BRIEF INTRODUCTION OF A COMPANY

Infosys Limited (formerly Infosys Technologies Limited) is an

Indian multinational corporation that provides business consulting, information
technology and outsourcing services. It has its headquarters in Bengaluru,
Karnataka, India. Infosys is the second-largest Indian IT company by 2017
revenues and 596th largest public company in the world in terms of revenue.
Infosys Technologies Ltd. (NASDAQ: INFY) was started in 1981 by seven
people with US$ 250. Today, we are a global leader in the "next generation" of
IT and consulting with revenues of over US$ 4 billion. Infosys defines designs
and delivers technology-enabled business solutions that help Global 2000
companies win in a Flat World. Infosys also provides a complete range of
services by leveraging our domain and business expertise and strategic alliances
with leading technology providers.

Infosys' offerings span 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 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
principle of taking work to the location where the best talent is available, where
it makes the best economic sense, with the least amount of acceptable risk.
Infosys has a global footprint with over 50 offices and development centers in
India, China, Australia, the Czech Republic, Poland, the UK, Canada and Japan.

Infosys has over 103,000 employees. Infosys takes pride in building strategic
long-term client relationships. Over 97% of our revenues come from existing
customers.

In an increasingly globalised world, significant complexity and uncertainty is

getting attached to the unprecedented economic crisis. The Indian economy has
also been impacted by the recessionary trends, with a slowdown in GDP growth
to seven per cent. The focus and exponential growth in the domestic market has
partially offset this fall and insulated the country, resulting in net overall
momentum. The IT-BPO industry in India has today become a growth engine
for the economy, contributing substantially to increases in the GDP, urban
employment and exports, to achieve the vision of a "young and resilient" India.
During the year, the sector maintained its double digit growth rate and was a net
hirer.

Vision
"To be a globally respected corporation that provides best-of-breed business
solutions, leveraging technology, delivered by best in class people."

Mission

"To achieve our objectives in an environment of fairness, honesty, and courtesy

towards our clients, employees, vendors and society at large."

MACROLEVEL EXTERNAL ENVIRONMENT ANALYSIS

One method used to analyze trends in the macro environment is the PEST
(political, economic, social, technological) analysis. Some variations of the
PEST analysis method add additional categories for the legal and ecological
environments, and may be referred to by other acronyms such as STEEP or
PESTEL.
Bounsoussan and Fleisher (2012) recommend the following process: begin by
defining the environmental boundaries in terms of: breadth (topical coverage),
depth (level of detail), and forecasting horizon (short, medium, or long
timeframe) based on the organization's current strategic plan, geographic reach,
and product or service scope.

1. Identify key events and trends within each segment. How have they
involved? What is the rate of change? How do they impact the
organization (negative, positive, or neutral)? Provide evidence.
2. Understand how the various trends relate to each other.
3. Identify the trends likely to have the greatest impact on the organization.
4. Forecast the future direction of these trends, including multiple
projections or scenarios.
5. Derive implications, focusing on structural forces within the industry
which will affect future strategies.

The following sources provide additional information on environmental

scanning and a variety of analytical tools including the PEST Analysis
technique.
Pestle of Infosys:
Political:
 1. Political stability: Indian political structure is considered stable enough
expect the fact that there is a fear of "hung parliament" (no clear
majority).
2. U.S. government has declared that U.S companies that outsource IT work
to other locations other than U.S. will not get tax benefit.
3. Government owned companies and PSUs have decided to give more IT
projects to Indian IT companies.
4. Terrorist attack or war.

