1)What factors led to IBMs success during the 1960s and 1970s and its problems during the late 1980s and early 1990s?

IBM became the most dominant in the growing IT industry. A bold investment in the first family of products based on an integrated semiconductor chip and offering interchangeability of components caused IBM to set the dominant design for decades to come. Furthermore, IBM produced a series of related IT innovations. So successful was IBM that due to its monopolistic business practices, the US Justice Department outlawed monopolies by passing the Anti-Trust Act. In addition, IBMs leadership, strategy contributed to its success.

IBMs deep structural problems revealed themselves quickly. Factors that contributed to its problems included:

Being over confident, out of touch with its customer, and distracted by internal turf battles. The conversion of leasing-oriented business to sales-oriented contributed to the weakening of the IBM. IBM was blinded by mainframe thinking and missed the PC mark. While revenues softened IBMs fixed costs began to grow.Executives were isolated from growing problems by deep levels of hierarchy.

2) What did Gerstner do when he assumed the role of CEO in April 1993? Evaluate Gerstners approach to crisis management. How well did he perform as a turnaround manager? What challenges did he face as he attempted to position the company for growth?

Gerstners approach to crisis management was to put the customer first. He visited customers, analysts, and industry experts during the first few months to get input. Rather than break up the company Gerstner decided to turn it around by going to market as one IBM. Made senior executives personally responsible for their assigned customer and accountable for any problems that arose. Additionally, he hired many experts in order to get costs under control, head the trouble PC company brands, and organize internal IT organization. Also, due to the many complaints from customers, a customer relationship manager and a dedicated sales and service team were appointed for each key customer account.

Gerstner, performed great as a turnaround manager implementing change throughout the company effectively. IBMs stock price doubled as investors voted with confidence to fix rather than break up and sell IBM. Profits rose to 5 billion on revenues by the year end of 1994.

Gerstner faced many challenges to include a group of people in the middle who didnt want to transition. Many found it difficult to operate as a team, as a global entity. Additionally, IBM employees focused on selling current products, serving current customers, and executing current operations which did not contribute to the growth of new businesses.

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3)Why do large established companies, like IBM, find it so difficult to build successful and sustainable new businesses?

IBM was complaisant due to its excessive self-confidence. Large companys like IBM will focus on sustaining profits and loose touch with its customers. IBMs employees were focused on flawless execution and short-term results that intensified under the ruthless cost cutting necessary to survive. Also, when competing against large companies it can be difficult to compete against the others, because they are trying to come up with The next big thing too.

4)Evaluate IBMs approach to leading mature, high growth, and emerging business opportunities. What are the organization design and leadership models required to manage each type of business? How should a company like IBM (or AT&T, for example) manage the innovation process?

Instead of applying a single approach, IBM worked with business leaders to catergorize IMBs businesses as H1: Mature Business, H2: Rapidly Growing Business, and H3: Emerging Business. Each of theses horizons required different leadership and governance, a different approach to defining and executing strategy, a different way of organizing and managing different types of people, culture, and incentives, and a different approach to financing.