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.

Organizational Structure Case Studies

Airbnb Organizational Structure

airbnb-organizational-structure
Airbnb follows a holacracy model, or a sort of flat organizational structure, where teams are organized for projects, to move quickly and iterate fast, thus keeping a lean and flexible approach. Airbnb also moved to a hybrid model where employees can work from anywhere and meet on a quarterly basis to plan ahead, and connect to each other.

eBay Organizational Structure

ebay-organizational-structure
eBay was until recently a multi-divisional (M-form) organization with semi-autonomous units grouped according to the services they provided. Today, eBay has a single division called Marketplace, which includes eBay and its international iterations.

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.

Sony Organizational Structure

sony-organizational-structure
Sony has a matrix organizational structure primarily based on function-based groups and product/business divisions. The structure also incorporates geographical divisions. In 2021, Sony announced the overhauling of its organizational structure, changing its name from Sony Corporation to Sony Group Corporation to better identify itself as the headquarters of the Sony group of companies skewing the company toward product divisions.

Facebook Organizational Structure

facebook-organizational-structure
Facebook is characterized by a multi-faceted matrix organizational structure. The company utilizes a flat organizational structure in combination with corporate function-based teams and product-based or geographic divisions. The flat organization structure is organized around the leadership of Mark Zuckerberg, and the key executives around him. On the other hand, the function-based teams based on the main corporate functions (like HR, product management, investor relations, and so on).

Google Organizational Structure

google-organizational-structure
Google (Alphabet) has a cross-functional (team-based) organizational structure known as a matrix structure with some degree of flatness. Over the years, as the company scaled and it became a tech giant, its organizational structure is morphing more into a centralized organization.

Tesla Organizational Structure

tesla-organizational-structure
Tesla is characterized by a functional organizational structure with aspects of a hierarchical structure. Tesla does employ functional centers that cover all business activities, including finance, sales, marketing, technology, engineering, design, and the offices of the CEO and chairperson. Tesla’s headquarters in Austin, Texas, decide the strategic direction of the company, with international operations given little autonomy.

McDonald’s Organizational Structure

mcdonald-organizational-structure
McDonald’s has a divisional organizational structure where each division – based on geographical location – is assigned operational responsibilities and strategic objectives. The main geographical divisions are the US, internationally operated markets, and international developmental licensed markets. And on the other hand, the hierarchical leadership structure is organized around regional and functional divisions.

Walmart Organizational Structure

walmart-organizational-structure
Walmart has a hybrid hierarchical-functional organizational structure, otherwise referred to as a matrix structure that combines multiple approaches. On the one hand, Walmart follows a hierarchical structure, where the current CEO Doug McMillon is the only employee without a direct superior, and directives are sent from top-level management. On the other hand, the function-based structure of Walmart is used to categorize employees according to their particular skills and experience.

Microsoft Organizational Structure

microsoft-organizational-structure
Microsoft has a product-type divisional organizational structure based on functions and engineering groups. As the company scaled over time it also became more hierarchical, however still keeping its hybrid approach between functions, engineering groups, and management.

Read Next: Organizational Structure

Read Also: Business Model

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