Economic:

1. Global IT spending (demand)

2. Domestic IT Spending (Demand): Domestic market to grow by 20% and
reach approx USD 20 billion in 2008-09 - NASSCOM
3. Currency Fluctuation
4. Real Estate Prices: Decline in real estate prices has resulted reducing the
rental expenditures.
5. Attrition: Due to recession, the layoffs and job-cuts have resulted in low
attrition rate.
6. Economic Attractiveness:

Due to cost advantage and other factors

Social:

1. Language spoken: English is widely spoken language in India, English

medium being the most accepted medium of education. Thus, India
boasts of large English speaking population.
2. Education: A number of technical institutes and universities over the
country offer IT education.
3. Working age population

Technological:

1. Telephony:

a. India has the world's lowest call rates (1-2 US cents).

b. Expected to have total subscriber base of about 500 million by 2010.
c. ARPU for GSM is USD 6.6 per month.
d. India has the second largest telephone network after china.
e. Teledensity - 19.86 %
f. Enterprise telephone services, 3G, Wi-max and VPN are poised to grow

MICROLEVEL EXTERNAL ENVIRONMENT ANALYSIS

 Industry Analysis(Porter Five Force Analysis)

1) RIVALRY AMONG FIRMS:

The IT Industry landscape is characterised by intense completion for

conventional IT services: Application Development & Maintenance, IT
Infrastructure Management Services, Network Management Services,
Data-center Services etc. leading therefore to commoditization. There are
several firms in the market offering similar services and it is difficult to
differentiate based on these service offerings. The existing competition
comes from both domestic players and international ones.

Infosys experience intense competition in traditional services and see a

rapidly-changing marketplace with new competitors arising in new
technologies who are focused on agility, flexibility and innovation.

In future, Infosys expect intensified competition. They expect increased

competition from firms that strengthen their offshore presence in India or
other low-cost locations and firms that offer technology-based solutions
to business problems and from firms incumbent in market segments that
they have recently entered.

2) BARGAINING POWER OF CUSTOMERS:

For conventional IT services, bargaining power of the buyer is large and

the possibility of pressure on rates exists. The buyer, having worked with
both with international IT providers as well as Indian ones is largely the
price setter and has negated (to a large extent) the offshore advantages
through mature procurement and global delivery. The international IT
firms too have negated the advantage enjoyed by Indian IT companies
through captive centres in India and globally. In this industry, in case of
conventional IT services, the buyer is king!

In case of non-conventional services, i.e. those that cater to emergent

technologies and technology trends (in Data Analytics or Enterprise
Mobility for instance) there is potential for differentiation and higher
margins. Also, this is the case for non-conventional, partnership-style
engagements where both risk and rewards are higher.

3) BARGAINING POWER OF SUPPLIERS:

The bargaining power for suppliers is very low and since high-
standardization exists, there is little scope of suppliers having any clout.

Software and computing technology are transforming business in every

industry around the world in a very profound and fundamental way. The
continuous reduction in the unit cost of hardware, the explosion of
network bandwidth, advance software technologies and technology-
enabled services are fuelling the rapid digitization of business process and
information. Traditional business models are being disrupted in every
industry with digital and software-based business models.

The suppliers consist of IT Infrastructure providers (Servers, computers

etc.), Recruitment firms, Office Space Suppliers etc.

4) THREAT OF NEW ENTRANTS:

In context of the highly commoditized IT services, there is little threat of

new entrants. That said, the Industry is also characterised by high people
dependence and therefore can see veterans detach from existing
companies to invest in new ventures.

The newer technologies allow the possibility of new niche players that
are not dependant on size or experience constraints.

MNCs are ramping up capacity and employee strength.

5) AVAILABILITY OF SUBSTITUTES:
 There are no substantial substitutes to IT services apart from Internal IT
departments, which have lost clout over the years and are ever thinner in
numbers and significance. One argument for internal IT is retaining
control over pertinent aspects of business but the argument against would
be since the main business of the company is not IT services, it should
outsource as much as possible and focus on future growth in core areas.
Over time there has been a steady decrease in in-house IT development
and maintenance with more and more being outsourced and the internal
IT staff has settled into a supervisory (program management) role.

This has been a mixed bag for newer services as well since internal
specialization is very low, most of the work is outsourced. For critical
areas, governance has been retained in-house and this trend seems to have
found favour with most large enterprises worldwide.

