Answers to Questions
1. What is IBM’s “Smarter Planet” business strategy? How does this strategy relate to IBM’s mission and values?
The strategic marketing process consists of three phases—planning, implementation, and evaluation. The planning phase consists of three steps—situation analysis, goal setting, and the marketing program. IBM used the strategic marketing process by applying each of the three steps in the planning phase to develop its “Smarter Planet” strategy.
a. What is IBM’s “Smarter Planet” business strategy? A strategy is an organization’s long-term course of action designed to deliver a unique customer experience while achieving its goals. IBM’s “Smarter Planet” business strategy is based on the idea that that the next major revolution in the global marketplace will be the instrumentation and integration of the world’s processes and infrastructures generating unprecedented amounts of data. This knowledge can help reduce costs, cut waste, improve efficiency, and increase productivity for companies, industries, and cities.
b. How does this strategy relate to IBM’s mission and values? This strategy complements IBM’s expressed mission and values. IBM’s mission statement (stated in the case) is to:
· Strive to lead in the invention, development and manufacture of the industry’s most advanced information technologies, including computer systems, software, storage systems, and microelectronics.
· Translate these advanced technologies into value for our customers through our professional solutions, services, and consulting businesses worldwide.
IBM’s values (stated in the case) emphasize:
· Dedication to every client’s success.
· Innovation that matters—for our company and for the world.
· Trust and personal responsibility in all relationships.
The “Smarter Planet” strategy clearly promotes leadership in the delivery of information technologies that provide valued customer solutions (mission) and a commitment to the customers’ success through meaningful innovation, and professional behavior.
2. Conduct a SWOT analysis for IBM’s Smarter Planet initiative. What are the relevant trends to consider for the next three to five years?
As the first step in the planning phase of the strategic marketing process, a SWOT analysis is part of a situational analysis a firm conducts to: (1) identify industry trends; (2) analyze competitors; (3) assess itself; and (4) research consumers (see Chapter 2). SWOT is an acronym that describes an organization’s appraisal of its internal Strengths and Weaknesses and its external Opportunities and Threats.
a. A SWOT analysis for IBM’s Smarter Planet initiative. Listed below is a brief, non-exhaustive SWOT analysis for IBM and it “Smarter Planet” initiative or strategy:
– Well-known global brand name.
– New technologies and patents.
– A planning process that included online discussions among 50,000 employees.
– A clear concise mission statement.
– IBM’s size may make change difficult.
– Products such as PCs and hard disk drives are becoming commodities and are not customizable.
– Once the values, mission, and strategy are determined employees must create the detailed plans for accomplishing them.
– Growth markets such as China, India, Brazil and Africa.
– Business analytics and optimization.
– Cloud and smarter computing.
– Shift to custom-made technological solutions.
– Demand for Smarter Planet solutions will depend on interest in change rather than just reaction to problems.
– Demonstrating success will require accurate and timely measurement of relevant outcomes.
b. The relevant trends IBM should consider for the next three to five years.
· Environmental Trends.
– Fewer trade barriers.
– Growth of developing economies.
– Increasing access to the World Wide Web.
· Customer Trends.
– Desire for a “globally integrated enterprise.”
– Desire for “connectivity across technologies.”
– Desire for “custom-made technological solutions.”
3. How can IBM communicate its strategy to companies, cities, and governments? How is Watson a part of the communication strategy?
a. Communicating IBM’s strategy to companies, cities, and governments. IBM’s marketing and communications professionals developed a marketing plan that included:
· A “Letter from the Chairman” Sam Palmisano, describing how the Smarter Planet initiative represented an infusion of intelligence into the way the world actually works.
· Print and television advertising focusing on IBM’s ability to improve the world now.
· Website information that included videos, statistics, and industry reports.
· Publicity events, such as the appearance of the IBM computer named “Watson” on the TV game show Jeopardy!
b. Using Watson a part of IBM’s communication strategy. While there may be short-term costs involved in shifting IBM from commodity-based businesses to customizable businesses, IBM believes that the transformation will provide growth for the company and its employees, success for its customers, and improved value for its stockholders.
4. What are the benefits of the Smarter Planet initiative to (a) society and (b) IBM?
a. Benefits to society. IBM’s Smarter Planet strategy benefits society by providing solutions for forward-thinking organizations that share a common outlook: they see change as an opportunity and they act on possibilities, not just react to problems. The solutions also help reduce costs, cut waste, improve efficiency, and increase productivity for companies, industries, and cities.
b. Benefits to IBM. While there may be short-term costs involved in shifting IBM from commodity-based businesses to customizable businesses, IBM believes that the transformation will provide growth for the company and its employees, success for its customers, and improved value for its stockholders.
5. How should IBM measure the results of the Smarter Planet strategy?
Since introducing the Smarter Planet strategy, IBM has collaborated with more than 600 organizations around the globe. In each case, there are different measures of the results of “smart” solutions. These include reduced traffic congestion, reduced inventory levels, and improved customer service. The U.S. Department of Energy measured power usage and found that consumers with smart electric meters saved 10 percent on their power bills. Retailers who implemented smart systems cut supply chain costs by 30 percent, reduced inventory levels by 25 percent, and increased sales by 10 percent. The Memphis Police Department reduced crime by 28 percent.
IBM was recently ranked number two (behind Coke) in Interbrand’s brand valuation survey with a value of $70 billion. The company has become an excellent example of how to manage change in a large company at a time when small business start-ups and entrepreneurs are the focus of media attention. The Smarter Planet initiative now has more than 2,000 projects worldwide and is one of the reasons IBM’s stock price has increased more than 70% since 2004. The use of Watson in the marketing program was also extremely successful, generating 1.3 billion media impressions and $50 million worth of media exposure.
In January 2012, IBM appointed Virginia Rometty, its VP of Sales, Marketing, and Strategy, as its 10th CEO (replacing Palmisano). The appointment is viewed as an indication of the importance of marketing and the new strategy at IBM.