International Business free essay sample

The freedom in the world survey evaluates the state of political rights and civil liberties around the world. Provide a description of this survey and a â€Å" freedom† ranking of the leaders and laggards of the world. What factors does this survey consider when forming the ranking? Answer: 1. General information 1. 1. Concept The Freedom in the World survey, which has been published since 1972, is an annual evaluation of the state of freedom in every country in the world.The survey divides freedom into two broad categories: political rights and civil liberties. Political rights allow people to join political parties and organizations, compete for public office, vote freely for distinct alternative candidates in legitimate elections, and elect representatives who have a real impact on public policies and are accountable to voters. Civil liberties allow for the freedoms of expression and belief, associational and organizational rights, rule of law, and personal autonomy, including economic freedom, without interference from the state. We will write a custom essay sample on International Business or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page 1. 2. Original of Freedom rankingFreedom in the World, Freedom House’s flagship publication, is the standard-setting comparative assessment of global political rights and civil liberties. Published annually since 1972, the survey ratings and narrative reports on 193 countries and 15 related and disputed territories are used by policymakers, the media, international corporations, civic activists, and human rights defenders to monitor trends in democracy and track improvements and setbacks in freedom worldwide. The Freedom in the World survey provides an annual evaluation of the state of global freedom as experienced by individuals.The survey measures freedom-the opportunity to act spontaneously in a variety of fields outside the control of the government and other centers of potential domination-according to two broad categories: political rights and civil liberties. Political rights enable people to participate freely in the political process, including the right to vote freely for distinct alternatives in legitimate elections, compete for public office, join political parties and organizations, and elect representatives who have a decisive impact on public policies and are accountable to the electorate.Civil liberties allow for the freedoms of expression and belief, associational and organizational rights, rule of law, and personal autonomy without interference from the state. The survey does not rate governments or government performance per se, but rather the real-world rights and freedoms enjoyed by individuals. Thus, while Freedom House considers the presence of legal rights, it places a greater emphasis on whether these rights are implemented in practice. Furthermore, freedoms can be affected by government officials, as well as by non-state actors, including insurgents and other armed groups.Freedom House does not maintain a culture-bound view of freedom. The methodology of the survey is grounded in basic standards of political rights and civil liberties, derived in large measure from relevant portions of the Universal Declaration of Human Rights. These standards apply to all countries and territories, irrespective of geographical location, ethnic or religious composition, or level of economic development. The survey operates from the assumption that freedom for all peoples is best achieved in liberal democratic societies.The survey includes both analytical reports and numerical ratings for 194 countries and 14 select territories. Each country and territory report includes an overview section, which provides historical background and a brief description of the years major developments, as well as a section summarizing the current state of political rights and civil liberties. In addition, each country and territory is assigned a numerical rating-on a scale of 1 to 7-for political rights and an analogous rating for civil liberties; a rating of 1 indicates the highest degree of freedom and 7 the lowest level of freedom. International Business free essay sample The notion that national economies are relatively self-contained entities is on the rise.For the last 50 years, the volume of goods, services and investment crossing national borders has consistently expanded faster than world output.   Today, the world economy is fast moving toward a world in which barriers to cross-border trade and investment are declining. The shift toward a more integrated and interdependent world economy is referred to as globalization.   The merging of historically distinct and separate markets into one huge global marketplace is known as the globalization of markets. The majority of U. S. firms that export are large multinationals that employ 500 or more people. The most global markets currently are markets for industrial goods and materials that serve a universal need the world over. Outsourcing is a process that is limited to manufacturing enterprises.   