Broadly speaking the market for conventional services is highly

commoditised with potential for differentiation concentrated around niche
expertise in new technologies and trends (SMAC + Internet of Things)
and around non-conventional engagements (revenue/profit share, risk-
reward models). It is unlikely that the market for conventional services
will vanish overnight but the future promises to hold a highly modified
view. Application development is fast morphing into app-development
and a large part of revenues continue to be drawn from conventional
services as the need to adapt and incorporate new technologies and
engagement models looms over an IT industry that needs to reform and
re-invent itself rapidly.

 Market Analysis(David A.Aaker Seven dimensions)

Market analysis helps us to determine the market situation in terms of its

attractiveness or otherwise. Organizations weigh their strengths and weaknesses
relating it to the opportunities and threats, to understand their capability to
respond to the market changes, based on such analysis.

Systematic market analysis benefits an organization in terms of new product

development, tracking changing demand pattern of customers. Also this helps in
demand forecasting and accordingly scaling up and down the activities of the
organizations.
David A. Aaker outlined the following dimensions of a market analysis:

i. Market size (current and future)

ii. Market growth rate

iii. Market profitability

iv. Industry cost structure

v. Distribution channels

vi. Market trends

vii. Key success factors

i. Market Size:
Market size is determined based on the current and future sales potentiality of
an organization. It is determined by browsing through the information from
various sources. A tentative list of such sources can be enumerated as follows:

i. Government data

ii. Trade associations

iii. Financial data from major players

iv. Customer surveys

ii. Market Growth Rate:

Extrapolating the past data into the future, market growth rate can be
ascertained in an organization. This is, however, very crude form of estimation
of market growth rate, as it cannot account for the fluctuations or any variation
in the growth pattern that may occur in future time period for change in any
factor or factors, which may influence the market growth.
There are many market growth drivers, like, demographic pattern, growth of
sales in complementary products, income level, changing lifestyle of users of
products and services, changing customers’ taste and preferences, etc.

For a better estimation of market growth pattern, often it is recommended to use

the product diffusion curve. Product diffusion curve is developed based on the
study of characteristics of adoption rate of similar products or services in the
past. This information ultimately helps us to reach the level of maturity.

We have already indicated the growth drivers. Some of the indicators of decline
phase in a product diffusion curve are price competition, decline in brand
loyalty, availability of new substitutes, market saturation, etc.

iii. Market Profitability:

Profitability levels in any organization, to a great extent, are market dependent.
Organizations may have different levels of profitability in different market
situation, which depends on number of factors. Michael Porter, through his five
competitive forces, explained the way to measure the market situation. This
framework of competitive forces, to a large extent influences the market
profitability. Let us now understand such competitive forces.

i. Bargaining power of buyers

ii. Bargaining power of suppliers

iii. Entry barriers

iv. Availability of substitutes

v. Rivalry

Such competitive forces exert pressure on market profitability. To take an

example, with a high degree of rivalry, i.e., availability of more competitors in
the market, price competition increases and market profitability declines. In the
reverse case, however, market profitability increases.

iv. Industry Cost Structure:

Industry cost structure is an important determinant of organizational success or
failure. Here, again we can refer Porter’s value-chain concept, which helps an
organization to add value to products and services, without, however altering
the cost. At times, it can even reduce the costs while increasing the customers’
satisfaction.

v. Distribution Channels:
Distribution channels facilitate in reaching the products to the end-users on real
time basis. Some of the distributions systems, which organizations need to
consider while doing market analysis are as under:

i. Understanding of the Existing Distribution Channels: This helps us to

understand how direct the products reach to the customers.

ii. Trends and Emerging Channels: This helps us to asses to what extent new
channels can enhance the competitive advantage for .the organization.

iii. Power Structure of Channels: Understanding the power structure of channels

is very important aspect of market analysis. Organizations with high brand
equity can weaken the channels power, as they dictate their terms. Similarly in
the reverse case, the channel partners enjoy the higher power.

