STRATEGIC ANALYSIS OF INFOSYS
1/9/2012
Prepared by
Surya kiran(BLR1107094002) Prashant kumar(BLR1107094013) Ranjith kumar(BLR1107039059) Prashant shelar (BLR1107094012)
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Contents Executive summary........................................................................................................................3 Introduction ......................................................................................................................................4 Infosyss external environment analysis- PESTLE analysis ................................................................... 4 Reduction of five forces on Infosys................................................................................................. 6 EFE Matrix ..................................................................................................................................... 7 CPM............................................................................................................................................... 8 Conclusion ..................................................................................................................................... 8 Bibliography................................................................................................................................... 9
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Executive summary
Infosys is the leading IT
Indian multinational and third largest IT firm with market share of
8%. Due
to recession in U.S and then after cut down on taxes by US Government, the hiring of
freshers has been cut down by significant percentage. Economic On
slowdown due to fluctuation in currency was major reason for cut down of hiring.
scale of External factor evaluation, its respond to threat and opportunity is good as
compare to other companies.
The establishment of brand Infosys has made it stand out in tough times even the market share is dominated by its competitors like TCS and Wipro.
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Introductio n
Infosys Limited, formerly known as Infosys Technologies Limited is a global technology services company. Infosys was founded in 1981 by N. R. Narayana Murthy, and 6 other software engineers. The company¶s primary business is business and technology consulting, application services, systems integration, product engineering, custom software development, maintenance, re-engineering, independent testing and validation services, IT infrastructure services and business process outsourcing. Today, Infosys is a worldwide leader in the "next generation" of IT and consulting with revenues of US$ 6.604 billion (LTM Q2-FY12), it has 64 offices and 65 development centres in US, India, China, Australia, Japan, Middle East, UK, Germany, France, Switzerland, Netherlands, Poland, Canada and many other countries. Infosys pioneered the Global Delivery Model (GDM), which emerged as a disruptive force in the industry leading to the rise of offshore outsourcing. The GDM is based on the theory of taking work to the place where the best talent is available, where it can make the most excellent economic intelligence, with the least amount of tolerable threat. Infosys has been ranked amongst the most inventive companies in a Forbes survey, leading technology companies in a statement by The Boston Consulting Group, and top ten green companies in Newsweek's Green Rankings. It also voted India's most accepted company in The Wall Street Journal Asia every year since 2000. The corporate governance practices in Infosys were recognized by The Asset Platinum award and the IR Global Rankings. Infosys was also ranked as the 15th most reliable brand in India by The Brand Trust Report in 2011.
Inf osyss
external environment analysis- PESTLE analysis
Political
1) Indian political condition is considered stable enough but there is always a fear of hung parliament because of no clear majority for any political party. 2) In the U.S. government not give any tax benefit for those company which outsource IT work to other places. 3) Because of globalization and demand for high speed a nd accuracy government owned companies and PSUs are now giving their IT projects to Indian IT companies. 4) India is always a target for terrorist attack. IT hubs like Bangalore, New Delhi, Mumbai, Pune, and Hyderabad always be a prime target for terrorist attack. Economical
1) Because of increasingly globalised world recession has also impacted the Indian economy which affected all the industry including IT. 2) Fluctuation of currency. 3) Real state price has growing dramatically which increased the rental expenditure. 4) Due to recession job-cuts have resulted in low attri tion rate.
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Social
1) Number of technical institutes and universities has grown in the country which offers IT education. 2) India has more than 50%t working age population which is largest in the world. 3) Number of English speaking population has grown in India and now English is become the most established language in India for education. Technological
1) Due to IT revolution since 90s all Indian major cities are well connected through optical cables. 2) Technology like Service oriented architecture, web2.0, grid computing, cloud computing, high-definition content etc has changed the way of business for IT industry. 3) India has the second largest telephone network and also t he world¶s lowest call rate. Legal
1) Indian government is strengthening the IT act 2000 to provide legal environment for companies. This is associated to protection of data in transmission and storage. 2) Companies make bonds under which the employees are required to work, which is not legally required. Environmental
1) For most enterprises, green IT strategy is limited to greening of IT infrastructure, where newer and better technologies are leveraged to reduce energy requirements.
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Reduction
of f ive f orces on Inf osys
Reducing bargaining power of suppliers Giving opportunities to new one. Improving supply chain management and training Getting own supplier
Reducing threats to new entrants
Reducing bargaining power of customers
Increasing MES (minimum efficient scale)
Increasing brand loyalty Adding much better values and incentives
Creating brand image P atenting
on that brand loyal commodity
Giving more opportunities to old companies Getting directly to customers
Reducing the competitive rivalry Moving away from price competition i.e. reducing cost, positioning.
Forming cartels Not giving opportunities to small enterprises
Infosys
Reducing threats from substitutions Legal action P rice
Differentiation in products Focusing on different segments to improve more growth than other companies. Communication with competito
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is reduced and quality increased
Entering into substitution market and influencing them and Showing differences between them
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Benefits from porters¶ model 1) Statical analysis It
is beneficial to internal environment that gives the likeness of industry and also profitability. It gives whether we have chosen right industry or not. It shows impact on competitors and how it is impacted by competitors. 2) Dynamic analysis It
majorly influenced by dynamics like political, economical and social causes. It has an impact to change its structure also. 3) Analysis of options 1) With the obtained knowledge we could develop better options than the competitors. Thus this model gives us a systematic structured and good market product in market segments, industries, companies and regions.
EFE Matrix Key
Weight
Rating
Weighted score
2
external factors Opportunities Establishing of new IT hubs in India Increase of IT education in India
0.15 0.1
4 4
0.6 0.4
3
Emergence of new small domestic companies
0.1
3
0.3
4
Increase of cloud & grid computing technology at cheaper rate Threats
0.15
4
0.6
5 6
Impact of recession in U.S. Cut down on taxes on outsourcing by U.S. Government
0.08 0.1
2 1
0.16 0.1
7
Emergence of Chinese companies in IT sectors
0.12
3
0.36
8
Slow down of Indian economy Target destination by terrorist in India Satyam fiasco on image of IT sector
0.5 0.1 0.05
2 1 2
0.1 0.1 0.10
1
9 10
1
Total
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2.82
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CPM Infosys
Wipro
CSFs
Weight
rating
Weighted score
Weight
rating
Weighted score
Market share
0.15
4
0.6
0.15
4
0.6
Global experience
0.2
4
0.8
0.15
4
0.6
Organization structure
0.1
3
0.3
0.1
3
0.3
Product quality
0.15
4
0.6
0.15
4
0.6
Price competencies
0.1
2
0.2
0.15
2
0.3
Customer services
0.15
3
0.45
0.1
2
0.2
Financial position
0.15
4
0.6
0.2
4
0.8
3.55
1.0
total
1.0
3.40
Conclusion Infosys, as per EFE (External Factor evaluation) scores 2.82 which rate him as good for responding to threats and opportunities in present scenario. Even though Wipro has more market share t han Infosys its still manages to be world leader in next generation of IT and consulting.
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Bibliography
1. http://www.infosys.com/newsroom/Pages/aboutus.aspx 2. IT/ITeS ± Market and Opportunities ± IBEF (India brand equity Foundation). 3. Indian IT/ITes Industry: Impacting Economy and Society: 2007-08 ± A NASSCOM and DELIOTTE Study. 4. www.finance.yahoo.com
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