Because of their nature, service activities cannot be outsourced to other companies. The World Bank is responsible for maintaining order in the American monetary system. We will write a custom essay sample on International Business or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page One of the UN central mandates is the promotion of higher standards of living, full employment and conditions of economic and social progress and development. Underlying the trend towards greater globalization is technological change and a decline in barriers to the free flow of goods, services and capital.   According to the United Nations most changes between 1992 and 2005 to laws governing FDI have resulted in a less favorable environment for FDI. According to WTO data, the volume of world merchandise trade has grown faster than the world economy since 1950. The expansion of world trade implies that nations are becoming less dependent on each other for important goods and services. Moores Law predicts that the power of microprocessor technology doubles and its cost of production falls by half every 18 months.   Efficiency gains associated with containerization have caused transportation costs to fall dramatically. The advent of commercial jet travel, by reducing the time needed to get from one location to another, has effectively shrunk the globe. Today global communication networks and global media are creating a worldwide culture.   In the early 1960s, the United States was by far the worlds dominant industrial power. However by 2006, it lost its dominant position and now is no longer the worlds largest industrial power.   By 2004, the U. S. ad seen its share of exports fall to almost half its share in the 1960s. According to forecasts, a further relative decline in the share of world output and world exports accounted for by the United States and other long-established developed nations is unlikely. In contrast many economists and politicians maintain that the power of supranational organizations is limited to what nation-states collectively agree to grant. They argue that these bodies exist to serve the collective interests of member states, not to subvert those interests. Supporters of supranational organizations point out that the power of these bodies rests largely on their ability to persuade member states to follow a certain action. In this view, real power still resides with individual nation-states, not supranational organizations. International business free essay sample This is one game that India has permanently lost to its arch-rival Pakistan manufacturing and exporting sports goods. Historically, when India and Pakistan were one before 1947, Sialkot, now in Pakistan, used to be the worlds largest production centre for badminton, hockey, football, volleyball, basketball, and cricket equipment. After the creation of Pakistan, Jalandhar became the second centre after Hindus in the trade migrated to India. Soon Jalandhar overtook Sialkot and till the early 1980s it remained so. However when the face of the trade began to change in the 1980s and import of quality leather and manufacturing equipment became a necessity for quality production, Pakistan wrested the initiative as India clung it its policies of discouraging imports through high duties and restrictions. As it was, the availability of labor and skills was a common factor in both Sialkot and Jalandhar, but with Sialkot having the advantage of easier entry, most of the worlds top sports manufactures and procedures developed an association with local industry in Sialkot that continues even today. We will write a custom essay sample on International business or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page Ten years later, in the early 1990s, when Manmohan Singh liberalised the norms for importing equipment and raw material required for producing sports goods, it was too late as majority of the global majors had already shifted base to Sialkot. In 1961 the late Narinder Mayor started the first large scale sports goods manufacturing unit, Mayor Company, thereby laying the foundation of an organized industry. Even today, more than 70 percent of the industry functions in an unorganized manner. Starting with soccer balls, Mayor expanded to produce inflatable balls like volleyballs, basketballs, and rugby balls. Today his two sons Rajan Rajesh have built it up into five companies engaged in a wide array of businesses, though sports goods remain the groups core business. While the parent trading company, Mayor Company, remains the leading revenue-earner to the tune of Rs. 55 crore annually out of a total group turnover of Rs. 85 crore-plus, Mayors second venture, the Indo-Australian Mayor International Limited, is spinning another Rs. 15 crore. Mayor International is a 100 per cent export-oriented unit (EOU) exclusively manufacturing and exporting golf and tennis balls. The product portfolio of the