Business Process Re-Engineering

  • Course Name and Number        :        Business Process Re-Engineering - 115

  • Program / Major                :        MBA (Innovative Management)

  • Submission Date                :        November 10, 2008

  • Date Program was Started        :        February 4, 2008

  • Type of Course work        :        This course work is complete research based                                                analysis of IBM’s downfall and revitalization                                                through re-engineering. Research has been done                                         referring books and from internet.

  • Research Question or Problem:        Critically examine and discuss why reengineering                                        became necessary at IBM. Examine the main                                                factors employed by Louis Gesrtner to successfully                                         reengineer IBM?

Executive Summary

A company’s negligence towards its customers’ needs and requirements can create a complete disaster. Nevertheless, re-engineering of the process which needs attention can again revitalize the company. In this course work we will critically examine and discuss why reengineering became necessary at IBM by looking at the problems they faced and the route causes of those problems. We will also look at the main factors employed by Louis V. Gerstner Jr. to successfully reengineer IBM.

Introduction to IBM

“The company which became IBM was founded in 1896 as the Tabulating Machine Company by , in . It was incorporated as  on , , and was listed on the  in 1916. IBM adopted its current name in 1924, when it became an international manufacturing company”. (Kelly and Aspray 2004)

In 1981 IBM introduced the IBM Personal Computer which is the original version and progenitor of the IBM PC compatible hardware platform. IBM sold its PC division to the Chinese company Lenovo on May 1, 2005 for $655 million in cash and $600 million in Lenovo stock. IBM was recognized as one of the "Top 20 Best Workplaces for Commuters" by the U.S. Environmental Protection Agency (EPA) in 2005. This was to recognize the Fortune 500 companies that provided their employees with excellent commuter benefits that helped reduce traffic and air pollution.

IBM’s downtime

IBM was at a very critical stage as it was constantly incurring losses and their efforts to bring back the organization to the profitability stage failed intensely. The company faced problems due to its negligence towards its customers’ needs and requirements, as a result at the end of financial year 1992 IBM had a loss of around 8.10 billion US dollars. (IBM Timeline 1993)

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(IBM's revenue and net income 2006)

If we analyze the revenue growth of IBM in the graph above, we can see that it was making a gradual increase in its revenue from 1980 to 1990 and thereon there is an abrupt decline from 1990 to 1993. This was the time when Louis V. Gerstner Jr. was appointed as the CEO of the International Business Machine, he did his magic and set about revitalizing the company, however it took him a very long time and enormous effort to again take IBM to its apex.

Note: If we ...

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