Teesside University Business School

MSc International Management

Global environment & strategy

Global Environment & Strategy

1.0 Choice of Organisation

The organization taken for study is Birla Soft Computers which is a global MNC IT
company with its base in India. It is one of the leading private IT sector operating all
over the world with a huge base of customers. It is considered as one of the lading
service providers in the Indian software industry. They have expanded to few parts of
the developing world and now they are planning to expand in to some of the global
locations like south Africa and China where they feel there is huge growth in the
future.

They are mainly into the implementation of the products based on Microsoft, Oracle,
SAP, etc Thus they are the main service providers for majority of the industries in
India. As they have reached a saturation point in India now they are in to the Global
Expansion strategy in to the parts of the world where they feel there is huge growth
in the future. As this article is not about the external factors and is all about the
expansion strategies; it concentrates on the process of planning and development
for the next set of growth in the international market. It discusses some of the models
and the ideas needed for the growth of the IT industry to be expanded around the
world.

2.0 Strategic options available to Birla software

2.1 Nature/Type of Strategy

Initially they had begun the growth as a small time IT Company in India, and they
applied the incremental model of growth. They had never applied all their resources
at once and had begun the growth by starting their growth as a small company and
then they had slowly expanded by conquering the market segments and based on
the profits they had expanded their resources. They had initially started from the
scrape where in they brought the minimal resources needed for the growth and later
they emerged in the market by the concept of the generic strategy models mentioned

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by Porter. They were the only people to provide the cheapest service in the market
and they had attracted a lot of the crowd by going in for the cheapest bids made.

Thus they had gained huge profit because in the times of the recession they had
differentiated their service by offering the lowest price in the market. Hence they had
occupied most of the industries in India with their lowest pricing which was not
adapted by the competitors. The service provided by them were also very excellent
and they used to send at least 2 engineers to the target site for the after service for
more than 1 month after the installation of the product like SAP. The engineers used
to work dedicatedly to provide the excellent support as they would work on the
customization of the product based on the needs of the clients. Since their after
services were very excellent than the other competitors in the market they were
rated as the best in the market and they had gained in most of the customers in a
very short period of time.

They were the only company which had used the strategy of the developing nation
like India to offer the service at the lowest cost to take over all the markets and
hence the first part of the strategy used by it was the Incremental improvement and
the cost leadership. Later it had gone in for the new strategy to balance the demands
like. In India it had fixed the prices based on the demands and when ever there
where very high demands they changed the prices and they used to give offers to
the clients based on the needs.

When ever there were low demands in the market they had gone for the rock bottom
prices of their service and provided free 1 month service support and other discounts
to attract their customers.

They had planned in for the international merger strategy where in they used to join
hands with the most established IT industry operating in the same sector in that area
and they continued to expand all over. They also emerged as the giants in India by
taking over some of the struggling and up coming companies in India.

The main strategy is to mainly concentrate on the specific point where they feel there
will be next major growth mainly the developing nations like South Africa and China
where they have a very high growth in the future. Birla joined hands with the Aditya
group of companies and it was called as the AB groups. Similarly now it is planning

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to expand in to the China and SA by joining hands with the companies there and
based up on this they have gained a huge growth.

First it created the market by the strategies like the low pricing -> Developed the
service and differentiated it to become the leader in that area -> then finally it
emerged as the brand leader and went in for the diversification in that area

2.2 Suitability

Any organization going in for the process of change should first plan their strategies
and should see to that the plan focuses the firm towards the future growth and it
should align with the mission and vision of the organization. (Palmer, A. and Hartley,
B. 2005)

The key strategy is to play safe by looking in for the process of joining hands with
some other firm before going in into new markets as the risk involved will be less and
they can also go in for the new services and products; which should be launched at
the periodic intervals to attract the taste of the people.

2.3 Feasibility

This is the test taken by the firm to check if the firm is having all the resources
needed to for the planned growth. Here AB groups have accrued lot of assets and
they are highly established in India. Their financial records have proved to be highly
profitable and they have proved to be one of the most stable companies. It has also
adapted the safest strategies like joining hands with the developed companies and
hence it can easily reach over the top as the risk involved is less and the resources
needed to be invested is very less.

2.4 Acceptability:
Since they are going for the global expansion they have to first plan for the
expansion strategy and for this they have to gain the support of the investors and the
employees of the firm. They have to gain the acceptance of the stake holders and
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they will have to plan for the increase in the profits. If they are planning for the
international growth then they will have to go for the acquisitions.

They will have to plan to increase the market segment and if they have to go for the
next level of the growth then the only strategy is to go in for the international market
of the developing nations and it is the role of the strategic planners to make the stake
holders understand this point and any thing done with out their willingness will be a
disaster because they will gain no support from them.( R D Stacey 1992)

3.0 Rumelts Test

3.1 Consistency

The key strategy followed by the AB group is pricing very low in the market initially
and then later increasing the market. This strategy had very highly worked with AB
but this success was very high in the Indian market and there is no hard proof that
this will work the same in the international markets as the market in those countries
may vary based up on several other factors. Hence the only way to plan for the
strategy is to first see if the existing model is consistent and also verify if this same
business model can be applied in the other market. In order to over come the risk
they will have to work on the building of the new model based on the companies
which have been successful in those areas, the political, economic and other factors
in those places. They have to do an extensive study on the external and the internal
factors affecting the growth and only based on these they will have to plan the new
strategies for the growth.

