completely overlook the potential for maximizing the price to earnings ratio. Besides this, since they are too habitual of dealing with established businesses that the market research figures or insights they have is merely mature business centric and fail to work out for new business units. All this leads to an eventual failure in the new, emerging business opportunities and creates a virtual barrier for these big firms.
2. What is your evaluation (strengths and weaknesses) of the “Horizons of Growth” (HOG) model? What are the distinguishing features of emerging, H3 businesses and their environments?
The horizons of Growth model is an effective method when it comes to formalizing the procedures for new business units or considering a new product launches. The major strengths of the model include its ability to classify business units based on their resource and administrative attention needs. It is also effective in a way that it aids in the forecast and planning by giving a fair idea of the stage a business unit currently is in and what profitability can be expected out of it. Besides this, it provides a sound ground for development of management hierarchy and assigning roles and tasks for various business units. It also allows a much better way of monitoring and tracking the performance of a business unit and then contrasting it with the intended goals. The downside to this model, however, mainly lies in question so as to how a business unit will be classified. The classification of businesses into three stages is highly subjective and debatable. Moreover, the model makes the process that has to be inherently informal and open, quite inflexible and rigid.
The major distinguishing factor for a business unit in H3 stage is that the business is generally less developed. The businesses require visionaries and strategists who can work in ambiguity and yet create and place strategies. Moreover, a greater classifying factor is the KPI. The progress of converting an idea into business is way more material and observable than indicators for other type of units.
3. How did the EBO management system evolve over time? What was accomplished during:
The Thompson era? Why was Thompson chosen?
The Corporate Strategy era?
Managers could have easily classified the businesses under the horizon they intended as the classification was quite subjective. So Gerstner identified the need for a shepherd for the EBO management system. As a result of this Thompson was put in charge of EBO management systems. Thomson was brought because of his experience with IBM and his past management of several business units and initiatives. Moreover, he was widely respected and known throughout the organization. Thompson began by speaking frequently about the issue with the employees and even setting up examples by putting people ‘in doghouses’. He made the team to focus of major 7 EBOs rather than making every division look for their own. In addition to this, he began reviews, reports and meetings which were intensive and with one to one after meeting interactions. He made the finance separate the expenses for these EBOs so that the tracking of performance was clear.
After Thomson’s retirement, there was a corporate strategy era that made things more formal and had the system placed more rigidly. Staffing was done, and as opposed to the earlier practice, experienced people were brought in and were put in charge of the EBO system. Harreld held meetings with the hope and appeal for increasing group level initiatives. EBO leaders’ forum was made in order to share best practices, and an ‘EBO Leaders guide’ was published with quarterly reports being sent on the progress of the new business units.
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