MOR 559 – Strategic Renewal: Discussion Questions University of Southern California ©2000, Michael A. Mische INFORMATION TECHNOLOGY: Case Discussion Dell Computer IBM

MOR 559 – Strategic Renewal: Discussion Questions University of Southern California ©2000, Michael A. Mische Dell & IBM… The Dynamics of the Computer Industry 1.It is 1994 and you are a member of IBM’s BOD. Your company’s stock price is about $27 per share (1967 levels):  What are the competitive forces confronting IBM and to what extent were these predictable?  What factors contributed to IBM’s loss of market share from 46% to less than 10% of the PC market?  You have fired Akers as a CEO; why do you hire Lou? 2.It is 2000 and you are still on the BOD of IBM. You note the following:  What major conclusions can you reach regarding the above performance (what do these performance measures indicate)?  LG has made a presentation and shown you the barbell; what is your impression of his synopsis of the market?  Where are the profit margins for each sector heading?  Where should IBM’s strategy lead it and why? PERCENTAGE CHANGE IN SALES IBMSUNDellHPMicrosoft PC(2.3%)--53%20%-- Servers3%29%-- Software6.3%-- 23%

MOR 559 – Strategic Renewal: Discussion Questions University of Southern California ©2000, Michael A. Mische Dell & IBM… The Dynamics of the Computer Industry 3.What are Dell’s sources of competitive advantage over IBM, Compaq and Gateway?  To what extent are these sources truly differentiating?  To what extent are these sources sustainable and for how long?  Traditionally, what was IBM’s main strategy for competing? 4.If you were invited to meet Michael Dell, what would you tell him the near-term (3- year period) holds:  What are or could be the new sources of competitive advantage?  What is the extent and impact of competitive threats coming from Compaq, Gateway or HP?  What should Dell do? 5.Thinking about IBM’s strategic position and performance from 1994 to-date, can you think of any other companies that have confronted similar circumstances and were successful at renewal?  Which companies?  How are they similar?  What did the other companies do? 6.Thinking about Dell, where is it in its evolutionary cycle as a leader, and can it continue to be a leader? What must Dell do to retain its leadership position? 7.If you were LG, How would you assess the acquisition of DEC by Compaq?  To what extent, do you believe, Compaq represents a threat?  How viable is Compaq’s strategy and why?