Business Strategy of Wipro Technologies - Coursework Example

Business Strategy of Wipro Technologies 1. Mission statement Mission statement is the written declaration of a firm's core purpose and focus which normally remain unchanged, whereas business strategies and practices may frequently be altered to adapt to the changing circumstances. Properly crafted mission statements (1) serve as filters to separate what is important from what is not, (2) clearly state which markets will be served and how, and (3) communicate a sense of intended direction to the entire organization. A mission is different from a vision in that the former is the cause and the latter is the effect; a mission is something to be accomplished whereas a vision is something to be pursued for that accomplishment. It is also called company mission, corporate mission, or corporate purpose (Mission statement, Business Dictionary.com) Mission statement of Wipro Technologies “With utmost to human values, we promise to serve our customer with integrity through a variety of innovative, value-for-money products and services, by applying thought day after day” (Dialani, 2008). Vision core competencies Wipro has decided that product engineering is a service that would be a major component of its overall service portfolio. In order to be competitive, it has included many foci at the core of its strategy (Dialani, 2008). Quality, innovation, domain knowledge and arrays of services constitute its core competencies. Quality has been the first focus for Wipro Technologies. Multi-national companies along with globalization have made a highly competitive environment for Wipro. Wipro has concentrated on pumping in a huge quantity of resources which are to please their clients through their optimum quality levels (Dialani, 2008). Its quality has been certified at PCMM Level5, SEI CMM Level 5 and SEI CMMI v1.1 Level 5. Domain specific quality certification has been secured for aerospace with AS9100. Certification for medical devices has been obtained through ISO 13485. It has also the Level 5 Automotive SPICE certification (Dialani, 2008). Environmental standards maintained have obtained for it the ISO 14001. For information and assets security standards, it has the BS7799. Wipro’s aims to excel in Information Technology services is a persevering journey and the certifications are evidence of the quality it maintains (Dialani, 2008). All these certifications have impressed customers. They are confident that project risks are handled in a structured manner. The metrics program is strong and defects are prevented at the organization level. The reduction in field error rate is a promising feature for customers. Deviations of schedules are minimal. Wipro has the capacity to provide value-added services and Six Sigma consultancy. Continuous improvement is established through the six Sigma focus on development of software. The customer identity is protected and security awareness is created. “Veloci-q” is the quality management system which is a well-documented one (Dialani, 2008). It conforms to the standards of ISO9000, SEI CMM (Level 5) and TL9000. The tools and techniques of Six Sigma make the security system exceptionally strong (Dialani, 2008). Innovation is the next focus: Wipro has adopted the applied innovation technique. It has found ways to involve all parts of the organization for infusion of newer ideas and methods to improve the outcomes without much disruption. The smooth or seamless approach will be evident in all the avenues of the business. It has put forward new service lines in the global delivery model. Software development is reinforced by lean management, Six Sigma and factory model techniques. The innovation council provides funding for about 50 projects yearly. Domain competence has been created through 55 centers of excellence (Dialani, 2008). Wipro has broad domain knowledge to speedily change a product design. Product development teams are available for telecom, computing and embedded matter. The large number of alliances and partnerships has allowed volume production while keeping the lowest ownership (Dialani, 2008). Business strategy Wipro Limited has an IT services business division functioning on a global basis, Wipro Technologies. Wipro Technologies are into media and telecom and product engineering. It is a global third party engineering and technology services (Dialani, 2008). This company works with leading equipment manufacturers, communication service providers, terminal vendors, mobile chipset vendors and semi-conductor firms. Wipro Technologies’ highly well-defined and strong partner ecosystem provides a wide range of engineering solutions to its customers (Dialani, 2008). The extended engineering model is used here. This allows engineering partners to also make use of Wipro’s Research and Development. The move helps to increase investment in research, access to new knowledge and increases the global scientific experience. Wipro was able to spike its revenues by 30% while the company grew by 24.1% in head count. The asset utilization was maximized. The strategy included the offering of an end-to end service. It was able to secure bigger portions of its partners. A major portion of its revenues comes from its top 5 customers, about 33.5% (Dialani, 2008). 