company comprises the following: Inflatable Balls †¢Soccer balls and footballs (Professional, Indoor, Match and Training, leisure toy) †¢Volley balls, rugby balls (Volley balls and Beach Volley Balls) †¢Australian rugby, hand balls (English League, Union and touch) (Australian rules, Australian Rugby League balls with laces) Boxing Equipment †¢Boxing and punching balls (Boxing and Punching Balls, Head Gear, Gloves, Punching Mitts and Kits Punching Bags Bag Sets) †¢Gloves †¢Goal keepers gloves (Football / Soccer) †¢Boxing gloves Cricket Equipment †¢Worldwide distributor for Spading Cricket Bats, Balls and Protective equipment. HOCKEY EQUIPMENT †¢Worldwide distributor for Spading Hokey Sticks, Balls Protective equipment Based in Delhi, Rajan Mayor, 41 is the CMD of the group, which also comprises an IT division working on B2B and B2C solutions; Voyaguer World Travels in the tourism sector; a houseware exports division specializing in stainless steel kitchenware, ceramics, and textiles; and a high school. Younger brother Rajesh, 34, is the executive director and looks after all the divisions operating in Jalandhar. Technical director Katz Nowaskowski divides his time equally between India and Australia, where he looks after the group’s interests. â€Å"While inflatable balls are our prime competence in our core business, we are presently focusing on golf balls, for which we are the sole producers in South Asia. Out of a total Rs. 300 crore of sports goods business generated in domestic market, most of which is supplied by the unorganized players, golf balls constitute a miniscule amount and therefore we came up with a 100 per cent EOU for producing golf balls. Later the same facility was utilized with little moderation for tennis balls too,† says Nowaskowaski. Clarifying that the sports good industry in India only includes playing equipment and not apparels or shoes, D K Mittal, chairman of the Sports Goods Export Promotion Council and joint secretary in the Ministry of Commerce, has certified Mayor group as the number one exporter since 1993 till date, barring 1996. However, SGEPC secretary Tarun Dewan points out that being the number one exporter does not mean that Mayor is the number one brand being exported. â€Å"Actually we have tie ups Dunlop, Arnold Palmer, and Fila for manufacturing golf balls. For footballs and volleyballs we have association with Adidas, Mitre, Puma, Umbro, and Dunlop. We manufacture soccer World Cup and European Cup replicas for Adidas, which is a huge market. Only 400 balls used for actual play in the World Cup are manufactured in Europe that too only for sentimental reason, otherwise we are capable of delivering products of the same, if not better quality. Now since we manufacture balls for them, we cannot antimonies them by producing balls of similar quality with our own brand name. Secondly, I agree that competing with such big quaint in the world market in terms of branding is a task that is well beyond our reach at the moment. However, we are trying to brand ourselves in the domestic market and that is one of the prime focus in the coming year,† says Rajan. Coca-Cola, Unilever, McDonald’s, American Airlines, Disney club, and other such big brands come up with huge orders at tines for golf balls with their logos for promotional schemes. However, there is no mention of the producing country since these companies do not want to show that balls they deliver in the US are being produced in Asia, â€Å"Not only is our quality good enough; labour in India is cheap enough to churn out a much less expensive product in the end. Yet, the main threat to our industry comes from countries like Taiwan and China, who have already cornered a chunk of world markets in tennis, badminton, and squash rackets. This is primarily because of two reasons – slow response to our needs in tune with the market requirements from the government and lack of infrastructure. And most importantly, tags ‘Made in China’ or ‘Made in Taiwan’ are more acceptable in the West than ‘Made in India’ or ‘Made in Pakistan’. One of the mottos of the Mayor group has been to make ‘Made in India’ an acceptable label in the West. For that we stress quality, timely delivery, and competent rates. Yet, a lot depends on perception value, which in our case is sadly on the negative side, much owing to our government’s stance over the years. Things might be improving, but the pace is very slow and as our economy drifts towards a free market scenario supinely, it might just prove to be too little too late in the end,† says Rajesh. Today, Mayor group is sitting pretty as its competitors, Soccer International Sakay Trades, Savi, Wasan, Cosco, Nivia and Spartan are only trying to catch up in the inflatables category. With 1. 2 million dozen golf balls, Mayor is way ahead of its competitors. The company is planning to enhance its manufacturing capacity to 1. 