IBM

Assignment 3: Select a specific company that IBM might acquire. Read about IBM – Wall Street Journal, Yahoo Finance, IBM’s website. What are they interested in? Which areas are they moving into? What appeals to them? Would you recommend that IBM buy this company? What would the advantages and disadvantages be? And, how would IBM accomplish the acquisition (debt, equity, etc.)?

 

IBM has innovative major business projects which are categorized in four parts: Smarter Planet, growing field, cloud computing, and data analytics. Smarter Planet is for health care, roadways, power grids, food production. The amount of mergers and acquisitions is the most in those. Growing field is for developing countries such as BRICs and countryside of developed country. Their cloud computing system is proud of high security and sustainability.

Their concept of M&A is to optimize businesses such as marketing, fundraising, selling and customer support by IT technology. For example, Last year, IBM acquired StoredIQ which has a possibility to help their existing enterprise business, Lifecycle Governance. Lifecycle Governance is a process used by analysts to develop hardware systems. However, this M&A has nothing to do with their new strategies such as Smarter Planet.

Their whole business design can be categorized three parts: 1, Hardware business 2, Software business 3, business in other category such as health care, roadways, power grids, food production. Acquiring StoredIQ would be part 1 because their technology supports hardware system. Therefore, they are able to conduct M&A in every part of businesses and reinforce their whole business design. Moreover, they are going to build “Smarter business” in part 1 such as hardware business and create Value Chain of “Smarter brand name”.

This idea is spreading whole international IBM branches such as my country, Japan. They already quoted this business design whole and intact from headquarter. As a result, IBM has created Global Value Chains. Recently, Dell went private. They have the same business design as IBM because competitors in IT industry can’t survive without proceeding to other categories. However, their hardware business failed. In my opinion, Dell neglect to conduct M&A for their hardware. In case of StoredIQ, IBM seems to consolidate their basis.