2. Strategy formulation in the merger of Wipro Technologies with Bain and Company Wipro Technologies is an IT based services company with a turnover of US$6 billion (Deshmukh et al, 2009). Bain and Company is one the best strategic consultation firms based in Boston, USA with a turnover of US$ 2 billion. Wipro planned to extend their product portfolio due to the service industry showing a declining picture (Deshmukh et al, 2009). Opening new avenues for core IT service business and having a new niche product was their aim. Differentiation from other IT giants like Infosys and Accenture was another motive. They wanted to take over the 4500 clients of Bain. This would also provide them expertise in something they were lacking in: the strategic consulting domain (Deshmukh et al, 2009). The prospects led Wipro to merge with Bain and Company. Wipro has a poor share in the global consultancy business. Its IT services were excellent but it formed only part of the whole firm. They could lose out at any time. Though Bain and Company have more than 4500 clients, solutions are not implemented by them (Deshmukh et al, 2009). The lack of government clients for Bain is another disadvantage. Government clients could have been a source of income even during a bad turn of events. The strengths and weaknesses of both companies caused the merger. The merger led to a new vision and mission. The vision is “to become a globally respected, trusted and renowned name in the field of technology and consulting leading to the betterment of the community”. The mission is “to offer integrated services to the customers by leveraging our core strengths in Information Technology and Consulting”. External auditing Porter’s five forces analysis have provided the following information about Wipro Technologies. Five threats have been identified: being a new entry, of forward integration involving the bargaining powers of suppliers, involving the bargaining powers of buyers and of substitutes (Deshmukh et al, 2009). The factors which contributed greatest to the threat of new entry were the economies of scale and brand identity. Low threats were due to switching costs, capital requirements and government policy. Proprietary product differences were a medium risk (Deshmukh et al, 2009). Even though only a small investment is made the good resource pool and building the brand identity takes some time for establishment, the risk involving economies of scale is high. Brand identity is essential in the IT industry for securing long-term deals. The risk of capital requirement is low because the capital is already there in the human capital and brand building (Deshmukh et al, 2009). Government favours the IT industry so problems do not arise there. The threats associated with the bargaining power of suppliers are evident greatly in the differentiation of inputs and impact of inputs on cost or differentiation (Deshmukh et al, 2009). IT is a people-oriented business. The input of people can make a difference in the industry achievement and have an impact on the costs too. A medium degree threat is possible from supplier concentration. Talented and skilled workers would be concentrated in the cities while the rural areas are deficient in them. The risk from forward integration is almost nil (Deshmukh et al, 2009). The bargaining powers of buyers also constitute threats. The high risks arise from buyer concentration, buyer volume, substitute products and the price factor. The buyer concentration is in the US, UK and Europe as the Wipro Technologies has maximum customers in these places (Deshmukh et al, 2009). The threat due to buyer volume will be high because Wipro is a big and accepted supplier of integrated services. Substitute products have enough options. The price factor is significant as the competition is stiffer. The risk of integrating backward is only medium as multinationals are already having their own development centers. Only low risks are possible from buyer switching costs as they are switched only quarterly and the switching depends on the customer’s satisfaction. The product differences are of low risk as most big companies have similar services (Deshmukh et al, Wipro). The threat of substitutes is ranked high where price performance is concerned. The threat of the substitute is medium as the possibility of services being of low quality is low. However if quality diminishes, the risk becomes high (Deshmukh et al, 2009). The risk of rivals is high as the industry is growing by attracting more players. Overcapacity is a threat as there are too many companies having similar services. Exit barriers also present a risk when customers and company trust each other with confidence; it becomes difficult to part ways. Corporate involvement is more in the IT industry so corporate stakes are higher. Product differences and switching costs have only low risks (Deshmukh et al, 2009). Internal analysis Primary activities include technological developments, operations, sales and marketing, services and consultations. The support activities include firm infrastructure, human resource management, product management and services support (Deshmukh et al, 2009). 