5 million dozen golf next fiscal. With approval from the world’s two top golf associations – the US PGA and RNA of Scotland, demand for its product is not a problem, the company’s senior marketing officials point out. With the markets in Mayor’s current export destinations – Europe, North America, Australia, and Nw Zealand – all set to expand in the coming years after the present slump, Mayor wants to expand its sports goods business that caters to 60 per cent of its overall exports. Though 40 per cent of exports come from house ware manufactured in Delhi and Mumbai, with export centres in the same countries for its sports goods, just about maintaining this business at its present state, and concerning entirely on sports goods is what the mayors are intent on. With nearly 2000 skilled workforce; quality certification from ISO 9001:2000 and ISO 14001: 2004; and having spread to more than 40 countries, Mayor and Company is obviously sitting pretty. Questions 1. What routes of globalization has the Mayor group chosen to go global? What other routes could it have taken? 2. What impediments are coming in the Mayor group’s way becoming a major and active player in international business? 3. Why is ‘Made in India’ not liked in foreign markets? What can be done to erase the perception? CASE II ARROW AND THE APPAREL INDUSTRY Ten years ago, Arvind Clothing Ltd. , a subsidery of Arvind Brands Ltd. , a member of the Ahmedabad based Lalbhai Group, signed up with the 150-year old Arrow Company, a division of Cutlet Peabody Co. Inc. , US, for licensed manufacture of Arrow shirts in India. What this brought to India was not just another premium dress shirt brand but new manufacturing philosophy to its garment industry which combined high productivity, stringent in-line quality control, and a conducive factory ambience. Arrow’s first plant, with a 55,000 sq. ft. area and capacity to make 3,000 to 4,000 shirts a day, was established at Bangalore in 1993 with an investment of Rs. 18 crore. The conditions inside – with good lighting on the workbenches, high ceilings, ample elbow room for each worker, and plenty of ventilation, were a decided contrast to the poky, crowded, and confined sweatshops characterizing the usual Indian apparel factory in those days. It employed a computer system for translating the designed shirt’s dimensions to automatically mark the master pattern for initial cutting of the fabric layers. This was installed, not to save labour but to ensure cutting accuracy and low wastage of cloth. The over two-dozen quality checkpoints during the conversion of fabric to finished shirt was unique to the industry. It is among the very few plants in the world that makes shirts with 2 ply 140s and 3 ply 100s cotton fabrics using 16 to 18 stitches per inch. In March 2003, the Bangalore plant could produce stain-repellant shirts based on nanotechnology. The reputation of this plant has spread far and wide and now it is loaded mostly with export orders from renowed global brands such as GAR, Next, Espiri, and the like. Recently the plant was identified by Tommy Hilfiger to make its brand of shirts for the Indian market. As a result, Arvind Brands has had to take over four other factories in Bangalore on wet lease to make the Arrow brand of garments for the domestic market. In fact, the demand pressure from global brands which want to out outscore from Arvind Brands, is so great that the company has had to set up another large for export jobs on the outskirts of Bangalore. The new unit of 75,000 sq. ft. has cost Rs. 16 crore and can turn out 8,000 to 9,000 shirts per day. The technical collaborates are the renowned CF Italia of Italy. Among the cutting edge technologies deployed here are a Gerber make CNC fabric cutting machine, automatic collar and cuff stitching machines, pneumatic holding for tasks like shoulder joining, threat trimming and bottom hemming, a special machine to attach and edge stitch the back yoke, foam finishers which use air and steam to remove creases in the finished garment, and many others. The stitching machines in this plant can deliver up to 25 stitches per inch. A continuous monitoring of the production process in the entire factory is done through a computerized apparel production management system, which is hooked to every machine. Because of the use of such technology, this plant will need only 800 persons for a capacity which is three that of the first plant which employs 580 persons. Exports of garments made for global brands fetched Arvind Brands over Rs. 60 crore in 2002, and this can double in the next few years, when the new factory goes on full stream. In fact, with the lifting of the country-wise quota regime in 2005, there will be a surge in demand for high quality garments from India and Arvind is already considering setting up two more such high tech export-oriented factories. It is not just in the area of manufacture but also retailing that the arrow brand brought a wind of change on the Indian scene. Prior to its coming, the usual Indian shirt shop used to be a clutter of racks with little by way of display. What Arvind Brands did was to