Name of the Institution
Infosys Strategic Business Analysis
TABLE OF CONTENTS
Five Forces Analysis……………………………………………..………….………….9
Collective Strength of the Five Forces………………………….….…………………..11
Factors Driving Industry Change……………………….…………….………………..13
Industry Competitive Analysis……………………………………….……….……….14
Position of Rivals in the Market………………………….……………….……………15
Industry’s Key Success Factors……………………………….…………….…………16
Summary of External Analysis………………………………………………….……..18
Infosys Strategic Business Analysis
Infosys Technologies Ltd. Is a technology company that was inaugurated in 1981 by seven people with a starting capital of US$ 250. The company has grown overtime to become the leader in ‘next generation’ of IT with a revenue base of US$ 6.04 billion. The company has been able to designs, defines and delivers technology-enabled business solutions to most of the Global 2000 companies all over the world (Hussain et al., 2017). The company provides a full range of services by leveraging its business dominion and business expertise. Recently, it has been able to grow further by forming strategic alliances with other technological industries. The company was able to start one of the major strategies that helped it to attain its current growth the Global Delivery Model (GDM) which emerged as the leading distribution strategy in the technology industry resulting to outsourcing acceptance (Mehta, & Rao, 2015). The GDM is a strategy that is based on the perception of taking work to the site with the talent that is needed, where it makes sense and economic and where it will attract less economic risks but meet acceptable risks. The company has a global presence with more than 64 offices across the world, 63 development facilities in the leading world economies of United States India, China, Australia, Japan, Middle East, United Kingdom, Switzerland, Germany, France, Netherlands, Poland, Canada, and South Africa among other nations in the world. The company had more than 150000 employees working in its different locations in the world. The company has been able to attain its long term growth strategy by establishing long-term customer relationships (Chandrawanshi & Banerji, 2017). Given the competitive nature of the industry in which the company operates in, its success has been built on its ability to become more strategic and innovative so as to always come first. The major undertaking of this assignment is to analyze one of the giant technology companies in the technology industry that has been listed as the first to offer innovative solutions to its customers throughout the world. The company offer several products and services ranging from software services, such as the application development and maintenance, independent validation services, corporate performance management, packaged application services, infrastructure services, and product engineering systems integration.
The major questions which have been asked by most people in the industry have asked include what 2017 hold for the investors in the technology industry. The main reason that most business and investment experts have deduced to support this notion or rather fact is given the leading-edge, considerate consumer base and innovative ways that are demanded to meet the savvy consumer throughout the world. This has also been compounded by the high change of business communication that has accepted technology as the main way of doing business. Most of the governments all over the world have moved from the paperwork governance system to digital platforms to enhance their efficiency and this has been another reason why the industry has been on the rise (Mehta, & Rao, 2015). Since it was incepted in the late 1800s, technology industry has surged to become one of the leading industry that enable most developed countries in the world. Anticipating new developments in the technology industry is challenging given the changing at warp speed. The high and strong investment in technology industry as far as research is concerned is something that will tell how the industry will change with time. According to Paul Sallomi, Global Technology, Media & Telecommunications industry leader and the US and global technology sector leader, technology industry story is based on the consumer demand and this will determine the industry market in the coming years. The expert is of the views that a company that will be innovative to meet the savvy customers’ demands will carry the day. It is believed that the exponential technology that include the robots, virtual and augmented reality, 3-D printing among other emerging technology will carry the day (Sengupta, 2014). Cognitive technology, blockchain, digital currency bitcoin, internests and online sales will also sprout and hit their best as the year come to age. Despite the prediction in growth, the expert is of the views that most customers are preparing for what e calls pay per use and other consumption based models and it is because of this that technologists should prepare for the challenges.
Technology companies have continually indicated that they will remain the leading companies in the global business. The main reason that most business and investment experts have deduced to support this notion or rather fact is given the leading-edge, considerate consumer base and innovative ways that are demanded to meet the savvy consumer throughout the world (Hussain et al., 2017). This has also been compounded by the high change of business communication that has accepted technology as the main way of doing business. Most of the governments all over the world have moved from the paperwork governance system to digital platforms to enhance their efficiency and this has been another reason why the industry has been on the rise (Mehta, & Rao, 2015). Since it was incepted in the late 1800s, technology industry has surged to become one of the leading industry that enable most developed countries in the world. Technology has been at the centre of all developed countries and the developing countries as it have made it possible for the countries other industries to be more effective and efficient during their operations. There are several reasons as to why the industry has been able to reach its current heights (Sengupta, 2014). At the top of all the factors has been the adoption of technology by all government departments which has provided the large market and demand for technological products throughout the world. Information technology industry has grown by more than 7.5% in the last five years as compared to how it was 1.2% in 1998. The industry has grown in the last one year by 23% and has increased its global revenue by more than $30 trillion down from $10 trillion.