vi. Market Trends:

Fluctuations in the market trends could be both an opportunity and threat for an
organization. Market trends may be industry specific or general. Industry-
specific market trends influence those organizations that falls under the same
industry category. General market trends, however, affect all organizations,
irrespective of their industry group. Such trends may be in terms of price
sensitivity, nature of demand or even regional trends.

vii. Key Success Factors:

Key success factors are those which help an organization to achieve its market
objectives. It also forms an important part of market analysis. Some of the key
success factors can be listed as under:

i. Accessibility to essential and unique resources

ii. Competence to reach economies of scale

iii. Accessibility to channels of distribution

iv. Accessibility to the state-of-the-art technology

  Competitor Analysis

Infosys Accenture TCS

Product  Offers Products  Accenture  information
and services Strategy technology-related
 Software  Accenture products and services
consultancy Consulting  application
 Business  Accenture development
consultancy Digital  BPO
 BPO  Accenture  enterprise software
Technology  software
 Accenture management
Operations  consulting
Price  Ticket based  Premium price  Outcome based
pricing when compared pricing
with other
A customer's Indian Tend to promise
fee will be competitors. clients process
based on  Decided by top improvements, cost
parameters level reduction and
such as whether management revenue
the client  Now leverages enhancement. If
request or on global these outcomes are
'ticket' is raised delivery model reached, the software
is for a small to deliver price firm gets to share a
enhancement in competitive part of the upside.
the software solutions.
application, a  Negotiable pricing
big  Focus is on volume.
enhancement or
a bug-fix.

 Competitive
pricing.
 Low margins.
 Decided by
Top
 management
Place  1,045 clients  Serve clients in  230 offices across 46
across 50 more than 120 countries.
countries countries.  147 delivery centres
 Headquarter  Headquarter in 21 countries
located in located in  total of 58 subsidiary
Bangalore, Dublin, Ireland. companies
India.
 Global
footprint with
offices and
development
centres across
the world.
Promotion  Print Media  Print media ad  Print Media
 Billboards campaigns  Billboards
 Awards &  Brand  Sponsored events
Events ambassador-
 Training Tiger woods
Programs (till 2009)
Segmentation  Targets high  Accenture  Any Enterprises
value driven mainly seeking IT solutions.
customers concentrates on  Focus is on volume
 Firms looking the upper-end and not higher
for Application customers. margins.
development  Clients include  TCS serves multiple
and 94 out of the industries which
maintenance Fortune Global include healthcare,
(ADM), 100 companies banking, High tech,
enterprise and more than manufacturing , retail
solutions, 80 percent of the telecom etc.
business Fortune Global
process 500.
management.
Targeting  Large  Any company  Large overseas
enterprises looking for enterprises along
looking for IT, business with domestic
ITes services. transformation clients.
 Huge revenues  Growing the  Focus on emerging
from USA and brand in Asian markets as well.
other markets like  Government
developed china, India etc. contracts for
 countries. stability.

Positioning  Positions itself  In 2015, named  Trustworthy

as a company as the world's company with huge
driven by most admired customer base.
ethical values Information  World’s most
and norms. Technology powerful IT brand.
 Tag line- Services  Tag line-
“Powered by Company by “Experience
intellect, driven fortune certainty”
by values” magazine.
 Tag line- “High
performance
delivered.”

