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Generating Higher Value at IBM A Case Solution

Solution Id Length Case Author Case Publisher
2792 2141 Words (8 Pages) Benjamin C. Esty, E. Scott Mayfield Harvard Business School : 215058
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The company has done this overall by making sure it identifies the bottlenecks which are hindering the success which was originally planned. The company made use of experts who were able to recognize the hindrances and came up with exceptional ideas to ensure that IBM became a world-class company. One important factor for the success was basically the financial experts who were able to take key decisions at the right moment, which allowed the company to excel in a very short amount of time. IBM also managed to improve its perception in the industry by focusing on the needs of the communities and making tailored changes according to the different customs and traditions all around the world. Apart from that, the implementation of the latest advanced technology really helped the company to understand the bulks of data and make better use of them. As previously, that data was literally of no use since its collation and analysis were really difficult to comprehend for the employees involved.

Following questions are answered in this case study solution

  1. Why did IBM create and publicly announce the 2010 EPS Roadmap in May 2007?

  2. How would you assess IBM’s financial performance both before (from 2004-2006) and after (from 2007-2009) announcing the 2010 Roadmap?

    a. Analyse case Exhibits 1, 2, 3 for levels, trends, changes in financial performance

    (Hint: what has happened to IBM’s ROE (return on equity) and cash flow over the 10 years? How has this changed?

  3. Was the 2010 Roadmap successful?

  4. How does the 2015 Roadmap differ from the 2010 Roadmap? Has the 2015 Roadmap been successful so far (up to May 2014)?

  5. What should CEO Rometty and CFO Schroeter do as of May 2014: affirm the 2015 EPS Roadmap (and the $20 target), adjust it, or abandon it?

  6. What should Sofia Johnson recommend to her clients – buy, hold, or sell IBM shares?

Case Analysis for Generating Higher Value at IBM A Case Solution

1. Why did IBM create and publicly announce the 2010 EPS Roadmap in May 2007?

It was a requirement for the company to choose the important component that would be used to select resources that would be used to outshine the social venture. The research was directed, and important evaluations were availed to make sure that changes implemented in reality brought success to IBM. Useful data was collated and assessed to identify whether the resources brought efficiency within IBM or not. Thus, it was revealed that the company could improve more if it focused on maintaining better services and relations with the company staff. So, the company had to shift the paradigm to focus more on these aspects in order to ensure that IBM, on a general level, improves. 

Developing improved associations and partnerships within the company enabled IBM to create its valuable resources with the aid of multiple governmental institutions and diverse communities throughout the globe. This association was largely determined by mounting exorbitant standards, strengthening communal and educational objectives, and focusing on sponsoring innovation which is vital when talking about the intricated social complications impacting the entire community. And thus, the company considered this issue to be important and discussed this in its corporate strategy, which also included ethical practices for the relevant stakeholders involved and sponsoring initiatives aimed to improve the general community well- being. And this could be easily understood that the company was involved in improving the services rather than the products on offer. Resultantly, this tactic led to more partnerships, as prospective partners found the changing strategies to be more intriguing than before. So, this can be understood that once objectives are clearly planned, and the way to achieve them is also straightforwardly comprehendible, then more potential partners will be willing to join hands. And with time, these associations developed into a "grid" as the stakeholders were enabled to make decisions on an individual level, which in turn allowed them to make changes that improved the social well-being of the world communities originally targeted.

2. How would you assess IBM’s financial performance both before (from 2004-2006) and after (from 2007-2009) announcing the 2010 Roadmap?

a. Analyse case Exhibits 1, 2, and 3 for levels, trends, and changes in financial performance
(Hint: what has happened to IBM’s ROE (return on equity) and cash flow over the 10 years? How has this changed?

The financial statements of the company directly summarize the stream of operations of IBM. Moreover, the financials also tend to show the performance, compared to the last financial year and also display the aims to be achieved in the subsequent financial year. Talking about the period 2004-2006, the revenue somewhat fell from $96,293 Million to $91,423 Million. And in the period 2007-2009, the revenue fell from $96,785 to $95,758Mn. However, the net profit increased from $7479 Mn to $9,492 Mn. Secondly, in the period between 2007-2009, the profits also increased from $ 10,418 Mn to $13,425 Mn. Also, the EPS increased in this period from $4.47/share to $6.2/share between 2004-2006, and in 2007-2009, the same increased from $7.27 to $10.12. In terms of the assets, in 2004-2006, these decreased from $111,003 Mn to $ 103,234 Mn, and in the period between 2007-2009, the same fell from $ 120,431 Mn to $109,022 Mn. The total liabilities also fell in both periods, in 2004-2006, from $79,315 Mn to $ 74,728 Mn and in 2007-2009, from $91,961 Mn to $86,267 Mn. In terms of return on equity (ROE), from 2004-2006, it increased from 23.6% to 33.3%, and in periods between 2007-2009, it further increased from 36.6% to 59%.

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