PESTEL analysis helps in studying the political, economic, social, technological, environmental and legal aspects of any company (Wang et al., 2016). In the case of Infosys Technologies Ltd, these factors are very crucial to evaluate the external environment.
As an international brand Infosys Technologies Ltd work in more than 60 countries around the world. Every country has its own political agenda related to foreign companies and their share in market. These diverse policies affect the sale of Infosys Technologies Ltd. The taxes and regulations on imported products also affect the brand price. So as a global company Infosys Technologies Ltd needs to focus on its political friendly policies (Ahmed, 2016). Many countries have rigid policies related to foreign products imported to their land and also they are not very open to foreign direct investment. It should understand how the trading system of importing and exporting of goods and products works in different countries. In such circumstances, Infosys Technologies Ltd has to change its management as well as its marketing policies.
It is not only the political factor that affects Zara, but also the changing economic scenario of the world in turn affects Zara. As it is an international technology company and as customers are price sensitive, it has aimed to provide better products in reasonable prices (Sengupta, 2014). But this may change from developed countries to underdeveloped countries. The economy of the country like the inflation situation affects the purchasing power of the costumers. In some countries Infosys Technologies Ltd is considered as a technology company, and this in turn affects sales in large markets. It is because of these that Infosys Technologies Ltd needs to change it economic strategies depending on the economy of the country they operate in.
Technology depends largely on the cultural prospect of the country. The society plays a major role in accepting and creating technological products (Hussain et al., 2017). Culture impact directly the demand of technology changes with change in culture of a given country. Working in various countries, Infosys Technologies Ltd has to look up for the cultural impacts on apparels. Because of that Infosys Technologies Ltd focused it products based on the social factors of the country (Mehta, & Rao, 2015). Of course there are always some global technology trends, but the technology industry needs to incorporate social and cultural factors to their products. Being an American company, Infosys Technologies Ltd not only has a European impact on technology, but it is also considered the culture of the country that it moves to.
Any kind of business around the world is facing the changing demand of the technology. Infosys Technologies Ltd is also moving forward in integrating improved technology (Wang et al., 2016). Apart from its physical stores, Infosys Technologies Ltd also introduced online sales points, which is very helpful in reaching out to those customers who do not have access to the stores. Even in the online stores, costumer’s priority is the most important for Infosys Technologies Ltd (Ahmed, 2016). It follows costumer’s feedback and revamps its products collection depending on the changing demands. RFID technology is helpful in stores in order to track down those products that sell out and need to be refilled in the store. Through this technology, it becomes much easier for the store manager to keep track of the products on demand or the products that are not on demand. Also by using social networking, it has amped up the place of Infosys Technologies Ltd in the global business.
As an industry for many years Infosys Technologies Ltd are criticized by environmental activities for spreading pollution through products manufacturing processes plants. To overcome that Infosys Technologies Ltd started eco-friendly methods in the technology industry (Hussain et al., 2017). It has its own detox campaign to promote non-toxic software for people. Costumers nowadays are very much concerned about the impact of various industries on the environment. This definitely affects Infosys Technologies Ltd as a global brand. Its impact on the environment can result in a chance of banishment. So as an outcome, Infosys Technologies Ltd has come up with incorporating organic materials and sustainable technology for its products.
Legal and Regulatory Factors
Legal obligation helps in creating the face of many products. Sticking to the legal premises of the land helps the company to protect its face value and emerge as trusted products among the costumers. So, that is why Infosys Technologies Ltd always has a wing to handle its legal part of the business (Sengupta, 2014). Being an international company and foreign to many countries, it faces legal obligations from local companies all the time. Some of the legal obligations that Infosys Technologies Ltd is exposed to are improving the labor standards in developing countries to reduce costs. The brand follows the local laws as well as the global laws while promoting its stores across the different countries.
Five Forces Analysis
Porter’s five forces analysis helps in understanding the external factors like industry rivalry, threats of substitute, threats of new entrance, bargaining of supplier and buyers. This factor is very influential to know the status of any production company (Hussain et al., 2017). It will help in measuring the gravity of each issue and based on that the plan can be made.
Rivalry within the industry
Technology industry is one of the most competitive industries in the world given its lucrative in nature (Ahmed, 2016). An analysis of rivalry in the industry is based commoditization offering, low cost, products similarities and little differentiation. Another rivalry is based on positioning, high industrial growth, competitors and little number of large companies.