 Supply Chain Management

Supply chain management (SCM), the management of the flow of
goods and services, involves the movement and storage of raw
materials, of work-in-process inventory, and of finished goods from
point of origin to point of consumption. Interconnected or interlinked
networks, channels and node businesses combine in the provision of
products and services required by end customers in a supply chain.
Supply-chain management has been defined as the "design,
planning, execution, control, and monitoring of supply chain
activities with the objective of creating net value, building a
competitive infrastructure, leveraging worldwide logistics,
synchronizing supply with demand and measuring performance
globally." SCM practice draws heavily from the areas of industrial
engineering, systems engineering, operations management, logistics,
procurement, information technology, and marketing and strives for
an integrated approach.
Supply chain management (SCM) is a business and technology discipline
that refers to the ways of coordinating the activities involved in
purchasing, designing, building and selling a product.
Reverse supply chain
Reverse logistics is the process of managing the return of goods. It is also
referred to as "aftermarket customer services". Any time money is taken from a
company's warranty reserve or service logistics budget, one can speak of a
reverse logistics operation. Reverse logistics is also the process of managing the
return of goods from store, which the returned goods are sent back to warehouse
and after that either warehouse scrap the goods or send them back to supplier
for replacement depending on the warranty of the merchandise.
Forward supply chain
Traditional (also known as open loop or forward) supply chain is a "system
whose constituent parts include material suppliers, production facilities,
distribution services and customers linked together by the feed forward flow of
materials and feedback flow of information" (Stevens, 1989). It is characterised
by a supply chain in which there is no flow back from the customer is referred
to as an ‘open loop supply chain

INTERNAL ENVIRONMENT ANALYSIS

1
Barney and Hesterly (2006), describe the VRIO framework as a good tool to
examine the internal environment of a firm. They state that VRIO “stands for
four questions one must ask about a resource or capability to determine its
competitive potential:

1. The Question of Value: Does a resource enable a firm to exploit an

environmental opportunity, and/or neutralize an environmental threat?
2. The Question of Rarity: Is a resource currently controlled by only a small
number of competing firms? [are the resources used to make the
products/services or the products/services themselves rare?]
3. The Question of Imitability: do firms without a resource face a cost
disadvantage in obtaining or developing it? [is what a firm is doing difficult
to imitate?]
4. The Question of Organization: Are a firm’s other policies and procedures
organized to support the exploitation of its valuable, rare, and costly-to-
imitate resources?”
What types of resources should we evaluate (e.g., what types of resources
lead to a competitive advantage)?

1) tangible resources,

2) intangible resources,

3) organizational capabilities.

Tangible Resources
 Firm’s cash and cash equivalents
Financial  Firm’s capacity to raise equity
 Firm’s borrowing capacity
 Modern plant and facilities
Physical  Favorable manufacturing locations
 State-of-the-art machinery and equipment
 Trade secrets
Technological  Innovative production processes
 Patents, copyrights, trademarks
 Effective strategic planning process
Organizational
 Excellent evaluation and control systems
Intangible Resources
 Experience and capabilities of employees
 Trust
Human
 Managerial skills
 Firm-specific practices and procedures
Innovation and  Technical and scientific skills
Creativity  Innovation capacities
 Brand name
 Reputation with customers for quality and reliability
Reputation
 Reputation with suppliers for fairness, non-zero-sum
relationships
Organizational Capabilities
 Firm competences or skills the firm employs to transfer inputs to outputs
 Capacity to combine tangible and intangible resources, using firm processes to attain
desired end.
Examples
 Outstanding customer service  Innovativeness or products and services
 Excellent product development  Ability to hire, motivate, and retain human
capabilities capital
Applying the VRIO framework. According to the VRIO framework, a
supportive answer to each questions relative to the firm being analyzed would
indicate that the firm can sustain a competitive advantage. Below is an example
of how to apply the VRIO framework and the likely outcome for the firm under
varying circumstances.

Applying the VRIO Framework—the value and rarity of a firm’s

resources
If a firm’s resources
The firm can expect:
are:
Competitive
Not valuable
Disadvantage
Competitive parity
Valuable, but not rare
(equality)
Competitive advantage
Valuable and rare
(At least temporarily)

Then, if there are high costs of imitation, the firm may enjoy a period of
sustained competitive advantage. Costs of imitation increase due to some
combination of the following: 1) Unique Historical Conditions (path
dependence; first mover advantages), 2) Causal Ambiguity (links between
resources and advantage foggy), 3) Social Complexity (social relationships not
replicable), 4) Patents (double-edged sword since period of protection
eventually runs out).