3. Organisation growth strategies During the last decade, India’s IT services has experienced a tremendous growth which saw an average annual growth of 40% (Baliga et al, 2009). In the recent global financial crisis, Indian companies have been hit along with major global establishments: the market valuation of Infosys was eroded by $1billion while Wipro decreased by 863 million dollars. Efforts are now being made to shift attention to the highly talented but low cost workers of IT services of major giants like Infosys, Wipro and Tata Consultancy Services (TCS). Integration of human resources with strategy and operational processes has become significant (Baliga et al, 2009). The case study by Baliga et al (2009) is to explore the aspects of integration in Wipro and the organizational developmental strategies adopted to continue the evolution of the organization. The key advantage that India has is the talent pool which has 350000 engineering graduates and 2.2 million English-speaking people. Wipro just like its counterparts has a competitive edge in that it has reached a maturity stage whereby it can take customer requests confidently and deliver the services (Baliga, 2009). The challenges that have been recognized are a possible declining demand, shortage of skilled people, an increase in wages and global competition. The growth phases have adopted a business model thinking beyond the low cost advantage to foster greater industry expertise and implement complex solutions (Baliga, 2009). The global model has performed this by expanding in North America and Europe. Wipro has established its global presence by searching for leaders who are effective across borders. It has used the reverse positioning strategy through reverse off-shoring. In the US, Wipro Technologies has a global software development centre at Atlanta. Here it has the objective of training 500 employees of the University of Georgia. Wipro wishes to become closer to customers with expanding technology services (Baliga 2009). Securing a better knowledge of the customer’s business through local people is the intention. It has more than 10 offices in the US and development centres in places like Europe, Canada, China, Brazil and Mexico. The reverse offshoring trend is expected to grow. This strategy is being implemented in both the software and hardware industry. Back in India the stress would be upon hardware design. The growth within operational, tactical and human capital is being strategically coordinated. Wipro is sculpting future leaders to handle specific jobs (Baliga 2009). Learning from adversity and helping the employees and managers achieve resilience is significant (Margolis and Stoltz, 2010). Having a resilience regimen is helpful. An employee’s personal reaction can be controlled and the impact lessened thereby. The magnitude of the adversity can be understood from the duration of problem created and whether it will affect the employee all his life (Margolis and Stoltz, 2010). Worldwide networks are being built for providing advanced and innovative services in distant low cost areas and in the customer countries. Expanding the global reach would smoothen and quicken operations for global customers who would want speedy results which is crucial for success. The global expansion has been facilitated by its skill of recruiting and training which has been adapted for various countries (Baliga 2009). Years may go by before it reaches a status where it has most of the top talent in Europe and US. Searching for leaders who are effective across organizational and national boundaries will be the main strategy in the years to come. Services being offered are undergoing a phased evolution of using simple application development. Low cost offshore workers with good project management skills are being offered simple jobs at one end while sophisticated global solutions are also being offered at the other (Baliga 2009). Communications with offshore locations are maintained through the Network Operation Centers. Large scale migration of desktop software from offshore locations is also possible. Web-based platforms could handle revenue management for organisations like the airlines. This system allows Wipro to have fixed fees for services related to transnational prices rather than hourly payment (Baliga 2009). Wipro has opted to tie up with major corporations for accelerating their growth. They have selected innovative thinking and partnerships rather than doing everything themselves. Their partners include Harvard, Wharton, Stanford and LBS. The Wipro Council for Industry Research has domain experts who chart the innovative strategies for sustaining competitive advantage. Their success has provided material for teaching cases (Baliga 2009). “Green” initiatives have been taken by Wipro while providing innovative solutions. It is a member of the green grid consortium. Wipro is a sponsor who supports green community programs. This actually allows Wipro to join with partners for developing products and services and for training salespeople for selling the products (Baliga 2009). The marketing campaigns are also collaborated. Horizontal and vertical integrations are useful for the organisation. Sudip Nandy, the Chief Strategy officer of Wipro, speaks of the difficulty faced with integration of the various acquisitions of the organization (2007). Migrating the systems and processes and making them Wipro-like was a feat in itself. The employee lives were completely covered “ from the e-mail accounts they use to how they apply for vacation days and business reimbursements”. The customer is not involved in these matters. The aim was to prevent employees from becoming dejected and lose morale in the first few months, affecting productivity which automatically reflects on the customers as