set up exclusive showrooms for Arrow shirts in which the functional was combined with the aesthetic. Stuffed racks and clutter were eschewed. The products were displayed in such a manner that the customer could spot their qualities from a distance. Of course, today this has become standard practice with many other brands in the country, but Arrow showed the way. Arrow today has the largest network of 64 exclusive outlets across India. It is also present in 30 retail chains. It branched into multi-brand outlets in 2001, and is present in over 200 select outlets. From just formal dress shirts in the beginning, the product range of Arvind Brands has expanded in the last ten years to include casual shirts, T-shirts, and trousers. In the pipeline are light jackets and jeans engineered for the middle age paunch. Arrow also tied up with the renowed Italian designer, Renato Grande, who has worked with names like Versace and Marlboro, to design its Spring / Summer Collection 2003. The company has also announced its intention to license the Arrow brand for other lifestyle accessories like footwear, watches, undergarments, fragrances, and leather goods. According to Darshan Mehta, President, Arvind Brands Ltd. , the current turnover at retail price of the Arrow brand in India is about Rs. 85 crore. He expects the turnover to cross Rs. 100 crore in the next few years, of which about 15 per cent will be from the licensed non-clothing products. In 2005, Arvind Brands launched a major retail initiative fir all its brands. Arvind Brands licensed brands (Arrow, Lee and Wrangler) had grown at a healthy 35 per cent rate in 2004 and the company planned to sustain the growth by increasing their retail presence. Arvind Brands also widened the geographical presence of its home-grown brands, such as Newport and Ruf-n-Tuf, targeting small towns across India. The company planned to increase the number of outlets where its domestic brands would be available, and draw in new customers for readymades. To improve its presence in the high – end market, the firm started negotiating with an international brand and is likely to launch the brand. The company has plans to expand its retail presence of Newport Jeans, from 1200 outlets across 480 towns to 3000 outlets covering 800 towns. For a company ranked as one of the world’s largest manufacturers of denim cloth and owners of world famous brands, the future looks bright certain for Arvind Brands Ltd. Company Profile Name of the Company:Arvind Mills Year of Establishments:1931 Promoters:Three brothers – Katurbhai, Narottam Bhai and Chimnabhai Divisions:Arvind Mills was spilt in 1993 into three units – textiles, telecom and garments. Arvind Brands Ltd. (textile unit) is 100 per cent subsidiary of Arvind Mills. Growth Strategy:Arvind Mills has grown through buying – up of sick units, going global and acquisition of Germanand US brand names. Questions 1. Why did Arvind Mills choose globalization as major route to achieve growth when domestic market was huge? 2. Hoe does lifting of Country-wise quota regime’ help Arvind Mills? 3. What lessons can other Indain business learn from the experience of Arvind Mills? CASE III AT THE RECEIVING END ! Spread over 121 countries with 30,000 restaurants, and serving 46 million customers each day with the help of more than 400,000 employees, the reach of McDonald’s is amazing. It all started in 1948 when two brothers, Richard and Maurice ‘Mac’ McDonald, built several hamburger stands, with golden arches in southern California. One day a traveling salesman, Ray Kroc, came to sell milkshake mixers. The popularity of their $O. 15 hamburgers impressed him, so he bought the world franchise rights from them and spread the golden arches around the globe. McDonald’s depends on its overseas restaurants for revenue. In fact, 60 percent of its revenues are generated outside of the United States. The key to the company’s success is its ability to standardize the formula of quality, service, cleanliness and value, and apply it everywhere. The company, well known for its golden arches, is not the world’s largest company. Its system wide sales are only about one-fifth of Exxon Mobil or Wal-Mart stores. However, it owns one of the world’s best known brands, and the golden arches are familiar to more people than the Christian cross. This prominence, and its conquest of global markets, makes the company a focal point for inquiry and criticism. McDonald is a frequent target of criticism by anti-globalization protesters. In France, a pipe-smoking sheep farmer named Jose Bove shot to fame by leading a campaign against the fast food chain. McDonald’s is a symbol of American trade hegemony and economic globalization. Jose Bove organized fellow sheep farmers in France, and the group led by him drove tractors to the construction site of a new McDonald’s restaurants and ransacked it. Bove was jailed for 20 days, and almost overnight an international anti-globalisation star was borne. Bove, who resembles the irrelevant