International Business Machines Corporation (IBM) has faced challenges lately due to increased competition in the home-consumer segment of the personal com- puter (PC) market. When IBM introduced the PC in the early '80s, the PC was a huge success. The PC market grew immensely and competition was on the rise. Although the PC was initially marketed towards businesses, a home-consumer market emerged as well. In 1995, IBM, under the direction of CEO Louis V. Gerstner, set up a home-consumer-PC division to augment its business-PC division. IBM hoped that with the two divisions each employing its own design, manufacturing, and mar- keting personnel, it could better focus on the needs of its various customers and in- crease total sales. IBM's consumer division quickly developed PC's that had high customer appeal. In early 1996, the division released its "Aptiva" PC in a sleek, dark-gray color. The model was equipped with many high-tech features. Also, IBM's good reputation al- lowed the consumer division to charge a higher price for the PC's. (In December 1996, IBM PC's sold for an average of $1,880, whereas other companies charged as little as $1,300 - $1,400.) Initially, the manufacturing department in IBM's consumer division could not keep up with consumer demand. However, IBM is now losing its share in the con- sumer market to companies such as Dell, Compaq, and Packard Bell. These com- panies are finding that consumers choose low price over the extra "frills" that IBM offers in its computers. Furthermore, IBM is discovering that many consumers are no longer willing to pay higher prices for IBM's good reputation. IBM, the company that once dominated the PC market, has plummeted to a market share of just 4.4% and is now considering shutting down its consumer division and returning to its pre- vious one-division system for all PC's.1.Did IBM make a good decision in setting up its consumer division? How so?2.Analyze the series of IBM decisions and actions involving the consumer division. Try to categorize these decisions and actions following the three-fold manage- ment process of planning, controlling, and evaluating.3.Based on the three-fold management process of planning, controlling, and eval- uating, where do you think IBM was weakest in its decision-making practice with respect to the consumer division? Where do you think it was strongest?4.If you were Louis V. Gerstner, what information would you want from your man- agement accountants in order to effectively plan, control, and evaluate the deci sion to either shut down or to continue the consumer division?