dissatisfaction (Nandy, 2007). The integration across cultures and geographies posed a tremendous challenge: each project would have “technology experts in Portugal, domain experts in London and software developer in India”. The right environment had to be created. Integration was facilitated between IBSG and Wipro when executives from both organisations sat together for a successful outcome. Wipro used the lessons learned in this venture for integrations with other organisations. Seeing integrations as ongoing corporate programs was the first step. Then they had a mind-set change and considered acquisitions as processes rather than projects. Cross-functional stewardship was also necessary for a smooth integration. Using proven best practices and evolved experience, Wipro finds it easier to go through acquisitions and integrations (Nandy 2007). An IT playbook which was an outcome of the integration with IBSG has plenty of information which can be applied in future acquisitions (Badiga 2007). The integration philosophy has made Wipro a seamless new organization with a single global Wipro culture. The “inorganic growth strategy, internal competency and functional expertise” describes Wipro suitably (Premji, 2007). Azim Premji, the Chairman and Chief Executive Officer of Wipro, commented that Wipro’s experience in successful integrations gives the confidence to pursue the growth strategy in real earnest in the future. 4. Strategy implementation Wipro is attempting to learn from global partners. Greater flexibility is being adopted for all activities which coordinate the overlapping entities (Baliga 2009). Global accounts, business units, cross-industry technological units, offices and functional areas like quality assurance, training and marketing all utilize the coordination. Programs like Return to India and Rainmaker are involved in the hiring spree to secure local and global talent (Baliga, 2009). Adoption of the Six Sigma principles helps the organization to evolve the cross functional matrixed team in the human capital or talent pool. Using different and multi-dimensional motivating factors for achieving successful outcomes, the workers are provided with enrichment in their profession. Constant feedback is given. “Work balance towards life” is the theme rather than “life balance towards work”. Amenities and benefits provided have competitive compensation packages. The employee gets a feeling of security. The culture and leadership in Wipro has actually broken through culture barriers which still trouble other organisations. Cultural relationship helps to create “international trust and understanding and generates opportunities for individuals to fulfill their potential and fosters the cooperation that contributes to a stable world” (Memis 2009 p 294). Wipro is seeing the provision of cloud services as having futuristic potential. Cloud service is a business model being adopted by IT organisations. It is expected to resolve IT sourcing troubles today (Roehrig, 2009). A disruptive market is expected if this model is not adopted. Different organisations are using different strategies to implement the cloud services. Wipro is planning to focus on cloud services rather than its traditional services. Heavy investment is being done in this direction. Several clients are interested in the current and the near term offerings. Wipro is trying to use the SaaS model options for the industry solutions (Roehrig, 2009). The specific cloud services Wipro is offering include digital asset management, ADM services on Microsoft Azure, storage, backup and disaster recovery. Partnerships have been formed with Amazon, Cisco, EMC. Microsoft, salesforce.com and VMware. References: Badiga, L. (2007). Global IT services provider gains comprehensive merger and acquisition integration expertise. Cisco Systems Inc. Baliga, R., Mcmullen, P. and Nunna, P. (2009). Beyond Customer Service: Strategy, human capital and operational alignment. WakeForest University, Wipro Council for Industry Research. Deshmukh et al, (2009). Retrieved on 19/1/10. Merger strategy-Wipro Technologies with Bain and Company, http://www.slideshare.net/ashish.chinthal/wipro-takes-over-bain-company. Slideshare.Inc Dialani, M. (2008). Retrieved on 19/1/10 . Wipro-Vendor profile series for research and development/Product engineering services. http://www.google.co.in/url?sa=t&source=web&ct=res&cd=1&ved=0CAcQFjAA&url=http%3A%2F%2Fwww.wipro.com%2Fresource-center%2Flibrary%2Fpdf%2Fidc_wipro_product_engg_services_rd_profile.pdf&rct=j&q=idc+wipro+product+engineering+services&ei=OuVVS6alBJaXkQXQ74S9Cg&usg=AFQjCNEWb-1q2On7aJd68tDpqpON2wOaWA IDC Margolis, J.D. & Stoltz, P.G. (2010). Here’s a way to understand and redirect your instinctive reaction to crises. Harvard Business Review, January/February, 2010 Memis, S. (2009). The impact of international cultural engagement: The British Council’s approach to evaluation. Journal of Arts Management, Law and Society, Vol. 39, No. 4, Taylor and Francis Ltd. Nandy, S. (2007). Global IT services provider gains comprehensive merger and acquisition integration expertise. Cisco Systems Inc. Premji, A. (2007). Global IT services provider gains comprehensive merger and acquisition integration expertise. Cisco Systems Inc. Roehrig, P., Ross, C.F., Staten, J. and Shanahan, A. ( 9th June, 2009). Market Overview of cloud service strategies from global IT providers. Forrester Research Inc. Read More