French comic book hero Asterix, traveled to Seattle in 1999, as part of the French delegation to lead the protest against commercialization of food crops promoted by the WTO. Food, according to him, is too vital a part of life to be trusted to the vagaries of the world trade. In Seattle, he led a demonstration in which some ski-masked protestors transhed at McDonald’s/ As Bove explained, his movement was for small farmers against industrial farming, brought about by globalization. For them, McDonald’s was a symbol of globalization, implying the standardization of food through industrial farming. If this was allowed to go on, he said, there would no longer be need for farmers. â€Å"For us†, he declared, â€Å"McDonald’s is a symbol of what WTO and the big companies want to do with the world†. Ironically, for all of Bove’s fulminations against McDonald’s, the fast food chain counts its French operations among its most profitable in 121 countries. As employer of about 35,000 workers, in 2006, McDonald’s was also one of France’s biggest foreign employers. Bove’s and his followers are not the only critics of McDonald’s. Leftists, anarchists, nationalists, farmers, labor unions, environmentalists, consumer advocates, protectors of animal rights, religious orders and intellectuals are equally critical of the fast food chain. For these and others, McDonald’s represents an evil America. Within hours after US bombers began to pound Afghanistan in 2001, angry Pakistanis damaged McDonald’s restaurants in Islamabad and an Indonesian mob burned an American flag. McDonald entered India in the late 1990s. On its entry, the company encountered a unique situation. Majority of the Indians did not eat beef but the company’s preparations contained cow’s meat nor could the company use pork as Muslims were against eating it. This left chicken and mutton. McDonald’s came out with ‘Maharaja Mac’, which is made from mutton and ‘McAloo Tikki Burger’ with chicken potato as the main input. Food items were segregated into vegetarian and non-vegetarian categories. Though it worked for sometimes, this arrangement did not last long. In 2001, three Indian businessmen settled in Seattle sued McDonald’s for fraudulently concealing the existence of beef in its French fries. The company admitted its guilt of mixing miniscule quantity of beef extract in the oil. The company settled the suit for $10 million and tendered an apology too. Further, the company pledged to label the ingredients of its food items, and to find a substitute for the beef extract used in its oil. McDonald’s succeeded in spreading American culture in the East Asian countries. In Hong Kong and Taiwan, the company’s clean restrooms and kitchens set a new standard that elevated expectations throughout those countries. In Hong Kong, children’s birthdays had traditionally gone unrecognized, but McDonald’s introduced the practice of birthday parties in its restaurants, and now such parties have become popular among the public. A journalist set forth a ‘Golden Arches Theory of Conflict Prevention’ based on the notion that countries with McDonald’s restaurants do not go to war with each other. A British magazine, The Economist, paints an yearly ‘Big Mac Index’ that uses the price of a Big Mac in different foreign currencies to access exchange rate distortions. Questions : 1. What lessons can other MNCs learn from the experience of McDonald’s? 2. Aware of the food habits of Indians, why did McDonald’s err in mixing beef extract in the oil used for fries? 3. How far has McDonald’s succeeded in strategizing and meeting local cultures and needs? CASE IV BPO-BANE OR BOON ? Several MNCs are increasingly unbundling or vertical disintegrating their activities. Put in simple language, they have begun outsourcing (also called business process outsourcing) activities formerly performed in-house and concentrating their energies on a few functions. Outsourcing involves withdrawing from certain stages/activities and relaying on outside vendors to supply the needed products, support services, or functional activities. Take Infosys, its 250 engineers develop IT applications for BO/FA (Bank of America). Elsewhere, Infosys staffers process home loans for green point mortgage of Novato, California. At Wipro, five radiologists interpret 30 CT scans a day for Massachusetts General Hospital. 