Answer

          Value Chain Re-Positioning in Pearson and IBM/PwC Companies

1.0 Introduction

Strategic changes that lead to value creation are variously highlighted in academic texts as “rejuvenation, renewal, and repositioning” (Noke and Hughes 2010, p. 5). Though, these words implicitly conjure sentiments of change, it is repositioning, the change of position along the value chain that is most preferred in academic circles. Repositioning generally aims at improving internal processes that enable the firm to create more value for products and services. This paper analyses Pearson and IBM/PwC through scrutiny of various positions within the value chain. Equally, survey of reasons for repositioning, levels of success and zones of manoeuvre in are considered.  

2.0 Reasons for repositioning along the value chain

2.1 Pearson ELT

Studies by Noke and Hughes (2010, p.2) define value change repositioning as the attainment of a New Product Development (NPD) capability. Noke and Hughes (2010, p.2) further delineate repositioning according to the aforestated criterion as actionable through mergers, acquisitions, licensing of key technological procedures, subcontracting and execution of “an internal development process”. Some scholars, notably, Riep (2019) link Pearson’s business strategies to market and strategic attributions. Sustained restructuring in the past decade that advertently preceded Pearson’s growth into a universally competitive multinational corporation provide sufficient justification for this position (Riep 2019). Myriad motivations for strategic change can be gathered from extant literature. Principally, Pearson’s repositioning is identified with the urge to leverage on steady demand for more affordable, accessible, and quality education. Deductively, Pearson’s repositioning can be explained as a response to flourishing education industry. Secondly, studies credit disruptive technologies in contemporary work places for legitimizing the economic value of education and skills in unprecedented ways (Attick and Boyles 2016). Similarly, Riep (2019) concurs by further associating the aforestated configurations with growing expenditure on public education and training with underlying justifications for Pearson’s change of strategy. Further, growth of global middle class, and a corresponding increase in demand for education, has been headlined as a key driver of Pearson’s value change. The latter phenomenon also seems to dovetail with inadequacy of public and private sectors to meet global demand for education (Riep 2019, p. 11). Finally, a pattern of modern capitalism has been discovered, in light of its categorization of the global economy as knowledge-based in practice, as another reason for Pearson’s current value chain proposition (Williamson 2015. This factor seems to underline Pearson’s growing involvement with educational policy issues on the global stage.

2.2 IBM/PwC Inc.

Similar repositioning under the NPD model can be deciphered from the IBM/PwC strategic merger in 2002 and the acquisition of Booz & Co in 2013. Verschoor (2014) implicitly notes the new entity’s overriding goal as the need to increase revenue. The acquisition in 2013 brought about significant increase in the firm’s total revenue by a third of revenue from previous consulting services (Verschoor 2014). Secondly, PwC’s merger with IBM, a US-based tech company aimed to improve value proposition by introducing the information technology consulting portfolio, as well as systems audit and artificial intelligence. 

3.0 Value chain positions and levels of success

3.1 Pearson ELT

Survey of extant data shows that Pearson’s new NPD process led to the alteration of its position from middle-end activities to the upstream position. Accordingly, Hernandez and Pedersen (2017) consider the company’s new position as synonymous with the change from logistical support services to basic and applied research with regard to “function in the value chain” criterion (Hernandez and Pedersen 2017, p.139). In the purview of global value chain, Pearson’s activities can be regarded as upstream primarily through its global influence on education policy. A critical policy analysis of “The Learning Curve Initiative, TLC” of Pearson by Hogan, Sellar and Lingard (2016) confirms the stature as an emerging education policy player. The TLC is an instrumental element of Pearson’s new business strategy, which emphasizes corporate social responsibility, in a new push for dominance, referred to as “soft capitalism”. These findings are also corroborated by a survey by Williamson (2016) who cites the organisation’s Learning Curve initiative, data-bank and involvement at the United States’ Center for Digital Data, Analytics and Adaptive Learning as markers of its robust influence on policy. The relentless marshalling of digital techniques reflects the company’s strategic intent to domesticate big data analytics, computer software, and information technology mediation into its value chain. These are intended to create an impervious educational data infrastructure into the value stream. Pearson’s upstream position is further headlined by studies by Lewis and Loftus (2017) who report several varieties of Pearson's “MyLab and Mastering products” which are designed to structure education policy to entrench growing influence of the company.

3.2 IBM/PwC Inc.

Similarly, IBM/PwC’s congruity with upstream activities has been associated with assurance, advisory, tax, and consultancy services. The company’s upstream activities are fairly well documented in literature. For instance, a study by Surve (2020) notes the expanded capability of the company in its upstream position with its foray into artificial intelligence and its impact on human resource development. Correspondingly, IBM/ PwC’s new position in the value chain can be understood from the change in “potential for value creation” from exploitation related activities to exploration related activities through explorations of new levels of competence in the tech field. This trend has been highlighted by growth in capabilities through the combination of resources of the resultant entity (Cantwell and Piscitello 2015, pp. 231-254; Ha and Giroud 2015, pp. 605-614). Studies also associate resultant augmentation of the IBM/PwC value capabilities by growth of access to “international knowledge” by individual units.

4.0 Zones of Manoeuvre

4.1 Pearson ELT

Scholars concede that Pearson’s lack of direct control of “hard “education policy has correspondingly seen the company adjust strategically in favour of “soft policy” (Williamson 2015, p. 39). The resulting situation offers room for Pearson to entrench itself further in the global value chain. Additionally, soft governance, through tacit strategies could be escalated through continued engagement with all the actors at various positions of the value chain. Another area in which Pearson’s could manoeuvre despite its weakened position in the global education sphere is policy research, specifically by refining its ‘governing through data’ (Williamson 2015, p. 40). This could be attained through attention to focus on “numbers and logic of enumeration” in order harness technical capacities to actualize education governance. However, Williamson’s (2015) investigation casts doubt on the role of stakeholders in educational governance through data, as competence concerns abound.

4.2 IBM/PwC

IBM/PwC’s incursion into computer software, artificial intelligence, systems audit and security, and artificial intelligence has also brought various opportunities for the company to leverage on. A report by Ghosh and Mitra (2017) on the state of artificial intelligence in the world through a microcosmic survey of India, presents an optimistic outlook on AI and robotics with endless opportunities for IBM/PwC to manoeuvre. In addition, the report suggests that heightened challenges facing Indian researchers, scientists and businesspersons due to laborious occupational procedures, and lower occupational facilitations, call for escalation of AI revolution in India. This could be pursued through upscaling of “cloud computing” capabilities, to enhance data storage for and AI applications (Ghosh and Mitra 2017).