ibm-organizational-structure

IBM Organizational Structure

IBM has an organizational structure characterized by product-based divisions, enabling its strategy to develop innovative and competitive products in multiple markets. IBM is also characterized by function-based segments that support product development and innovation for each product-based division, which include Global Markets, Integrated Supply Chain, Research, Development, and Intellectual Property.

Introduction

IBM is an American multinational technology corporation that was founded in 1911 by Charles Ranlett Flint as the Computing-Tabulating-Recording Company (CTR).

IBM is a manufacturer and seller of various products, such as computer software, middleware, and hardware, nanotechnology, and hosting and consultancy services. IBM is also a serious innovator, filing more patents than any other company for a record 30 consecutive years between 1992 and 2022.

Over this time, some of IBM’s notable inventions include the ATM, hard disk drive, magnetic stripe card, SQL programming language, and dynamic random-access memory (DRAM).

With these various interests in mind, let’s analyze the company’s organizational structure.

Product-based divisions

IBM has an organizational structure characterized by product-based divisions. This allows the company to carry out its strategy of developing innovative and competitive products across multiple markets.

To that end, the company’s major operations consist of five divisions:

  1. Global Technology Services (GTS) – mostly consisting of IT infrastructure and business process services.
  2. Global Business Services (GBS) – this division focuses on delivering client value via consultancy in areas such as cloud, mobile, social business, enterprise applications, analytics, and smart eCommerce. 
  3. Software – middleware and operating systems software
  4. Systems and Technology (STG) – encompassing any business solution that requires advanced storage capabilities or computing power.
  5. Global Financing – IBM also offers lease and loan financing to end-users and internal clients. This division also includes commercial financing to dealers and remarketers of IT products.

In some instances, GTS and GBS are collectively known as Global Services.

Function-based segments and geographic divisions

To a lesser extent, IBM’s structure is characterized by function-based segments and geographical divisions. These are explained below.

Function-based segments

To support the core global IT business and support each product-based division, there are three function-based segments:

  1. Global Markets (this was previously known as Sales and Distribution).
  2. Integrated Supply Chain, and
  3. Research, Development and Intellectual Property.

Geographic divisions

Like most organizations, IBM’s geographic divisions help it manage a global business despite differences in various regional markets. This is important for IBM since the company has operations in more than 170 countries.

IBM has a total of three geographic divisions:

  1. Americas.
  2. Asia Pacific, and
  3. Europe/Middle East/Africa.

Most company revenue is attributed to the Americas division, with the $28 billion generated in 2021 representing nearly 50% of IBM’s total revenue.

Key takeaways:

  • IBM has an organizational structure characterized by product-based divisions. This allows the company to carry out its strategy of developing innovative and competitive products in multiple markets.
  • IBM’s structure is also characterized by function-based segments that support product development and innovation for each product-based division. These include Global Markets, Integrated Supply Chain, and Research, Development, and Intellectual Property.
  • Like organizations with a similar global reach, IBM’s geographic divisions help it manage operations despite differences in various regional markets. The Americas division is by far the most lucrative for IBM in terms of revenue.

Read Next: Organizational Structure.

Read Also: IBM Business Model.

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