2500 college educated men and women are buzzing at midnight at Wipro Spectramind at Delhi. They are busy processing claims for a major US insurance company and providing help-desk support for a big US Internet service provider – all at a cost upto 60 percent lower than in the US. Seven Wipro Spectramind staff with Ph. Ds in molecular biology sift through scientific research for western pharmaceutical companies. Another activist in BPO is Evalueserve, headquartered in Bermuda and having main operations near Delhi. It also has a US subsidiary based in New York and a marketing office in Australia to cover the European market. As Alok Aggarwal (co-founder and chairman) says, his company supplies a range of value – added services to clients that include a dozen Fortune 500 companies and seven global consulting firms, besides market research and venture capital firms. Much of its work involves dealing with CEOs, CFOs, CTOs, CLOs and other so-called C-level executives. Evalueserve provides services like patent writing, evaluation and assessment of their commercialization potential for law firms and entrepreneurs. Its market research services are aimed at top-rung financial service firms, to which it provides analysis of investment opportunities and business plans. Another major offering is multilingual services. Evalueserve trains and qualifies employees to communicate in Chinese, Spanish, German, Japanese and Italian, among other languages. That skill set has opened market opportunities in Europe and elsewhere, especially with global corporations. ICICI Infotech Services in Edison, New Jersey, is another BPO services provider that is offering marketing software products and diversifying into markets outside the US. The firm has been promoted by $2-billion ICICI Bank, a large financial institution in Mumbai that is listed on the New York Stock Exchange. In its first year after setting up shop in March 1999, ICICI Infotech spent $33 million acquiring two information technology services firms in New Jersy – Object Experts and lvory Consulting – and Command Systems in Connecticut. These acquisitions were to help ICICI Infotech hit the ground in the US with a ready book of contracts. But it soon found US companies increasingly outsourcing their requirements to offshore locations, instead of hiring foreign employees to work onsite at their offices. The company found other native modes for growth. It has started marketing its products in banking, insurance and enterprise source planning among others. It has ear- $10 million for its next US market offensive, which would go towards R D and back-end infrastructure support, and creating new versions of its products to comply with US market requirements. It also has a joint venture – Semantik Solutions GmbH in Berlin, Germany with the Fraunhofer Institute for Software and Systems Engineering, which is based in Berlin, Germany with the Fraunhofer Institute for Software and Systems Engineering, which is based in Berlin and Dortmund, Germany, Fraunhofer is a leading institute in applied research and development with 200 experts in software engineering and evolutionary information. A relatively late entrant to the US market, ICICI Infotech started out with plain vanilla IT services, including operating call centers. As the market for traditional IT services started weakening around mid-2000, ICICI Infotech repositioned itself as a â€Å"Solutions† firm offering both products and services. Today, it offers bundled packages of products and services in corporate and retail banking and insurance, among other areas. The new offerings include data center and disaster recovery management and value chain management services. ICICI Infotech’s expansion into new overseas markets has paid off. Its $50 million revenue for its latest financial year ending March 2003 has the US operations generating some $15 million, while the Middle East and Far East markets brought in another $9 million. It now boasts more than 700 customers in 30 countries, including Dow Jones, Glaxo – Smithkline, Panasonic and American Insurance Group. The outsourcing industry is indeed growing from strength. Though technical support and financial services have dominated India’s outsourcing industry, newer fields are emerging which are expected to boost the industry many times over. Outsourcing of human resource services or HR BPO is emerging as big opportunity for Indian BPOs with global market in this segment estimated at $40-60 billion per annum. HR BPO comes to about 33 percent of the outsourcing revenue and India has immense potential as more than 80 percent of Fortune 1000 companies discuss offshore BPO as a way to out costs and increase productivity. Another potential area is ITES/BPO industry. According to a NASSCOM Survey, the global ITES/BPO industry was valued at around $773 billion during 2002 and it is expected to grow at a compounded annual growth rate of nine percent during the period 2002-06. NASSCOM lists the major indicators of the high growth potential of ITES/BPO industry in India as the following : During 2003-04, The ITES/BPO segment is estimated to have achieved a 54 percent growth in revenues as compared to the previous year. ITES exports accounted for $3. 6 billion in revenues, up from $2. 5 billion in 2002-03. The ITES-BPO segment also proved to be a major opportunity for job seekers, creating employment for around 74,400 additional personnel in India during 2003-04. The number of Indians working for this sector jumped to 245,500 by March 2004. By the year 2008, the segment is expected to employ over 1. 