Деловой иностранный язык. Ирина Машукова

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      Task 14. Reading 4

      Getting started

      ▪ Before reading the text, discuss in small groups why even big and successful companies have losses. What are the potential dangers they can meet?

      ▪ Give examples of companies that met difficulties in manufacturing their goods but overcame them and recovered. Dwell on the strategies that helped them to survive.

      ▪ Read the text, neglect the gaps and check if your ideas are right. Consult Vocabulary p. 145–146.

      ▪ Read the text again where seven sentences have been removed. Choose from sentences A–F the one which fits each gap 1–5.

       H ow to go about it

      1. Check that the whole sentence fits in with the meaning of the text before and under the space.

      2. Pay attention to the connections between the language in the text and the language in the missing sentences.

      3. Find the connections between pronouns and other words.

      4. When you think you have found the sentence, read the whole paragraph again to check that it fits.

      5. Complete the rest of the spaces with appropriate sentences.

      Founded in 1911, US corporation IBM (International Business Machines), or Big Blue as it is nicknamed, began its existence producing clocking-on machines and punch-card tabulators, used in the 1890 US census. It had been the most successful mainframe computer manufacturer in the world, with a monopoly position in corporate sales (80 per cent of the market).

      However, IBM neglected the growing Personal Computer (PC) market in the 1980s, producing only a high-cost limited range with poor performance characteristics. It also neglected the production of chips (buying in from Intel) and software (buying in from Microsoft). The rapid development of IBM-PC clones produced in the Far East to fill the gap caused by the limitations of IBM's product range hit IBM seriously.

      Founded in 1911, US corporation IBM (International Business Machines), or Big Blue as it is nicknamed, began its existence producing clocking-on machines and punch-card tabulators, used in the 1890 US census. It had been the most successful mainframe computer manufacturer in the world, with a monopoly position in corporate sales – 80 per cent of this was aggravated by the rapid growth in PC performance, meaning that corporate customers increasingly used networked PCs rather than buying large mainframes.

      By the beginning of the 1990s large losses were being sustained (in 1993 alone it lost $8.1 billion, the biggest annual loss in US corporate history) and IBM was forced to embark on a major corporate restructuring and delayering programme, including all its sites in the EU, in order to save itself. To illustrate the depth of its fall in 1987 IBM had a market value of $107 bn. By 1992 it was $26.5 bn.

      In the EU the highly competitive PC market and weakening of the EU economies in the early 1990s as they moved into recession worsened the position of IBM in the EU since sales fell.

      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.

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