3.2 Consonance

Currently the world is under severe recession and they are facing severe problem in
the trade hence the new companies are finding it difficult to run the show and the
only option is to go in for the new method which will promote the trade. Currently
they are facing problem in the test because they have to see if the new planned
strategy is suitable for them. Hence they will have to plan for the initial testing before
entering in to the new market as they have invested huge amount of the resources.

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More over any plan can never be directly used they have to follow a reactive model
where in they will have to first initially introduce the plan and based on the effect or
the success of the out come they will have to make alterations and do the changes.
Hence the best strategy is to plan for the feed back based model. Here they can
collect the feed back from the clients, employees, investors and other experts and
based on this expert opinion they can plan for the change to be implemented.

3.3 Advantage:

In what way are they going to get benefited from the plan made? Since they are
going in for the new market they will have to see in what way they are going to move
towards their objective and how they are going to be benefited due to the new
market entry strategies. They have to play a silent game at times and based on the
plans made by their opposite companies they will have to make alterations to their
plan and the most essential step is to identify in what ways they are benefited or how
they can reach the target. Thus based up on the target moves and the changes
made they can reach the top of the market segment.

3.4 Strategy Implementation Issues

Any plan that is implemented should align with the target country and they have to
be suitable for the practices in there. Currently the main problem with the AB group is
that they are planning for the expansion strategy and their plan should align with the
company they are going to merge with and this also will depend on the country in to
which they are expanding in to.
The plan made should be aligning with the;
1. Human resource
2. Technology
3. Objectives
4. Vision / Mission
5. Target country
6. PESTEL and the internal factors

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4.0 Organisation structure:

Birla soft is completely having diverse set of the services and the products now it is
also opening several sectors which are partitioned based on the domain in which
they are operating. Currently they are in different parts of the world with the main
controls and HQ from India. They are working on a lot of products and services and
the main problem is they are in to merger strategy with the firms whose structure is
completely different than their own. They are currently more centralized and hence
they are not able to control all their branches more elegantly and they will have to
follow new methods where in they have to combine their plans like mergers and
takeovers. It will be better if they are working on the decentralization and this will
help in reducing the cost of the operations and also reduce the over head of the
control this will help in the increase in the coordination and control of all the
departments.

The changes made are taking more time to get implemented and hence due to this
the loss of the time period for the change is high and if they are going to have an
effective management in each and every branch who can take best decisions
immediately rather than waiting for the green signal from the centralized branch they
can gain in and make more easy and quick decisions in a short period of time which
is going to change the fate of their business as the decisions will be very effective

Already it is highly established in India and it is the right time to move into the other
parts of the world as they have more increased opportunities in the growth and they
also have more help form the existing branches more over the risk is also less as
they are in a very good business and market position in India and any problems of
the business in the other parts of the world will be offset by this.

These changes can be easily implemented in the AB group because they have very
good communication infrastructure and IT background hence even if they are going
in for the process of decentralization they can easily interact with the HQ of all the
operations. Similarly the HQ can also monitor all the branch operations and work on
the live updated datas. Hence this will work better for them and they can gain in
more support from the management.

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Culture:

The culture of the firm is flat and they are free and independent to communicate with
the upper levels of the management. As there is very good communication between
the segments they are able to gain more competitor advantage and this strategy will
be directly applicable to them.

Before going for any merger they will have to plan for the strategies for the cultural
alignment as it will be a major disaster if their cultures dont align with each other.
(Clark, D. 2000)

5.0 Conclusion:

Thus all the strategies have been discussed for the Birla soft corporation to go global
and they will have to adapt the new strategies like joining with some other firm which
is well established in that particular region. They have to plan for the new set of the
services and the products based on the target market as their current position is
highly stable. Liquidity is one major factor in which most of the firms fail as they dont
have enough cash in the hands to manage all their needs and they have to plan for
their operating cash in order to over come the problems associated with the cash
needed for the operations.

By going in for more acquisitions they can gain more advantage in the future like:

The autonomous decentralised branches will be more faster than the old
method
They can help in preventing the operational cost
Dependency on the Indian market alone will be eliminated
Increase their market capacity
Increase in the assets and the customer base
Extensive expansion
Increased profits

Hence by their strategic choices they can enter in to the new market and new places
for growth.

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References:

1. Palmer, A. and Hartley, B. (2005) The Business Environment, 5th edition,

Berkshire, McGraw Hill Higher Education.

2. R D Stacey (1992), Managing The Unknowable: strategic boundaries

between order and chaos in organizations (2nd edn), Jossey-Bass, San
Francisco.

3. Clark, D. (2000, August 18), Organizational Culture, [Online]. Available at <

http://www.soi.org/reading/change/culture.shtml> [Accessed 25 May 2011].

4. Craig G, Sadler P., (2003). Strategic management. (2nd edn). KOGEN

Publications, USA

5. Hill, L, Jones G., (2003). Strategic management: an integration approach.

(3rd edn), Wiley Publishers.USA

6. Finlay, P. (2008). Strategic management: an introduction to business and

corporate strategy (2nd edn)., Pearson Education, USA.

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May, 2011