1 million Indians, according to studies conducted by NASSCOM and McKinsey Co. Market research shows that in terms of job creation, the ITES-BPO industry is growing at over 50 percent. Legal outsourcing sector is another area India can look for Legal transcription involves conversion of interviews with clients or witnesses by lawyers into documents which can be presented in courts. It is no different from any other transcription work carried out in India. The bottom-line here is again cheap service. There is a strong reason why India can prove to be a big legal outsourcing industry. India, like the US, is a common-law jurisdiction rooted in the British legal tradition. Indian legal training is conducted solely in English. Appellate and Supreme Court proceedings in India take place exclusively in English. Indian legal opinions are written exclusively in English. Due to the time-zone differences, night time in the US is daytime in India which means that clients get 24 hour attention, and some projects can be completed overnight. Small and mid-sized business offices can solve staff problems as the outsourced lawyers from India take on the time consuming labour intensive legal research and writing projects. Large law firms also can solve problems of overstaffing by using the on-call lawyers. Research firms such as Forrester Research, predict that by 2015, more than 489,000 US lawyer jobs, nearly eight percent of the field, will shift abroad. Many more new avenues are opening up for BPO services providers. Patent writing and evaluation services are markets set to boom. Some 200,000 patent applications are written in the western world annually, making for a market size of between $5 billion and $7 billion. Outsourcing patent writing service could significantly lower the cost of each patent application, now anywhere between $12,000 and $15,000 apiece – which help expand the market. Offshoring of equity research is another major growth area. Translation services are also becoming a big Indian plus. India produces some 3,000 graduates in German each year, which is more than in Switzerland. Though going is good, the Indian BPO services providers cannot afford to be complacent, Phillippines, Mexico and Hungary are emerging as potential offshore locations. Likely competitor is Russia, although the absence of English speaking people there holds the country back. But the dark horse could be South Africa and even China. BPO is based on sound economic reasons. Outsourcing helps gain cost advantage. If an activity can be performed better or more cheaply by an outside supplier, why not outsource it ? Many PC makers, for example, have shifted from in-house assembly to utilizing contract assemblers to make their PCs. CISCO outsources all productions and assembly of its routers and switching equipment to contract manufacturers that operate 37 factories, all linked via the Internet. Secondly, the activity (outsourced) is not crucial to the firm’s ability to gain sustainable competitive advantage and won’t hollow out its core competence, capabilities, or technical knowhow. Outsourcing of maintenance services, data processing, accounting, and other administrative support activities to companies specializing in these services has become common place. Thirdly, outsourcing reduces the company’s risk exposure to changing technology and / or changing buyer preferences. Fourthly, BPO streamlines company operations in ways that improve organizational flexibility, cut cycle time, speedup decision making and reduce coordination costs. Finally, outsourcing allows a company to concentrate on its crore business and do what it does best. Are Indian companies listening? If they listen, BPO is a boon them and not a bane. Questions 1. Which of the theories of International trade can help Indian services providers gain competitive edge over their competitors? 2. Pick up some Indian services providers. With the help of Michael Porter’s diamond, analyze their strengths and weaknesses as active players in BPO. 3. Compare this case with the case given at the beginning of this chapter. What similarities and dissimilarities do you notice? Your analysis should be based on the theories explained in this chapter. CASE V THE SAGA CONTINUES It was the talk of the town in Bangalore during the late 1970s and early 1980s. The plant was coming up on the Bangalore – Yelahanka Road, about 20 km from the city. Everything the people over three did became a folklore. The buildings were huge with wonderful architecture, beautifully built with wide roads and huge spaces. Should a situation demand, the entire plant could be dismantled, bundled up, loaded into trucks and ferried to other places. Lighting inside the building had to be seen to be believed. Interiors had to be seen to be believed. Washrooms, stores, reception, canteen, healthcare, had to be seen to be believed. It had never happened elsewhere. It was amazing, the boss was not addressed as Sir, he was called Mr. - and so ! The yellow painted buses on the city roads made a delightful sight. Legends were fold about the two gentlemen