Case Study

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Discussion 1. What competences has IBM had to invest in arising from its transformation from a ‘product-centric’ to a ‘service-centric’ organization? The competences that IBM had to invest in arising from its transformation from a ‘product-centric’ to a ‘service-centric’ organization relate to the knowledge, ability, commitments, and skills. The knowledge refers to the amount of information and understanding IBM has towards its current situation and the best solution available. Gerstner, the new CEO of IBM in the year 1993, had the competence to analyze and diagnose the problem that existed in the company: costs were excessive, no customer loyalty, and was too bureaucratic. Furthermore, IBM made it possible to transform its path, through its extraordinary ability, commitments and skills. The company eliminated its weaknesses, but maintains its competitive advantage, which is to provide integrated solutions for customers. IBM was very committed with its strategy, and acquired the relevant resources and skills needed to perform its services. With the lead of Gerstner, IBM was determined to recover its financial position and its industry leadership position. The decision led to a very different approach, and was now based on knowledge, experience and expertise of personnel. Gerstner realized that the cost of changing IBM to a ‘service-centric’ business was less than the cost to stay in the ‘product-centric’ business, and that changing it would lead to a better outcome in the long-term. IBM was able to foresee the problem that existed, the trend that occurred, and the ability to change. 2. How would you describe Louis Gerstner’s implementation style of IBM’s competitive strategy in the early 1990s? After analyzing through the problem and trend that IBM is facing in the market, Gerstner implemented a new competitive marketing strategy for IBM. He positioned

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