Introduction
The world has grown increasingly complex, resulting from the greater interdependence
among world economies (Thompson, 2002). Successful organization is largely determined
by how well the organization adjusts all its tangible and intangible properties to keep itself
on track with its surrounding (Armenakes & Bedeian, 1999). Strategy was concerned to
manage firms activities and resources to the environment in which it operates. This essay
will analyse the micro and macro external environment in the part five years (2000 to
2006) of IBM Company by using PESTEL and five forces model to analyse in the first
part. The second part will discuss about the advantages and disadvantages of the two
possible alternative strategies for IBM.
Part 1: Analysis of Micro and Macro External Environment
1.1 PESTEL Analysis
The external factors can be divided into six broadly categories which are political,
environment, social, technology, environment and legal (Johnson, 2005). Such external
factors usually are out of the firms control and sometimes present themselves as threats. In
this case, political factor, environmental factor and technology factor will be used to
analyse the computer technology industry.
Political factor
The Iraq War is an ongoing war which began with a United State led invasion of Iraq in
2003. This war affected to the world economy, especially, USA who directly war with Iraq.
Fear of a possible U.S. led war with Iraq soured investors sentiment in U.S. stock market.
Furthermore, technology stocks in European market plunged following down results from
sector giants Microsoft and IBM stocks fell down (CNN.com). This is because of everyone
is negative on Iraq and in combination with the darkness surrounding of technology.
However, IBM Company is strong enough to fight with this pressure as its revenue more
than 50% is from outside U.S.
Environmental factor
All computer technology manufactures are the global companies, thus, they can be
affected by some environmental factors that happening around the world. For example, in
2002 and 2004, there were widespread outbreaks of an illness such SARS and bird flue
respectively (BBC News). These situations could adversely effect to all businesses that
operate especially in China. These crises also effect to IBM in terms of ability to source
and deliver products and services to its customers and customer demand since IBM has
many suppliers in China and Asia countries (IBM Company)
Technology factor
Technology affects directly to computer technology industry because computer technology
can be used as a tool to invent many technological products such as x-ray machine,
aeroplanes, talking dictionary, video game and etc. Moreover, computer technology has
