(IBM), a bit behind the curve, announced that it is ramping up focus on emerging markets that investors are already investing actively in through exchange-traded funds. This is a significant change in thinking for a firm that has always focused on traditional markets.
IBM is set to spend $1.6bn over the next three years as its hunt for growth takes it to smaller markets in the emerging world that have not previously been a focus of its efforts, according to an internal memo from its chief executive and described by Richard Waters of the FT.
The attempt to tap a wider range of developing countries comes as IBM’s earlier investment in three big markets which already have ETFs - Brazil (EWZ), India (IIF) and China (GXC) – has started to pay off.
Though still only a small part of its total revenues, business in these countries accounted for a quarter of IBM’s growth last year and plays an important part in the longer-term financial goals that Sam Palmisano has set.
In an e-mail to senior management, the IBM executive wrote of “a significant shift in our approach to the global marketplace” as the company sought to organise itself to deal with opportunities outside its normal scope. “Too often in the past, because we’ve built our plans by starting with our traditional markets, we haven’t focused sharply enough on the opportunities being generated elsewhere,” Mr Palmisano wrote.