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The main strategy was to devolve IBM's divisions into 13 autonomous units to address the perceived problem of excessive centralism, these being required to compete against each other (similar to the US government’s treatment of monopolies). Large numbers of senior executives were dismissed and a quarter of the workforce in total was made redundant; in 1992 alone this exceeded 40 000 people, and in 1993 another 45 000 were dismissed.

Additionally over $20 bn of assets have been sold or closed down.

Increased emphasis was placed on small start-up subsidiary companies to promote new ideas – e.g. InterMedia was set up in August 1993 to fund the expansion in Europe of high technology ventures which can then be marketed worldwide using IBM's global manufacturing, marketing and distribution networks. The aim was to make IBM more flexible to sudden market changes, rather than the unwieldy organisation it had been, and to make managers and individual companies like InterMedia more accountable for their actions.

A further part of the IBM strategy was close cooperation with US computer manufacturer Apple Computers to produce common design for the microchips, in conjunction with chip producer Motorola.

In mid-1995 IBM announced a successful takeover bid for software producer Lotus. By these two actions IBM has addressed the two big gaps in its strategy in the 1980s.

The effect of this turnaround strategy was that by late 1994 IBM had achieved a third quarter profit of $710 m, and a fourth quarter profit of $382 m. IBM revenue in Europe rose by 13 per cent.

However, the return to profitability is substantially due to the large-scale redundancies who will not be re-employed, even if the recovery continues.

A. It also abandoned its policy of lifelong employment for its staff.

B. Its strong position in European manufacturing and employment has made it as much a European business as any European-owned company.

C. It was described by IBM chairman Louis Gerstner as the start of the second stage of recovery.

D. This was aggravated by the rapid growth in PC performance, meaning that corporate customers increasingly used networked PCs rather than buying large mainframes.

E. This will enable common software to run on both machines and was intended to give independence from Intel and Microsoft.

F. Moreover, it was announced by the board to be the final stage of recovery.

Task 15. Talking Point 4

Read the text again and make notes under the headings given below:

Internal sources of IBM organizational structure delayering

External sources of IBM organizational structure delayering

Recovery strategy and of IBM company

Benefits from delayering of IBM

Consult Speaking References p. 126–130.

According to your notes discuss the following:

Is delayering tactics always argued to have recovery effect?

Express your point of view.

Using Internet resources analyse similar cases: make comparison of initial situations and effects of delayering.

Learning outcomes

Understand the importance of interdependence of culture and management

Learn about varieties of cultures and their impact on transactions, negotiations and meetings

Participate in discussions using your personal experience

Master your skills in writing a summary, an essay

Task 1. Reading 1

Getting started

Before reading the text, discuss in small groups what associations you have when you hear the word “culture”.

Have you ever experienced any cultural differences when travelling? Which aspects of life surprise, confuse or may be even shock you?

Think of any consequences of cultural misunderstanding in doing business and list them out. Compare your list with a partner and discuss the points you mentioned.

Define the term “culture” in your own words, compare with your partner’s. Do you have similar ideas?

Read the information about culture below; compare your ideas with those in the article. Then read the text. Consult Vocabulary p. 146–147.

Culture is acquired knowledge that people use to interpret experience and generate social behavior. This knowledge forms values, creates attitudes, and influences behavior. Most scholars of culture would agree on the following characteristics of culture:

Learned. Culture is not inherited or biologically based; it is acquired by learning and experience.

Shared. People as members of a group, organization, or society share culture; it is not specific to single individuals.

Transgenerational. Culture is cumulative, passed down from one generation to the next.

Symbolic. Culture is based on the human capacity to symbolize or use one thing to represent another.