Economics and Swot Analysis Essay

Before we start with the swot analysis of IBM lets understand what actually the SWOT is . The full form of SWOT is strength ,weakness opportunity and threat . so the basic meaning of swot analysis of any company is to judge this four factors of any company at certain given period of time . On the other hand the full form of PEST is Political, Economic, Social and Technological and the analysis of these four factors of any organization is called pest analysis. SWOT ANALYSIS : Strengths: 1. Founded in 1896 as the Tabulating Machine Company by Herman Hollerith, in Broome County, New York it is very much old and organization of high repute . 2. the leading IT Manufacturer and service provider . the 4th largest technology company and 2nd most valuable global brand . And they are consistently in top 10 for last 20 years . 3. Company is handling 95% of all business in the 1000 most profitable companies in the US. Having his branch in almost 200 places in this world. 4. Its value almost $70 billion. They have over 450,000 employees worldwide. 5. The first company who decide to establish dedicated labs for research on technology innovation . Weakness 1. The company has become too large that the operating cost of the company is very high . 2. The workforce who are working is very much efficient but also very expensive in nature 3. IBM is mainly dependent on corporate clients the nature of them is changing day by day . 4. They have vary much low share in pc market which is a growing segment right now Opportunities 1. Increased globalization is an important opportunity that can be exploited by IBM in order to balance the fluctuations in different economies. 2. IBM’s small-medium business (SMB) has improved over the years but there is definitely a need to increase its market share to have an overall competitive edge. 3. IBM needs to maintain a competitive edge in the marketplace and innovation is key and working with IT-related companies to create new products in the ever changing market; use patents to generate revenue. Threat 1. The fact that they are completely dependent on Microsoft (in their computer services division) could be a huge problem if anything ever happened to them. 2. Hackers and sensitive information can be exposed and exploited by individuals and IBM needs to be innovative with regards to firewalls and protective software. 3. The supply chain has very few suppliers, leaving IBM very little to negotiate with or switch to HP, Sun Microsystems are all competitors and are all threats to IBM’s bottom line. Their competitors are able to create cheaper products and make more a considerable profit. Smaller companies that can move faster and provide less expensive products and services than IBM can become very costly to IBM’s more lucrative bundles focusing more on larger companies with big budgets PEST ANALYSIS Political factors: The heavy taxes in the UK make the IBM server products increase the weakness on the price factor, especially on the premium price IBM products. Economic factors: The healthy economic environment with strong and stable GDP in the all regions provides a good market for the product and service business of IBM. Although the GDP increase rate is not fast, the stability could balance this disadvantage element. The service industry in the world contributed nearly 73.4% to the GDP in 2006. That indicated that the high value added service market in the world is matured, and the customer experience on the service would be higher or more difficult to be satisfied. Socio cultural factors: Population and the internet users, in 2006, the population in just U.K it was nearly 60,609,153, and according to CIA, (2007), more than half of these people (37.6 million in 2005) were internet users. The well known about the internet indicated the opportunities of relevant products and services Technological factors: Internet, A survey from CIA, (2007) shows that there were 6,064,860 Internet hosts in 2006, and more than 400 Internet Service Providers in 2000. In this sophisticated market, the opportunity and competition will exist together.