Ibm Business Model

Business model

Value proposition

• Innovative and leading edge technology due to high R&D activities
• Create value by reducing a client’s operational cost or enabling new capabilities that generate revenue through business insight and IT solutions.

Key activities

• Provide business insight, IT solutions, professional services, and application management services for the company’s clients.
• Manufacture and sell IT product
• Invest in financial assets, leverage with debt, and manage the risks for IBM and its client (Global Financing)

Key partners

• Partnership and joint ventures
• IT product manufacturing companies
• Distributors
• Suppliers

Customer segmentations

• Companies with operation involving IT
• Government and institutional
• Individuals

Revenue structure

• Professional services fees
• Sale of software and license fees
• Sale of computing power, computer systems, and data storage products
• Revenue earned from financing services

Key resources  

• Software and licenses such as Websphere, Tivoli, Lotus, Rational, and Business Analytic
• Business and IT solutions
• Computer system and IT products including data storage products
• Brand
• High skilled professionals and consultants

Channel

• For services, business-to-business consulting projects through personal relationship and various means of communication.
• For  IT products and software, local IT markets/shops, B2B consulting projects

Customer relationship

• Reputation and quality
• Building personal relationship through personal contacts and various means of communication.

Cost structure

• R&D expenses
• Professional salary and benefit payments
• IT infrastructure
• Raw materials

Strength

• Global Intelligent utility Network
• Strong distribution channel
• Leadership position in the market
• Effective R&D activities

Weaknesses

• Reliance on the Americas
• Dependence on suppliers

Risk explicitly identified by the company

1. IP portfolio and IP protection

1. No strategy to manage
2. Recommendation: Operate its business in high IP protection law and enforcement

1. Economic environment

1. No strategy to manage

1. Relationship with suppliers and distribution channels

1. No strategy
2. Increase number of suppliers/contract manufactures and distribution channels  

1. Currency and interest rate fluctuation

1. Hedging and derivatives

1. Failure to innovation initiatives
2. Loss of critical skilled personnel
3. Substantial costs for environmental matters

Risk not identified by the company