Case Ibm
...to success?
Nowadays, a company to grow up has to start new businesses, and this is a difficult point for them. Normally it is not for economic reasons but for cultural reasons (HBR Garvin 2004). Generally between 50% and 60% of the new businesses fail in their first six years. The principle problems when starting a new business are the following:
Normally big companies seem to be very enthusiastic to develop a new business, but not all the initial ideas become successes. In any case managers should know that current products and technology get obsolete. Therefore, they must focus on new opportunities and not only involved in core businesses (HBR Garvin 2004).
As the article “Emerging business opportunities at IBM” says, big companies use to have a very complex structure that means that the company is divided into several business units. These units are based in different brands that have their own profit and loss statements. Sales and distribution are organized geographically and by industry sectors. The result of this situation is that to start a new business there are too many parties required to support the new idea, because bureaucratic way of making decisions. This is also the case in big companies as IBM.
Another problem is that starting a new business is always time consuming. Experimentation particularly consumes a lot of time. New concepts are difficult to validate and the first reactions of the customers are not always good predictors of long-term sustainability. Therefore, managers expecting a quick return are often disappointed, some studies show that businesses took about seven years to become profitable and none of the businesses have a positive cash flow in its first two years (HBR Garvin 2004).
Managers inside new-growth businesses often feel tremendous pressure to quickly increase sales volume. But disruptive businesses cannot get big...
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