improve its competitive position. Recognizing that it can no longer dominate the industry, the company is seeking to build on its long-term reputation in order to realize short-term goals of regaining market share and improving its investment picture.
Long term, the company has to improve its revenue performance or the cost cutting measures it has implemented will not guarantee success. The company must also seek to maintain its market share in the mainframe market and expand its market share in the client/server and personal computer markets. The company currently has long term debt in excess of $15 billion, which represents 41 percent of the company(s total capital (Coyle, 1994, p. 1210). With negative cash flows in 1992 and 1993, and a steady downturn in revenues from 1990 to 1993, the company has no choice but to focus on introducing new products, providing innovative services, and rethink its pricing strategy for existing and new products. The mainframe market will continue to make up a significant part of the company(s business for the near future, and the company needs to take advantage of that market, where it has dominance, to fuel its growth in other market segments. As client/server technology grows and matures, there will be a move away from mainframes, but the company can use the current environment to diversify its long term product mix.
The company needs to improve its financial performance in the immediate future. To accomplish this, it should seek to improve its current ratio (which stands at 1.18 for 1993) and reduce its long term debt to equity ratio (which stood at .77 for 1993) ((International Bus. Machines,( 1994, p. 1). By comparison, Apple Computer, once a competitor of IBM(s and now a partner in some business ventures, posted a current ratio of 1.72 for 1993 and a long term debt to equity level of 0.00 ((Apple Computer Inc.,( 1994, p. 1).
Both of these objectives are ways in which the company c...