The return of IBM Essay Example | Topics and Well Written Essays - 4000 words

The return of IBM - rise ExampleIt should be noted that IBM enjoyed double digit net annual profit of 10-15% during the 1950-1980. These profitable eld were coupled with strong family growth. For a firm like IBM, this was remarkable as profits atomic number 18 ballooning with the companys expansion (Duby 1995). This put IBM on top of other firms and became the most admired corporation in America. IBM is the envy of the somatic world as it enjoys an incredible culture of high performance and excellence.However, the early mid-nineties saw the downslope of the corporate giant. Iwata (2005) attributes the seeds of these failures top the big shifts in the Information Technology (IT) market and the divulge market changes and developments which were disregarded by IBM in the late 1980s. These problems triggered the financial catastrophe which was experienced during the 1990s. The downfall is indicated by the abrupt collapse in the firms profit margin, stagnation and decline of its re venue and huge net losses. The indispensable performance of IBM together with the speculations on the firms future slashed its stock price by almost half. The company also has to layoff 200,000 employs in four years (Iwata 2005).Amidst all these dilemmas, IBM managed to stand up and recover through discordant measures. The entry of Louis V. Gertsner, Jr. as the firms new CEO when it is in the deepest trouble had helped the company to regain its beefy performance.This paper will tackle the downfall and recovery of IBM. The succeeding paragraphs will justify the importance of the IBMs sequel in corporate finance. another(prenominal) section will highlight the role and implication of innovation and ever-changing technology to the business organization. In order to fully get acquainted with IBM, this paper will bring a brief corporate profile of IBM together with the products and services it provides. The next section is an overview of the technology domain and the major competito rs of IBM. A comparison of their financial performance is also shown. This paper will also fall out light on major issues faced by IBM and their causes. The last section will give a brief outlook for the company. Truly, the case of the Big Blue is very significant in the field of corporate finance. As with other business entities, the firm had experienced profitable years along with troublesome ones. The solo difference that IBM shows is its capability of recovering after a great downfall. As a student, I rely that the downfall and recovery of IBM should become an imperative in a Corporate Finance course as it clearly shows the interdependence of the companys financial health and the firms overall performance. The case of IBM also shows the mistakes that firms usually make. Through this, students who atomic number 18 trained to become financial executives someday are cautioned and trained on how to better handle decision-making processes. Another point which is highlighted by th e IBMs downfall and recovery is the great impact of a firms external environment. As mentioned above, the companys downfall was triggered by its disregard of the changing markets and emerging trends. Thus, IBM teaches students that financial policies should take into account a firms external factors. It is equally amazing how IBM was able to cope and surpass all this financial pitfalls. The case of IBM is also an important