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Posted on May 7th, 2014, by

INTRODUCTION

As IBM faces considerable problems provoked by the slowing down of its business, the company needs to introduce changes to improve its marketing performance and to enhance its competitive position. In actuality, IBM is facing the problem of effective downsizing because this strategy was chosen by the leadership of the company as the key to its successful restructuring that is supposed to lead to the improvement of the marketing performance. However, on analyzing the downsizing strategy and position of IBM in the market, it is possible to recommend moving online instead of considerable downsizing of the company because downsizing may lead to the loss of jobs and well-qualified employees. Therefore, the development of online service and telecommuting may be an effective strategy that can enhance the position of IBM because the company can preserve well-qualified personnel and maintain highly efficient marketing performance but the company should focus on prospective projects which can help IBM to introduce innovations that can put the company in an advantageous position in the market.

CURRENT PROBLEMS OF IBM

In fact, IBM was traditionally one of the leaders in the high tech industry. However, the company needs to save costs and improve its performance because of the considerable slowing down in its business development. The slowdown is the result of the growing competition because the company failed to maintain its leading position in the market as the competition has grown tighter.

DOWNSIZING STRATEGY

In such a situation, the company has chosen the strategy of downsizing as the key to the improvement of its marketing performance. In fact, downsizing is a very efficient step to cut spending of the company fast. At this point, it is worth mentioning the fact that downsizing can lead to the considerable reduction of costs in a short-run perspective (Lucas and Baroudi, 2002). Therefore, as the company cuts its spending fast, IBM gets additional financial resources to accelerate its business development and to enhance its competitive position in the market.

At the same time, the company should be aware of the fact that fast downsizing may have a negative impact on the development of the company in a long-run perspective. To put it more precisely, downsizing is accompanied by the risk of losing well-qualified professionals (Andrew, 2003). Moreover, the company may lose talented and prospective employees, especially if the company cuts newcomers and young employees, who have just joined the company. In such a situation, IBM can suffer from the slowdown in its business development because creative and talented employees, who lost their job in the course of downsizing, will not generate new ideas that could be helpful for IBM.

Furthermore, downsizing strategy raises another problem the problem of the deterioration of the atmosphere within the organization and the emergence of conflicts between employees. In fact, this problem naturally emerges as the result of downsizing. Downsizing leads to job cuts, while job cuts increase the uncertainty of employees in their future in the company (Bloch, Peigneur, and Segev, 2000). Therefore, downsizing leads to the growing uncertainty of employees in their future that apparently affects and deteriorates their performance. Moreover, some employees may consider transfer to other companies to save their jobs and to be certain in their future. Hence, it is obvious that downsizing is not the best strategy IBM can choose.

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