International business strategy - Assignment Example

? International Business Strategy Table of Contents SECTION A 3 Question 3 SECTION B 6 Question 2 6 Question 3 9 Bibliography 14 SECTION A Question1 Identify and critically assess the strategic challenges confronting Kirk Strawser in 2008, when he is attempting to turn Wipro Consulting Services (WCS) into a global business leader in technology consulting. Explain how you have used module concepts and frameworks in your analysis. One of the main strategic challenges faced by WCS in the perception of Kirk Strawer was that the consulting initiative was taken during a time when the global economy was struck with a recession. Slowdown of the global economic conditions could act as a barrier or hurdle towards realising the long term strategic objectives of the firm. Moreover, WCS was established as an independent dedicated organization having its own work structures in order to take complete advantage of the conditions prevailing and offered by the sector. This required the company to proceed further in the business independently. Working independently was difficult for the new organization. Not only did it require to maintain its strategic focus in the business, but also had to take advantage of the parent concern’s impressive customer base and competence in technology. The strategic objectives of the firm were also influenced by the competitive strategic practices undertaken by the competitive firms in the industry. Most of the competitive consulting firms operated through a framework called the global delivery model. Through the system the firms delivered solutions through global channels at the sites or near shore and offshore centres throughout the globe. Most of the consulting firms had established offshore delivery centres in nations like India, Philippines and Europe in order to benefit from the immense talent prevailing in the place and the low costs of hiring the talents. Thus the establishment of the GDC would no longer act as a competitive edge for the firm as it had emerged as a common denominating factor used by almost all consulting firms. The difficulty of emerging as a strategic differentiator would be a difficult task before the company. Some of the other strategic challenges also include some of the large global consulting players operating in the market, such as HP, Cap Gemini, Accenture, IBM, EDS etc. These large firms account for holding more than 90% of the world’s consulting market. Entering into new markets or acquiring the market share of competitors was one of the leaping strategic challenges before the firm. Moreover, they were already holding great cost and resource advantage in some of the largest emerging countries like India, Philippines and other nations like Eastern Europe and Russia (Plunkett, 2007, p.119). The management of WCS also was faced with a dilemma. This was choosing the right or appropriate model from amongst the several trends and models which different organizations across the globe followed. The challenge was choosing between the following options. First, was to create and generate the consulting capability of the firms and then spin off as a completely independent and different company having no operational connectivity with the parent organization. The second option treated consulting capability as a captive unit. This is followed by the off-shooting the existing units of businesses which continues to evolve their own consulting capabilities in the global market. However, units operate under the strong guidance and supervision of the parent organization and uses operations such as human resource management and marketing management from the parent organization itself. After much of the deliberations, the leaders decided that it would need the best features of the two models. This consequently generated the concept of a federated structure. The idea was to provide a certain amount of fundamental autonomy to the consulting business of the firm while maintaining a loose association with the parent organization. According to the organizational leaders such as Mark Payne, this would be the most suitable or appropriate structure for the company. However, creating this structure would be a great challenge for the company with regards to the extent of autonomy it would rest with itself and the degree of coupling it would maintain with its parent organization. The consolidated competencies of the new matrix structure of WCS would act as a competitive strength of the company and would add to its flexibility, strength and sense of cohesion and collective purpose of the company. It was critical that communication system within the new and upgraded structures was compatible and efficient as per the requirements such that the flow of information within the system was efficient and free from hurdles. The positioning of the firms in the strategic consulting space along with the existence of such firms as BCG and McKinsey was challenging and not very easy. Leaders found it crucial to position the organization as a reliable and trusted advisor which was useful and efficient for firms to improve its revenues and overall business growth based on the application and implementation of the new technologies and technology based change programs at the workplace. With strong competitors like BCG and McKinsey, winning the trust and devotion of firms in the global market was quite a challenge. It could only be achieved through quality services which were at par with the industry standards or above it. However the favourable aspect for the company was that customers already regarded Wipro Technologies as the provider of quality services to clients. Thus maintaining the support and faith of customers was a greater challenge before the company than winning it. The firms’ quality on focus and core competencies was not new to its customers which had used its projects. The idea was continue providing crucial and critical consulting solutions to these customers and enhance its quality to the highest level. The satisfied customers would then act as the carrier of positive information about the company and expand its name to other customers. This would not only help to satisfy the present customer base of the company, but also acquire new customers from the global competitive market (Pinault, 2001, p.117). SECTION B Question 2 Critically evaluate the impact of national and industry environmental influences upon Indian, American and European competitors in the technology consulting industry, as shown in the Wipro case. Use your findings to reflect upon the advantages and disadvantages of India as a headquarters location for a global services firm One of the most prominent environmental challenges faced by the consulting industry is the technological conditions and advancement at the place where they operate or seek to expand. The recent dot com bubble between 2001 and 2001 coupled with the terror attack was one of the major global incidences which shook