Despite IBM's dominance in the mainframe market, which was assisted by US government contracts and provision of supplies to major companies worldwide, the company failed to adapt to significant changes in other markets. The computer market has become increasingly diverse and has seen the emergence of numerous aggressive new players. These new players have enjoyed more agility than IBM due to their flexible organizational structures, enabling them to respond more effectively to technological advancements and better cater to customer needs.
The market has fractured and become fiercely competitive, resulting in IBM mini-systems losing ground to Digital while personal computers have been overwhelmed by cheaper IBM-compatible options such as Amstrad, which offer a broader software selection. As a structural reaction, IBM has divided into five autonomous divisions - mainframes, mini-computers, personal computers, telecommunications, and new
...technology - each with its own responsibility for product design, manufacturing, sales, and profitability.
The importance of ownership in determining business goals and operations cannot be overstated. Whether a business is privately or publicly owned is a significant factor that deserves consideration. Where a business is wholly or partially owned by the state, such as in the case of coal mines or local hospitals, there are important questions around management control and public accountability that must be addressed. In this section, we will delve into both these aspects of ownership and explore their implications for business operations. One company that has taken a unique approach to employment practices is IBM. At IBM, individual employee relationships with the company are highly valued, with personal wage negotiations, immediate access to management when grievances arise, and an internal labour market that promotes mobility and job
security being prominent features of their approach.
Research shows that many top companies have engaged in widespread culture change programmes, which may not be as distinct as famous greenfield site examples in terms of extending levels of identification between employee and organization (Storey 1998). For white collar and professional employees, measures designed to create a performance-conscious culture or environment have been spreading. As a key element in transforming employee attitudes within the overall process of managing a culture change, performance-related pay and new appraisal systems are often seen. IBM built up its dominance by undercutting its competitors in vulnerable market sectors and paying for it through excess profits from customers who had little choice, according to an important book on IBM (Delamarter, 1988) by a senior economist who worked in the US Justice Department on the anti-trust case against IBM. The authors of the book argue that IBM's success is due to a strong central philosophy initially laid down by its charismatic leaders, the Watsons. They present excellence in management as a simple and appealing model for IBM's success.
Contrary to popular belief, IBM owes its success to the benefits of having a monopoly, as stated by Sampson in 1995. Outsourced services like catering, security, and IT, along with various HR functions (including training, retirement planning, and counselling) can be outsourced. This has led to the creation of Workforce Solutions, a spin-off company established by IBM in 1992 for outsourcing services.
Workforce Solutions was outsourced by IBM to handle its HR staff functions, while also being able to offer its services to other clients. The following section delves into IBM's national variations, where the analysis of Hofstede's four
dimensions is used to define national culture as the shared mental programming rooted in common history and reinforced through everyday life and cultural institutions. These dimensions are based on surveys conducted in the 1970s with IBM employees in forty different countries.
The expectation is that IBM has a potent and all-encompassing corporate culture. Thus, uncovering significant national differences would demonstrate the dominant influence of national culture as a contingency variable, exceeding the believed impact of other variables such as size proposed by Hickson et al. Hofstede's method was not unique, but it challenged traditional thinking and has garnered extensive dissemination and discussion.
Hofstede’s interpretation of factor analysis yields four dimensions. The first is power distance, which refers to how evenly power is distributed in a society. Societies with high power distance believe in inequality and often assume that superiors and subordinates are different types of people. They also view few individuals as independent and accept power as a given. The second dimension is uncertainty avoidance, which reflects how threatened members of a society feel when faced with ambiguous situations. Societies with high uncertainty avoidance establish formal rules to protect themselves and do not tolerate deviant behavior. Conversely, societies with low uncertainty avoidance prefer few, flexible rules, are willing to take risks, accept dissent, and view authority as a means of serving everyone. The third dimension is individualism-collectivism, which represents opposite ideals.
According to Hofstede's research on cross-cultural differences, individualism suggests that individuals and their families should uphold a loose social framework while collectivism adheres to a more rigid system that separates in-groups and out-groups with a focus on loyalty. Additionally, the concept of masculinity pertains to men
being dominant, ambitious, and independent with an emphasis on materialism. Interestingly, IBM exhibits a strong corporate culture, as noted by Rushdie (1991). However, while Hofstede's study included forty nations, it does not necessarily uncover specific cultural patterns.
The argument is that IBM is not likely a typical employer in certain nations, and there is no indication that the cultural profile of individuals from different nations has a systematically consequential causal influence (DeLamarter 1986). A PWCC senior consultant gained insight into knowledge management consulting at IBM, enabling them to catch up quickly and exchange insights on new opportunities. Employees introduced each other to consulting practice members through conference calls, expanding connections between practitioners from both organizations. These connections led to multiple business opportunities that teams pursued.
Numerous new connections were made, raising awareness of abilities and expertise, and creating opportunities for future sales.
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