Ibm in Estonia

Executive Summary:

IBM, International Business Machine: The Company which became IBM was founded in 1888 as the Tabulating Machine Company by Herman Hollerith, in Broome County, New York. It was incorporated as Computing Tabulating Recording Corporation (CTR) on June 16, 1911, and was listed on the New York Stock Exchange in 1916. (http://en.wikipedia.org/wiki/IBM, 8th April 2008). IBM entered Estonia in 1992 and it has achieved a good strong brand name for itself. In 1992 Estonia’s economy was in a very bad state as it just got independent from USSR in 1991. IBM’s main strategy to enter Estonia then was to enter the Baltic States then and make a mark then and take advantage of the Free Estonian market. Over the years IBM has had many projects with the Estonian government for example one with the Estonian Ministry of internal affairs, citizenship and migration department. IBM has adapted its pricing, and packaging in the Estonian market. IBM globally makes most of its sales through resellers and its good network of distributors; it’s the same thing in Estonia as well. Estonia’s IT market is a growing market as it is making a mark in the world for its ICT and outsourcing industry. IBM finds a good healthy competition in Estonia not just from local players but even international players too. IBM concentrates more on B2B business.

Estonian Market:

Estonia is a country in Northern Europe in the Baltic region. Estonia regained its freedom in August 1991, from the USSR, with the collapse of the Soviet Union. Estonia is a democratic parliamentary republic. It has been a member of UN (United Nations) since 1991, member of EU (European Union) since May 2004 and of NATO since March 2004 (https://www.cia.gov/library/publications/the-world-factbook/geos/en.html, 8th April 2008). IBM entered Estonia in 1992, and to analyze their marketing strategy it is necessary to understand the Estonian market then, in 1992.

Despite their independence from USSR in 1991, Estonia still reflects their past dependency on the old USSR in terms of Information Technology and Electronic networking. Though USSR achieved huge milestones in the field of aerospace but it still lagged in most of the areas of computer science. In the early 90s the Baltic region was equipped with technology that trails the rest of the computer domain by 10years. (Pakstas Algirdas & Pakstiene Sonata, Computer Networks in Estonia, Lativa and Lithuania). But there was software and data base development for the Governmental and private sector. In 1992, the industrial production declined by 30%, real wages fell by 45% and the fuel prices had raised by 10,000%. (http://www.heritage.org/Research/WorldwideFreedom/bg2060.cfm, 10th April 2008)

The new government reduced trade and non tariff barriers and abolished all export restrictions, making the nation a free trade zone. Estonian government did not encourage foreign investors by offering any tax exemptions or special rights; in fact they provided a platform to build a business that favours both the local and foreign investments. During the period 1991-1993 a lot of private software and hardware companies established. Network based computer applications such as scientific calculation, office automation and business applications (banking), manufacturing (planning and production control) were all done using IBM 360/370 mainframes which were made mostly in USSR. (Algirdas Pakstas, Norwegian Institute of Technology Sonata Pakstiene, Lithuanian Academy of Sciences; Computer networks in Estonia, Latvia and Lithuania; September 1993)

There were a lot of companies getting privatized including new magazine houses, TV channels, private radio and so on, advertising was huge, and it was the birth of advertising age. Since the Estonian government made the Estonian market a free market there were a lot of companies from the West wanting to invest here, such as Microsoft, IBM, Oracle and many more. IBM also faced competition from companies such as hP, international whole sellers like Soft-tronik, Elko and Micro link.

The Company: (IBM)

International Business Machines (IBM) is a multinational computer technology and consulting corporation. They sell computer hardware and software and offer infrastructure service; they are the largest Information technology employer in the world. They have engineers and consultants in over 170 countries and they have 8 research labs world wide. As a chip maker IBM is among the world top 20 semiconductor sales leader. IBM offers its products through global sales and distribution; in addition IBM offers its product through a variety of third party distributor and resellers, as well as through its on-line channels. (http://en.wikipedia.org/wiki/IBM, 08th April 2008)

Alliance Solution:

IBM has many global business partners which provide solutions and few of them are Avaya, Infor, Novell, Oracle, SAP, Genesys, Nortel, Redhat, Symphony technology group.

IBM Estonia:

IBM Eesti Ou, its Estonian affiliates which 100% is owned by IBM. IBM entered Estonia in 1992. They have around 60 employees currently working and they intend to increase their work force by another 25 by the end of this year. When compared to the average size of 18 employees in other companies IBM holds a huge work force in Estonia. IBM has many resellers in Estonia such as, Telegrupp S.A; they are IBM’s business IT partners and concentrate more on web technology development. (http://d03bphrb.partner.boulder.ibm.com/bpconnections/bpcms.nsf/public/F915F735B183D98E872570DF003312A9?OpenDocument&NL=en, 09th April 2008). They currently have projects in Sweden, Finland, England, Germany and Estonia. Mediasoft S.A, (http://d03bphrb.partner.boulder.ibm.com/bpconnections/bpcms.nsf/public/1A5310FF9D24F403872570DE0074E819?OpenDocument&NL=en, 09th April 2008) they are the largest supplier of software development and related IT services in the field of social insurance and healthcare in Estonia and other Baltic countries. GoPro and IBM have cooperated in numerous customer cases within the EMEA region (Europe, the Middle East and Africa). The other resellers are NET group and GNT (gateway to NET trading) who also act as consultants to IBM. IBM international service center Estonia monitoring centre is situated in Estonia that provides service for the Nordic countries.

IBM world wide (including IBM Estonia) has divided its capabilities into 3 different categories and they are:

1. System and Finance. The line of products which come under this category are servers, storage, micro electronics, engineering and technology services,