Applying the VRIO Framework, integrating the notion of Inimitability

If a firm’s resources
The firm can expect:
are:
Valuable, rare, but not Temporary competitive
costly to imitate advantage
Sustained competitive
Valuable, rare, and
advantage (if organized
costly to imitate
properly)
Organized properly deals with the firm’s structure and control (governance
mechanisms—compensation, reporting structures, management controls,
relationships, etc).

These must be aligned so as to give people ability and incentive to exploit the
firm’s resources.

Summary of VRIO, Competitive Implications, and Economic Implications

Costly to Organized Competitive Economic
Valuable? Rare?
Imitate? Properly? Implications Implications
No No Disadvantage Below Normal

Yes No Parity Normal

Above Normal
Temporary
Yes Yes No (at least for some
Advantage
amount of time)
Sustained
Yes Yes Yes Yes Above Normal
Advantage

ENVIRONMENT THREAT AND OPPORTUNITY ANALYSIS

It is a technique to structure the environment for fundamental business analysis.
It was developed by glueck.The preparation of ETOP involves dividing the
environment into different sectors and then analyzing the impact of each sector
on the organization. A comprehensive ETOP requires sub dividing each
environmental sector into sub-sectors and then the impact of each sector is
described in the form of a statement.
The strategic managers must keep focus on the following dimensions-

 Issue selection – There is a likelihood of arriving at incorrect priorities

therefore focus must be on the issues which have been selected.
 Accuracy of ETOP – The data must be collected from good sources
otherwise the entire process of environmental scanning might go to waste.
 Impact study – It should be conducted focusing on the various
opportunities and threats and the critical issues selected. Efforts must be
made to make the assessment more objective.
 Flexibility of operations – Due to uncertainty in business situations, a
company will be benefited by devising a proactive and flexible strategies in
their plans, structures, strategy etc. An optimum level must be reached.

STRATEGIC ADVANTAGE PROFILE OF COMPANY

STRENGTH:

 Cost advantage due to a presence in India: Majority of Infosys’ 119

development centres are present in India, which gives it high-quality
technical talent at a great cost advantage considering the fact that wage
costs have been significantly lower in India than the developed parts of
the world.
 Provides strong end to end business solutions: The company offers a
wide range of consultancy services and provides comprehensive end to
end business services in IT services, software-based services, business
 consulting and business process management. This allows Infosys to
attract companies from various industries.

 Strategic Association: Infosys has partnered with major technology and

business players in order to strengthen its services and business solutions.
The company has earlier partnered
with HP, IBM, Microsoft and Amazon etc. The strong partnership
network allows Infosys to deliver innovative and collaborative solutions.

Weakness in the SWOT Analysis of Infosys :

Dependent on Limited markets: Infosys has concentrated operations majorly

based out of the America and Europe. Together, North America and Europe
constitute over 80% of the company’s revenue. This makes the company
susceptible to instability and uneven growth.
 Not covering growing markets: The emerging markets have been
growing rapidly, and most of the credit goes too fast growing technology.
Infosys does not have services for the majority of the emerging nations
and thus misses out on a potential of growth.

 High Attrition rate: Infosys is one of the tech companies in India which
has been a victim of the high attrition rate. Many employees leave for
better career opportunities and higher education. High attrition rates
affect company’s image.

SWOT ANALYSIS

SWOT ANALYSIS

1) Pioneers of global delivery model(GDM)

2) High Cash Reserve
Strengths 3) Corporate Governance

1) Doesn't tap the Indian domestic market

Weaknesses 2) High Attrition Rate

1) Focus on emerging markets

2) Finnacle and other products
Opportunities 3) Shifting to business transformation services
 1) Attrition and Employee loyalty
2) Bigger MNC's entering India and competing for global clients
Threats 4) Focussing on organic growth