International Business Machines Corporation

HISTORY

International Business Machines Corporation (IBM) is an information technology company that uses their expertise to provide customer solutions. The company operates primarily in a single industry using several different segments that create value by offering a variety of solutions that include, technologies, systems, products, services, software, and financing (10-K report).

The company's major operations compromise three hardware product segments. These segments are: technology, personal systems, and enterprise systems. They also offer a global services segment, a software segment, a global financing segment, and an enterprise investments segment (Ibid).

IBM offers its products and services through third-party business partners like distributors and resellers. They also offer these services through its on-line channels (Ibid).

IBM is historically known for their personal computing products. These include: notebooks, desktops, workstations, monitors, and PDA's. IBM offers many other products and services. They offer upgrades, accessories, and parts. They also offer printing systems, storage systems, networking tools, and servers. In addition, they offer software, business consulting, outsourcing, web hosting, training, and financing (IBM Homepage).

In 1911 the Computing-Tabulating-Recording Co. (C-T-R) formed by a merger of three companies: the Tabulating Machine Co., the Computing Scale Co., and the International Time Recording Co. The firms joined forces to emerge as one entity incorporated in the state of New York. C-T-R is the precursor of what would become International Business Machines Corporation (Business and Company Resource Center).

In the beginning of the company's history, they sold time recording equipment, punch cards, mechanical keypunches, vertical sorters, and tabulators (Ibid).

The company first used the name IBM in 1917 when they entered the Canadian market. At this time they had over 3,000 employees and had recently opened a division in Brazil. In 1924, the company officially changed their name to International Business Machine Corporation (Ibid).

In 1952, Thomas Watson, Jr. became IBM's president. Watson, favoring a push into the computer market, led the company in an immense research program designed to surpass their major competitor, Remington Rand. Because of this research, the IBM 701, the first production computer designed for scientific calculations was introduced (Ibid).

Over the years, IBM has continued to make better, faster computers. However, they have also expanded their business by adding outsourcing, web hosting, networking, and other customer related services.

IBM's Mission

IBM's mission is to lead in the creation, development and manufacture of the industry's most advanced information technologies, including computer systems, software, networking systems, storage devices and microelectronics.

IBM translates these advanced technologies into value for customers through professional solutions and services businesses worldwide.

IBM is a technology company that is the world's largest supplier of advanced information processing technology and communication systems, services and program products. A breakdown of 2000 shows 43% of IBM's revenues are in hardware, 37% in global services, 14% in software, 4% in global financing and the remaining 2% is in enterprise investment/other areas. According to IBM's mission statement their goal is to lead in the creation, development and manufacture of the industry's most advanced information technologies. They have achieved this goal in becoming the world's largest supplier of advanced information processing technology and communications systems, services and program products.

Company Ethics

IBM believes that their customers deserve quality products, delivered by trusted Business Partners that stand behind their delivery and fulfillment. Ethical behavior requires more that compliance with agreements and the law, which are the minimum measures of their contractual relationship. It means meeting customer expectations, and those of IBM, in carrying out the many tasks which they perform. This means setting reasonable commitments, and not misrepresenting the capability of IBM products.

IBM is constantly re-assessing and clarifying its business practices to meet with the rapid changes in the industry. No set of guidelines should ever be considered the absolute last word under all circumstances. The Chief Executive Officer and senior executives are responsible for setting standards of business ethics and overseeing compliance with these standards. It is an individual employee's responsibility to comply with these standards.

In 1999, IBM was ranked number one in business ethics according to Business Ethics Corporate Social Responsibility Report. IBM dropped from its top position to number 5 in 2000. This was largely due to its mishandling of the change from a defined benefit to a cash balance pension plan, which drew widespread employee outrage. The switch cost some older employees as mush as 50 percent of their pension, while it saved the company an estimated $200 million. The company did agree to offer more employees a choice of plan, but the unpopular move is still a blot upon IBM's otherwise positive leadership in the area of employee relations. (Business Ethics Corporate Social Responsibility Report)

The cash-balance program is a type of pension in which companies can reduce their pension costs by cutting future benefits to middle-aged workers--while offering younger workers the benefit of taking a larger cash payout if they leave before retirement. They resemble a 401-K plan. The company contributes to the account, based on the salary, and includes a pledge that the balance will grow by a certain interest rate each year. Any gains beyond the guaranteed rate of return are retained by the company. Younger workers benefit because the money builds up faster than the traditional defined-benefit plan. If they stay with a company for five years or more, they generally can take the cash balance with them if they leave for another job. The plan does not give older workers any incentive to hand on until retirement age before leaving their jobs.

In September 1999 the IRS said that these new pensions may violate federal age-discrimination laws. The law prohibits discrimination against any worker age 40 and over. Analyst say that the company took a misstep, and it looked like IBM was setting things right but some IBM employees felt