IBM (International Business Machines) Corporation is a technology American multinational company. Herman Hollerith, Charles Ranlett Flint, and George Winthrop Fairchild founded the tech company in 1924. The tech brand is operating its business in approximately 150 countries across the globe. Today, we’ll discuss the PESTLE analysis of IBM; it focuses on external environmental factors like; political, economic, social, technological, legal, and environmental factors.
Political Factors Impacting IBM
Some of the main political factors in the IBM PESTLE analysis are as follows;
I-Trade Policies
The trade policies of different countries are changing for the tech brands depending on the type of government that comes into power. The political tension and international relations issues of different countries with the US government would make them change their trade policies for the US companies. They could be in the form of import-export documentation, trade bans and restrictions, and other regulatory requirements.
II-Government Tech Regulations
IBM is operating its business in approximately 177 countries across the globe. The tech policies on data privacy, IPR, patents, and copyrights of different countries and regions are different for tech companies. IBM should comply with the tech regulations of different countries to avoid any type of negative impacts.
III-Government Contracts
Government contracts are the main source of IBM’s earnings and revenue in the global market. According to an estimate, the tech brand won contracts worth of over 10 billion USD from the US federal government. They’re for the purpose of cloud services, tech solutions, and cybersecurity reasons. However, IBM engages in various types of political lobbying and building relations with government officials to win government contracts.
Economical Factors Affecting IBM
Some of the main economic factors in the IBM PESTLE analysis are as follows;
I-Global Tech Economy
The global economy is investing a significant amount of capital resources in the tech and IT sectors. According to an estimate, global IT spending has reached approximately 4.5 trillion USD in 2023. It presents a lot of growth opportunities to the business of IBM for cloud computing, tech solutions, and other IT services.
II-Currency Exchange Rate
The currency exchange rate of different countries keeps fluctuating depending on various factors. IBM earns a significant amount of its revenue and income from the international market. A small change in the currency exchange rate would increase the cost and expenses due to the currency exchange rate differences.
III-Emerging Markets
Emerging markets of Asia-Pacific, Southeast Asia, Africa, Latin America, and the Middle East are making significant growth and progress in tech and IT. New tech startup companies are making the tech and IT industry more competitive. They have the advantage of lower taxes, cheap labor, and a growing business environment. These factors put great pressure on IBM to innovate and develop new solutions to the local market needs and requirements.
Social Factors Impacting IBM
Some of the main social factors in the IBM PESTEL analysis are as follows;
I-Remote Working
The trend of remote working has been increasing significantly for the past few years. It allows workers and employees to live a life of their choice and deliver the work to the companies. However, remote work is only possible with the cloud services, AI, and IT solution services of IBM and other tech companies.
II-Aging Population
The number of aging population has been increasing and skilled employees and tech professionals are retiring. As a result, it is causing a significant skill and experience gap in the working environment of tech companies. In order to bridge the skill and expertise gap, IBM is launching various types of training and development programs with the collaboration of universities and tech professionals to improve working conditions.
III-Data Privacy Awareness
The consumer has become highly cautious about data privacy and database security. According to an estimate, the average cost of a database breach would be approximately 3.86 million USD. It is compelling tech businesses and companies to invest in cybersecurity solution services to protect their database.
Technological Factors Affecting IBM
Some of the main technological factors in the IBM PESTEL analysis are as follows;
I-Growth in AI and Cloud Technology
The worth and value of cloud computing, AI, and IT services and solutions of IBM have increased significantly over the past few years. It plays a key role in scaling and innovative capabilities of managing the data. The annual revenue from AI and Cloud Computing technology has increased by approximately 16% reaching 22.4 billion USD in 2022.
II-Continuous Innovation
According to an estimate, IBM invested approximately 6.5 billion USD in research and development in 2022. It is necessary for the tech brand to invest in innovative technological development to gain a competitive edge and maintain its market and brand positioning.
Legal Factors Impacting IBM
Some of the main legal factors in the IBM PESTEL analysis are as follows;
I-Legal Compliance
IBM needs to comply with the legal and regulatory requirements of different countries to smoothly perform its operations in the global market. They comprise data security, data privacy laws, IPR, copyrights laws, patents and trademarks, ISO certifications, and employment and contractual laws of different countries. However, it allows them to smoothly perform their operations without any delays and disruptions.
Environmental Factors Affecting IBM
Some of the main environmental factors in the IBM PESTEL analysis are as follows;
I-Sustainability Initiatives
The world governments and the consumer market have become highly cautious about environmental sustainability. IBM needs to comply with electronic waste disposal, recycling of electronic devices, and renewable sources of energy. The tech brand is taking various measures to decrease the carbon emission rate and reduce the carbon impact on the environment.
Conclusion: IBM PESTLE Analysis |PESTEL Analysis of IBM |External Environmental Analysis of IBM | Strategic Analysis of IBM
After an in-depth study of the pestle analysis of IBM; we have realized that IBM is the world’s leading tech, cloud computing, and cybersecurity services providing company. If you are learning about the IBM PESTLE analysis; then you should keep in mind the abovementioned external environmental factors like; political, economic, social, technological, legal, and environmental.
Ahsan Ali Shaw is an accomplished Business Writer, Analyst, and Public Speaker. Other than that, he’s a fun loving person.
