Written Case Analysis – IBM Quick Facts: John Akers became CEO of IBM in 1985. At this point, IBM had experienced a decline in earnings for the first time. This trend continued, creating various other problems until John Akers was forced to resign in 1993. IBM was perceived as a ruthless giant with enormous growth. Naturally, she was targeted for criticism from the entire industry and the government. As a result, IBM also attracted antitrust legislation. IBM lost ground as the personal computer industry began to prosper. He found that the old paradigm of closed proprietary systems, applicable to the mainframe business, was not relevant to PCs. Reasons for IBM's decline in recent times 1980s and early 1990s: · IBM's early investments had not yet paid dividends and planned future investments were high. · IBM products were treated as generic. PC parts were available cheaply and assembly was also cheap. Therefore customers opted for cheap clones. A high-cost manufacturer like IBM had an obvious disadvantage. IBM failed to read industry trends and still focused on the mainframe business to obtain greater revenues. It was losing market share in the PC and laptop segments, which were growing rapidly and had huge potential. IBM had excess labor resulting in heavy overhead costs. IBM was seen by customers as a single entity. So dividing the company into autonomous business units was not acceptable to customers. Customers would find it difficult to deal with IBM's different divisions. IBM also did not realize that software was becoming more important than hardware in light of the IT revolution. Louis Gerstner became CEO in 1993. The major policy initiatives he launched included a decision not to break up the company but to make it even more connected, focusing on networking and reducing bureaucracy to a minimum. Under his leadership, IBM's earnings showed a remarkable turnaround over the next two years, after posting a huge loss in 1993. PC Industry - Structural Analysis: (using Michael Porter's model) Based on information provided in the case, we can perform a structural analysis of the PC industry which will help us in better analysis of the case. Threat of new competitors: Entry into the industry has been easy due to its huge potential. However, the largest market share was held by only a few operators. Rivalry: Strong competition between a few major players with equal strength and potential. This led to an intense rivalry. Bargaining power of customers: High bargaining power due to strong competition and a large number of suppliers offering similar products to choose from. Bargaining power of suppliers: The bargaining power of suppliers is