International Business Machines Corporation Team 3: Austin Conklin, Camille Hawkins, Jordan Redden, and Stephanie Thomas

Proposed Strategy: To expand the capabilities of IBM's cloud computing platform by performing a strategic acquisition of a small firm

Initial Strategy Cost: $30 million

NPV: $6,338,070

IRR: 23%

ROE Increase of 2.78%

ROA increase of 1%

IBM's Current Status

  • Slow decrease in annual revenue across all business segments
  • Strategic Imperatives that focus on the 3 main forces of "digital"

Current strategy focuses on long-term success

According to the infinite io website:

  • $24 billion cost of inactive data storage in 2016
  • 80% of data is inactive
  • There will be 650% of big data growth in the next five years
  • New solution to control and manage large amounts of inactive data
  • Offers a competitive advantage to the cloud storage market
  • Privately held company

The Acquisition Process

  1. Identify potential acquisitions
  2. Secure necessary third-party services
  3. Prepare for the transaction
  4. Negotiation and Finalization of Acquistion
  5. Implementation

Income Statement


  • no changes in this statement because implementation is in 2017


  • IBM’s revenue has been declining for the last 18 quarters
  • Acquisition will not change the decline in revenue
  • Increase in Services by 0.0001% and Sales by 0.002%
  • Revenue is higher than the projected without strategy in 2017 but it is still a decline from 2016
  • Rise in cost and expenses for implementation


  • Projection for growth in Services is 0.0002% and Sales 0.004%
  • Decline total expenses from 2017

Balance Sheet


  • Financed by debt; long term debt increased by $30 million
  • $15 million increase in goodwill and inventory
  • Only accounts that changed from the 2016 without strategy

2017 and 2018

  • The total of assets and liabilities will go up because of the addition of infinite io
  • Accounts that there is a major growth is cash and cash equivalents, inventory and property, plant, and equipment
  • With the addition of employees, the liability accounts of compensations and retirement will increase

Statement of Cash Flows

  • The changes on this statement due to the strategy would be to the payments for property, plant and equipment, investment in software, acquisition of businesses, and proceeds from new debt.


  • Current Ratio: The current ratio for IBM has steady with it stay above 1 but has not been above a 1.30 in the past 3 years.
  • The ratio in 2018 is valued at 1.23 with the strategy.
  • Long Term Debt to Equity Ratio: This ratio affected by the strategy because it is being financed by long term debt.
  • The rise in non current liabilities lowered this ratio to be 2.16 in 2018 (with strategy) and it is a big decline from the 4.28 value in 2015.
  • Average Collection Period
  • Operating Profit Margin

Our proposed strategy will:

  • Increase the bottomline
  • Increase customer satisfaction
  • Add value to IBM


Created with images by Patrick H~ - "CeBIT 2011 - IBM Logo" • blickpixel - "board electronics computer" • lorenzocafaro - "programming computer environment" • UliSchu - "handshake hands shaking hands" • ptanpm - "asphalt texture material" • heladodementa - "technology servers server" • quapan - "labyrinthine circuit board lines" • Key Foster - "advancing with time in feverish pursuit" • cote - "Answers are in the cloud"

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