INFORMATION TECHNOLOGY: Case Discussion

MOR 559 – Strategic Renewal: Discussion QuestionsMOR 559 – Strategic Renewal: Discussion Questions

University of Southern CaliforniaUniversity of Southern California

©2000, Michael A. Mische©2000, Michael A. Mische

INFORMATION TECHNOLOGY:INFORMATION TECHNOLOGY:

Case DiscussionCase Discussion

Dell ComputerDell Computer

IBMIBM




Dell & IBM…Dell & IBM…The Dynamics of the Computer The Dynamics of the Computer IndustryIndustry1. It is 1994 and you are a member of IBM’s BOD. Your company’s stock price

is about $27 per share (1967 levels): What are the competitive forces confronting IBM and to what extent were these

predictable? What factors contributed to IBM’s loss of market share from 46% to less than 10%

of the PC market? You have fired Akers as a CEO; why do you hire Lou?

2. It is 2000 and you are still on the BOD of IBM. You note the following:

What major conclusions can you reach regarding the above performance (what do these performance measures indicate)?

LG has made a presentation and shown you the barbell; what is your impression of his synopsis of the market?

Where are the profit margins for each sector heading? Where should IBM’s strategy lead it and why?

PERCENTAGE CHANGE IN SALES

IBM SUN Dell HP Microsoft

PC (2.3%) -- 53% 20% --

Servers 3% 29% -- -- --

Software 6.3% -- -- -- 23%




Dell & IBM…Dell & IBM…The Dynamics of the Computer The Dynamics of the Computer IndustryIndustry3. What are Dell’s sources of competitive advantage over IBM, Compaq and

Gateway? To what extent are these sources truly differentiating? To what extent are these sources sustainable and for how long? Traditionally, what was IBM’s main strategy for competing?

4. If you were invited to meet Michael Dell, what would you tell him the near-term (3-year period) holds: What are or could be the new sources of competitive advantage? What is the extent and impact of competitive threats coming from Compaq,

Gateway or HP? What should Dell do?

5. Thinking about IBM’s strategic position and performance from 1994 to-date, can you think of any other companies that have confronted similar circumstances and were successful at renewal? Which companies? How are they similar? What did the other companies do?

6. Thinking about Dell, where is it in its evolutionary cycle as a leader, and can it continue to be a leader? What must Dell do to retain its leadership position?

7. If you were LG, How would you assess the acquisition of DEC by Compaq? To what extent, do you believe, Compaq represents a threat? How viable is Compaq’s strategy and why?

INFORMATION TECHNOLOGY: Case Discussion

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