A porters 5 forces analysis of Wipro Ltd (Indian IT Outsourcing) - Essay Example

Topic: A Porters 5 Forces Analysis of Wipro Ltd (Indian IT Outsourcing) Affiliation: Date:IntroductionWipro Ltd is an Indian based IT firm that primarily engages in IT outsourcing activities. It is India’s second largest IT firm that offers IT and consultation services globally. Its role in the information technology sector is significant, more especially current global trends in technological advancement in the context of globalization. The analysis of this company under the Porter’s five forces considers the all-round environment of its operations and evaluation of its business aspect both in India and globally.

AnalysisThe Porters 5 Forces Analysis considers both internal and external environment of an industry with regard to business undertakings (Porter, 1979, p.5-8). The model specifically addresses competition concerns within and without the industry in a bid to evaluate and assess the profitability of firms prior to their competition strategies. The following is an analysis of Wipro Ltd in this regard:RivalryCompetition is a crucial undertaking for any given business entity. For Wipro Ltd, rivalry pertains to countering forces of advancing technologies from time to time and ensuring that sit meets customer needs as they fall due.

In so doing, new and existing firms in the same line of service offering are essential to consider. Wipro Ltd seeks to create customer value that remains competitive and reliable over time in order to keep its business aspect attractive to its customers both in the short run and long run. Entry ThreatsEntry of new firms in the industry poses threats to the revenue earnings and profitability of Wipro Ltd. Unlike other markets, the information technology is characterized by relatively low barriers to entry.

The diversity and dynamism associated with IT services consistently lead to the emergence of new firms. To counter threats of new entrants, the company has diversified its service offering portfolio by establishing Wipro divisions which take advantage of new IT needs in the market. Substitutes ThreatsRival firms offer similar but relatively differentiated IT and consultation services. This gives customers a variety of products and services to choose from. Maintaining high profitability in such an environment requires that the services offered be affordable to the customers.

However, it is important that the firm observes its costs of operation in order to strike a balance between pricing and operational costs. To account for this scenario, Wipro Ltd evaluates the IT industry from time to time in order to determine factors that affect consumer behaviour, triggering demand for substitute services. Buyer PowerThis is a significant influencing factor in the business aspects of the company. Buyer power is determined by: size of the market share, concentration of buyers, buyer awareness and differentiation of competitors (O’Shaughnessy, 2006, p.12-20). Wipro Ltd is a key player in the IT industry in India and significantly in the global context.

Its potential in influencing buyer power in the industry is significantly high, and it therefore plays a major role in influencing its profitability and position in the market. Supplier PowerSuppliers are as important as the customers since they enhance business running in the company. Businesses and suppliers are dependent on each other in the industry context. High supplier power is depicted by the ability of suppliers to charge their customers different prices for the supplies made prior to value creation for the customers (Baker, 2008, p.167). Wipro Ltd acknowledges that switching suppliers is an expensive activity.

It therefore maintains a constant supply position, which enables the company avoid switching costs.ConclusionThe company assesses and evaluates its competitive environment from time to time. This helps the company monitor its market share and customer base over time. Also, it is a strong basis upon which new and emerging customer needs are determined, thereby minimizing threats of new entrants. The business aspect of the company is therefore safeguarded, and its profitability and long term operation is subject to no jeopardy.

ReferencesBaker, M, (2008), Marketing Strategy and Management, London: Macmillan.O’Shaughnessy, N, (2006), Michael Porter’s revisited, Management Decision, Vol. 34 Issue 6, pp.12-20. Porter, M, (1979), How competitive forces shape strategy, Harvard Business Review, Vol. 57 Issue 2, pp.5-8.