the IT and consulting industry across the world. The ongoing boom in the IT industry virtually came to halt during that time. Clients kept from latching to the new technologies and welcoming upgrades. Speculations and suspicion crept into the industry while the unanimous attitude among all the players was to wait and see. Investments greatly came down as these players were only willing to invest when the IT industry would be clearly yielding business results. During such conditions the IT consulting firms are compelled to make strategic changes in their business. This can include trying to move up the value chain and also use their present strategic strengths and competitiveness in assisting customers to handle and overcome the difficult environmental conditions rather than trying to push and sell their services forcefully. One of the major industrial and national level influencers of businesses in the consulting industry is the pace of the economy and economic conditions prevailing in that region. One of the main disillusionment faced by Wipro which it indirectly benefited from was the economic slowdown. Numerous customers began to blame the major consulting players that consulting was not adding any value to their businesses. Moreover they also blamed the consultants on the grounds that they kept from taking responsibilities completely as they were apprehensive of failures during that time. The advantage that Wipro took from the condition was that there was increasing for consultants during the recession phase who were not only thorough with understanding the business demands of the customers but also took entire ownership and responsibility of the technology driven program which helped them to yield return from their investments. The condition opened tremendous business opportunity for Wipro which was seeking to make entry into the competitive domain. Experts regarded that the company must capitalize on the new atmosphere and it should shift its expertise into systems developments which created consultancy and also provided advice. This generated the new business model for the organization and was regarded as a traditional shift in the conventional client and consultant interaction from a transactional relationship to a collaborative relationship. This even implied the business entering into partnership with clients in whom the risks as well as business outcomes would be shared (Toraskar, n.d., p.l-3). It is critical for organizations to realise the ways of exploiting a certain situation or environmental conditions. The economic slowdown was regarded as a hurdle and block in the business of certain organization; however, it was considered an ideal situation for Wipro Consulting. With increasing economic pressure on the IT industry the company seeked to diversify its resources. Some of the diversifying strategies worth mentioning in this context are acquisition of Spectramind, which is a BPO; and entering into a joint venture with General Electric (GE) in the sector of medical information and technology. This time was utilised by the firm to nurture its consulting capabilities against the backdrop of its information and technology capabilities. The idea was to instil in the minds of customers that Wipro not only restricted its routine tasks to IT and consulting activities but also tried to add real economic value to its businesses. With this initiative gaining momentum, the company not gained positive impacts on its bottom line but also opened up and created new avenues for the implementation of new technology projects for the existing services. India has been one of the emerging economies which have been a popular target for establishing and expanding businesses. This has been because of the availability of rare and qualified talents in the country. It is the producer of some of the brightest minds of the world which can be used extensively by the consulting industry, which is why it has emerged as a popular place for establishing headquarters location for consulting firms. MBA graduates from the top B Schools of the nation can be employed as analysts by these consulting firms who then can be rotated globally on live projects across the world. India is also at an advantage of being a major producer of human resource or talents in the industry along with providing cost benefit to businesses. These talents can be employed at much smaller remuneration as compared to nations in the western parts of the world. This is the reason why it accounts for being the host of large players like Accenture and IBM. Besides it is also flooded with Indian organizations such as Satyam, Cognizant, TCS and Infosys. The hub of technical talent coupled with relatively small compensation has drawn major players towards this region. Most of these firms had begun their operations as low cost providers of information technology services and had subsequently branched out into consulting services (NASSCOM, 2012). The main disadvantage of choosing India as a location of headquarters for the global services firms is that it is already flooded by numerous local and international players. Competitive pressures are high and it would be difficult to penetrate into the market with the presence of some of the biggest brands in the world. IBM accounts for one of the largest and most established consulting companies having large international presence too. Major operations of the company are business consulting, technology services, financial services and enterprise investment services. Some of the major Indian players include TCS and Infosys which have established strong grounds in the region. TCS accounts for being the largest offshore IT service providers in India. Commencing in the year 1968, the company leveraged its operations and offshore model for 30 long years and now holds one of the strongest position in the market. New firms find it extremely difficult to establish themselves in India because of the presence of such large and multinational players (TCS, 2010). Question 3 How far and in what ways is WCS a ‘born global’ firm? Explore the implications of your argument for the future development of WCS’s networking and innovation strategy. The trend in which Wipro Consulting Services had grown right from the time of its inception as an IT offshore company to an amorphous organization of giant size demonstrates the efficiency and ease with which it globalized and became known as a global brand. These steps demonstrated why it can be termed as a ‘born global’ firm. The period between 2002 and 2008 saw massive transformation of the company throughout all levels. It grew from a medium sized information technology off-shoring firm to a huge organization which consisted of numerous business units and subsidiaries. The wide range of services included low end application services to as high ended services as research and development and consulting services. This was prevalent not only in the home country but was spread across several different nations