Barriers to entry
As an in-house designing facility, there are always situations of doubting the authenticity of the product. The creativity of Infosys Technologies Ltd products is unique. But with continuous changing of customer demand trends, there is always a new brand in the market (Mehta, & Rao, 2015). The technology industry is flourishing. It is bringing more business and money. It encourages new companies to try their luck in the technology industry. But the uniqueness of the products serves as a lesser chance of threat from the new companies. So the threats are at medium level
Bargaining power of suppliers
Because of its in-house designing, production, distribution and selling, Infosys Technologies Ltd is not much dependent on suppliers. That results in a less power of bargaining by the suppliers. As an international company for some countries like China, Infosys Technologies Ltd depends on certain suppliers and manufactures. But still they have a lesser chance to pressurize Infosys Technologies Ltd as a brand (Ahmed, 2016). Also Infosys Technologies Ltd has less opportunity in outsourcing its production, to maintain the quality, which in turn may affect the cost of manufacturing. But the company does not have to depend on out factor for production.
Bargaining power of buyers
As an international company, Infosys Technologies Ltd has no room for bargaining by the buyers. The company has a history of dedicated costumers despite the change in pricing and the influence of other retail brands. Buyers are always willing to pay for better technological products. Infosys Technologies Ltd is able to produce the latest products trends available to the costumers with a faster time frame, so that the buyers will have no chance to complain (Rothaermel, 2015). Costumers always have a say on the service and feedback and it is always taken into consideration by the Infosys Technologies Ltd’s team. This privileged service is provided to them to give way to lower complain and moderately affect the trading.
Threat of substitutes
Infosys Technologies Ltd has its own in-house designing and production facility. Apparels are manufactured from its more than 50 facilities and exported to different stores across the world. Because of its unique style of designing, Infosys Technologies Ltd stands out immensely among other rival products. So there is less opportunity for a threat of substitute (Karna et al., 2014). Infosys Technologies Ltd has successfully established itself as a top brand both in retail and production. Though there are many companies that have the same type of product, costumers that understand and used apparels from Infosys Technologies Ltd never believe to switch to any other brand.
Collective Strength of the Five Forces
The state of competition in any industry depend on the porters five forces. The ultimate or rather collective strength of the forces is determined by the ultimate profit potential of the industry that the company belongs (Mehta, & Rao, 2015). The strength ranges from intense in industries where no one company earns spectacular returns on investment like metal tire among other to mild in the industry where companies are able to earn high profits on their investments. Collective strength of the five forces in the industry allows company strategists to attain their goals of finding a position in the industry where the company is in position to defend itself from the forces or position itself in a way that it cannot be influenced by other competitors in the industry.
Figure 1 below shows collective strength of five forces
The strength of the five forces help the company to determine what makes it easy for the new entrants to enter the industry and create the knowledge of what makes it easy for the suppliers to bargain in the industry (Rothaermel, 2015). The strength of the five forces is in the fact that it allows companies to create groundwork for a strategic goals that the company intend to attain. The best thing with the collective strength of the five forces is that it highlights the company’s strength and weaknesses in the industry. It also animates the position of the company industry (Mehta, & Rao, 2015). The collective strength also help to clarify areas of the company operations that strategic changes may help the company bring in vast returns on investment. Collective strength of the forces helps to identify areas in the industry where opportunities are great and where threats are limited. Knowledge of collective strength of the five forces is important as it provide knowledge that can help the company diversify successfully. Collective strength of the five forces has been imperative among the technology industry players as they have utilized on the strength to strategically plan for their company growth.
Factors Driving Industry Change
Technology industry is one of the most competitive industries in the world due to high levels of innovation among the industry players (Wang et al., 2016). Changes in an industry just like the technology industry are determined by several factors that include and not limited to the ones discussed below.
The knowledge of the buyers and sellers in the industry is one of the factors that drive changes in the industry. When the sellers and the buyers have perfect knowledge of the industry market, then the there will be almost a uniform price in the industry which will significantly change in the revenue margin of most companies in the industry.
Change in the technology used in the industry is one of the factors that drive changes in a given industry (Chandrawanshi & Banerji, 2017). As technology change in the technology industry, companies in the industry including Infosys has to improve the way it manufacture its products and services so as to remain competitive in the industry something that will change its revenues due to customer increase.
Marketing is another important aspect that causes great revolution in any given industry (Wang et al., 2016). Introduction of new ways of marketing through innovation is central to changes in the industry as most innovative companies in the industry will gain more market share as less innovative may ware out of the industry.
The changing in lifestyle of people in the world is seen to one of the most important aspect that drives change in the industry (Sengupta, 2014). Customers are aware of the products health impacts and are much interested in the products they are paying for in the industry. Customers are ready to go for quality products at any given prices but not quantity products at lower prices.
Industry Competitive Analysis
Faced by high competition from other industry players, technology industries have strategically come up with ways to deal with the competition. Some of the strategies that most of the companies have adopted include mergers and acquisitions. The competition in the industry has made it possible for the companies to increase their size, change structure and overcome some of the challenges in new geographical frontiers (Ahmed, 2016). According to the competitive studies that have been done in the industry, 99% of the companies have alluded the competition to regulations and ease of entry into the industry. Technology companies face strong competition for the available talents and skilled labor supply in the industry. As earlier discussed, the company’s success in the industry heavily depends on innovation and creativity (Karna et al., 2014). Because of these success factors, there is high competition for talented employees in the technology industry. Companies are struggling to mange, attract and retain some of the best talented employees. Another competitive area in the industry is the ability to oversee supply chain of such companies and to protect intellectual properties, developing the most updated innovative price and price wars has also been the basis of high competition in the industry. The high levels of competition in the industry have resulted to several risks in the industry that has made company operations in the industry limited (Sengupta, 2014). Some of the risks that have originated from the competitive environment include control of international operations are subject to political and economic uncertainties. There is high increased number of litigation risks and pressure tech companies as the issues of IP address increase.
9.0 Industry Competitor
Technology industry is one of the most competitive industries in the world given the high demands of technological products and services (Ahmed, 2016). The industry is inhabited by several gigantic companies with large or rather strong financial muscles. The major competitors in the technology industry include, Microsoft, apple, Google, Toshiba Corporation, Dell, Acer, HP, Sony among other companies that manufacturer software and technology application.
Position of Rivals in the Market
As much as the company has been able to grow significantly in the industry, it is not ranked as the first or rather number one in the industry. Technology and to the extent the information technology industry is the industry that drive other industries in the world. The best and top ten companies in the world are selected by sharp minds in the technology industry across the industry. Infosys technologies ltd does not exist in the industry alone but it has rivals or competitors (Rothaermel, 2015). Some of the list of the companies in the information technology industry that rival Infosys include IBM which is on position one in the industry, Microsoft which is at position two and HP Enterprise which is at position 3. The other companies include Oracle at position 4, Accenture at position five, SAP at sixth place, TCS at position seven, Cognizant and Capgemini at position eight and nine respectively. The company under the analysis is at position ten coming after nine of its rivals in the industry. As much as the company enjoys market leadership in the information technology industry, it is not at the apex of the top ten best companies in the industry.
Industry’s Key Success Factors
Every industry has some of the factors that drive success in such specific industries throughout the world. These factors are important as they help the companies in the industry to achieve its goals. Some of the factors include the following success factors:
Marketing position is very important success indicator in any given industry. The success of the company in any gven industry depends on the market position in the industry (Rothaermel, 2015). It is imperative to analyze the competitive advantages of the company in business and market position. Any company with high market share should have bigger economies of scale as other aspects that include leadership and innovation trends to the growth of the company.
Operating management is imperative and one of the leading success factors to any companies success in the industry. Working capital management and safeguarding of the inventory , receivable collections, and payable management is significant key factor success in any industry as it provide procedures and regulations that may increase the operational effectiveness and efficiency of the company leading to success (Karna et al., 2014). Operating management is important as it provide the required knowledge to the management team that can be used to compare the company’s performance to that of the rival companies in the industry.
Diversification is very important as far as the success of any company in the industry is concerned. Diversification in this case refers to change of production line which in turn changes the products and services offered by companies in the given industry (Karna et al., 2014). Technology industry is one of the most competitive industry and change off products ids important as technology industry is one of the most demanding consumers and changing products and services is imperative as it may play a significant role in increasing the company market share and lead to success (Ahmed, 2016). Diversification also helps to widen company coverage and reduce pressure something that will stabilize company revenue.
Marketing and distribution
At the heart of any company success in any industry is marketing and distribution chain. Marketing will enable the company acquire enough market share which will in turn increase the demand of the products and services. On the other hand, as the market share increase, it is imperative that the company products reach all the corners of the market and fulfill the demands of the customers (Karna et al., 2014). The company’s ability and commitment to build and strengthen customers’ and public awareness and trust on the reliability of the company’s products or service is also analyzed.
Conclusion (Summary of External Analysis)
The company has been able to designs, defines and delivers technology-enabled business solutions to most of the Global 2000 companies all over the world. The company provides a full range of services by leveraging its business dominion and business expertise. Recently, it has been able to grow further by forming strategic alliances with other technological industries. The main reason that most business and investment experts have deduced to support this notion or rather fact is given the leading-edge, considerate consumer base and innovative ways that are demanded to meet the savvy consumer throughout the world. This has also been compounded by the high change of business communication that has accepted technology as the main way of doing business. Porter’s five forces analysis helps in understanding the external factors like industry rivalry, threats of substitute, threats of new entrance, bargaining of supplier and buyers. This factor is very influential to know the status of any production company. It will help in measuring the gravity of each issue and based on that the plan can be made.
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