across the globe. The speed and efficiency with which the consulting branch of the company grew only goes to show that it was no less than a ‘born global’ organization. The consulting capabilities of the firm is seen to have evolved from a small business start-up organization established in 2001 offering small services to the regional clients which subsequently emerged into an organization which successfully gave great competition to some of the biggest competitors like Accenture and IBM. The continuous hard and sincere work for 8 years reflected through the growth of the consulting business of the firm from possessing about 100 consultants to 1200 numbers of consultants which earned a business worth $100 million in 2008. The global expansion of the firm took place dramatically and with great vigour and dynamism. The growth of the company since 2001 till date has been stupendous. The past growth trend of the company shows it future prospects as being one of the biggest consulting brands in the world. Right from its inception it competed against the largest competitors like IBM and Accenture and has emerged successfully. This has strengthened its position in the market considerably (Vashistha & Vashistha, 2006, p.101). Quality is one aspect the company has never compromised with. In the Middle Eastern countries and the Asia Pacific region, Wipro was known for its high quality IT services and this made its solid foundation for the establishment of the new firms such as Wipro Consulting, Quality Consulting and Business Process Modelling Group. During the later years Wipro seeked to emerge as the top most global consulting brand which would be a greatly trusted advisory brand which required it to reflect the value of a true trusted advisor in the global market. In order to make this happen, the company required to make a shift from the contemporary mode to the mode of problem solving. The focus thus shifted to three main aspects, namely, branding and positioning, scaling and differentiation. One of the most significant globalization strategies taken by the company is increasing market share in the Middle Eastern countries and other countries. The idea was to provide the different business units with a fair amount of autonomy and authority while maintaining a globalised approach in nature. This was done with extreme success by the organization. On one hand WCS had made immense global presence by attaining scale economies and consistency in the global brand. On the other hand, it tried to embed its local culture through the demonstration of local culture and knowledge in the client relationships which were collaborative and also crucial for attaining trust and security and winning engagements. This demonstrates a very unique and different strategic practice undertaken in the company. The globalization strategy undertaken in North America has been particularly appreciated by Tim Matlack who headed the consulting division of this region. According to the views of the consultant, the localization strategy has been particularly effective in expanding the market of Wipro Infotech in the Middle East and other countries. The localization strategy is seen to make a significant contribution to the overall globalization strategy of the company. It not only highlights the unique aspects of the firm’s business, but also throws insight into the future growth trends and success the company would be able to achieve. The strategy shows a clear idea of the company’s thrust on client relationships at the local levels and then taking a global approach. Such an approach is likely to strengthen its brand name and strength in the international market considerably as against its competitors which seek to take a globalized approach without attending to the concerns at the local level. This shows great business mind and maturity to follow a different practice and path from the usual and conventional strategies undertaken by firms at the global level (Money Control, 2012). The strategies also throw light on its attempt to undertake innovative business practices and making the most out of them successfully. The fact that it was begun at the time of recession when all organizations ceased to perform at their normal pace throws the innovative power and strengths of the organization. It only goes to show that its future practices and strategies would be primarily ruled by innovation and networking strategies and not the conventional footsteps of its competitors. The company took pride in itself on its ability to manage or handle internal changes at the client organizations. During the time of working with the client organization the company attempted to align itself with the value system of the customer. This was done to facilitate the process of change from within the firm and not it’s exterior. So far the strategies taken by the company has been different and has thrived on innovative practices and strategies. The past trends of the company shows that it encourages its customers to evolve their best practices and to have the utmost reliance and trust on their own culture and people. It is believed that the company’s future approaches would be different and marked departure from the traditional techniques of consultants to emphasise on business and technical aspects and losing out on the cultural issues of the organization and place. The company disregards strategies of copying and pasting external cultures in the organization which happens to be short-lived and temporary. It believes in internal changes and the effectiveness of internal forces in bringing about change in the organization (Nachum, 2012). Reference Money Control. (2012). Cautiously optimistic on demand scenario: Wipro to analysts. [Online]. Available at: http://www.moneycontrol.com/news/market-outlook/cautiously-optimisticdemand-scenario-wipro-to-analysts_716822.html. [Accessed on June 12, 2012]. Nachum, L. (2012). Why TCS, Infy Wipro need to look beyond US & Europe. [Online]. Available at: http://timesofindia.indiatimes.com/tech/enterprise-it/strategy/Why-TCS-Infy-Wipro-need-to-look-beyond-US-Europe/articleshow/13958270.cms. [Accessed on June 12, 2012]. NASSCOM. (2010). Leveraging India for Innovation, Talent and Market Potential. [Online]. Available at: http://www.nasscom.org/leveraging-india-innovation-talent-and-market-potential?fg=138885. Pinault, L. (2001). Consulting Demons: Inside the Unscrupulous World of Global Corporate Consulting. HarperCollins. Plunkett, J. W. (2007). Plunkett's Outsourcing and Offshoring Industry Almanac 2009 (E-Book). Plunkett Research, Ltd. TCS. (2010). TCS BaNCS retains its position as Global Challenger in Independent Research Firm’s Report. [Online]. Available at: http://www.tcs.com/news_events/press_releases/Pages/TCS-BaNCS-Global-Challenger-Independent-Research-Firm-Report.aspx. [Accessed on June 12, 2012]. Toraskar, A. (No Date). How the Indian IT Industry can cope with the US recession. [Pdf]. 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