The company’s strategic planning should focus on following the localization strategy. The service offering’s strategic goal would be to provide a wide range of high-quality, reliable IT services, assuring value creation (McGraw Hill, 2022a). The company’s target market should be medium-to-large businesses needing technological logistics and communication solutions. The company would provide customers benefits like improved global coordination, operational processes automation, productivity increase, and data security (GlobalEDGE, n.d-b). The financial aims for the company would be to eventually establish a stable return on investment, possibly around 5-7 %, and to secure a market share that allows profitable existence by the side of the major competitors.
The provision of ICT services renders some entry modes more effective on the global market. Turnkey projects are optimal for tasks that do not require constant supervision and thus are more beneficial (GlobalEDGE, n.d-c). Exporting and partnering can provide a safe entry, but the company should choose partners carefully to avoid conflicts (McGraw Hill, 2022b). Furthermore, management contracting, contract manufacturing, and wholly-owned subsidiaries are sophisticated and require direct investment(McGraw Hill, 2022b). Franchising or licensing would require having a well-known brand – an issue for a new company. Lastly, joint ventures lack the technology and quality control (McGraw Hill, 2022b). Entry modes like exporting, turnkey projects, and partnering may yield the most benefits and least risks for the budding ICT enterprise.
The proposed organization will likely benefit more from decentralized as the customer’s ICT service requirements may differ. Certain IT features like cloud computing allow for effective decentralization, granting the company more agility in expanding globally and sharing information (GlobalEDGE, n.d-d). Therefore, the decentralization approach will be the major one used by the proposed business.
Designing a Global Distribution Strategy
As previously discussed, the biggest barrier to delivering IT services promptly would be unreliable electricity supply. Moreover, internet speed and accessibility are quite limited in India, with only 479 secure internet servers per one million people, as opposed to the world average of 11,502 in 2020 (World Bank, 2022). Therefore, the company may face difficulties with securing uninterrupted access.
Services distribution may be affected by the political tensions between India and some customer countries. Moreover, cultural aspects such as the caste system may hinder communication and distribution. Lastly, as discussed earlier, India did not ratify several global trade agreements, but it is unlikely to impact services distribution.
Using wholesalers or brokers for the ICT global business operations is not likely to be necessary. However, an international intermediary like the IT distributor may play an agent role. They could take on marketing the company’s services, handling payments, or negotiating contracts.
The distribution of services will likely take place in the digital realm. The major distribution and operational method used by ICT companies is cloud computing, which would reduce financial barriers to entry and increase flexibility (GlobalEDGE, n.d-a). Hence, the digital distribution channels powered by cloud computing will support the proposed business.
Starting an ICT business in India may be highly profitable, but the company should be aware of a highly competitive environment. Nonetheless, the critical economic, socio-cultural, and politico-legal analysis has shown that India is overall welcoming to foreign investors. Moreover, India will provide a fruitful setting with abundant skilled labor to implement the company’s strategic goals. However, given that the extant major competitors successfully reduce costs due to their size, the emphasis on quality and localized products is recommended.
Given the IT-saturated business environment in India, a decentralized approach coupled with a localization strategy would allow the company to meet such a recommendation. Potential business entry modes include exporting, turnkey projects, and partnering. Cloud computing is recommended as a major method for globalizing the proposed business. Therefore, the company is advised to select locations with reliable internet access and electricity supply in major cities.
3 ways cloud computing can globalize small businesses. (n.d-a). GlobalEDGE: Your Source for Global Business Knowledge. Web.
Achieving strategic agility in hypercompetitive environments. (n.d.-b). GlobalEDGE: Your Source for Global Business Knowledge. Web.
Glossary. (n.d.-c). GlobalEDGE: Your Source for Global Business Knowledge. Web.
McGraw Hill. (2022a). Chapter 12: The strategy of international business [PowerPoint slides].
McGraw Hill. (2022b). Chapter 13: Entering developed and emerging markets [PowerPoint slides].
The cloud and implications on int’l business. (n.d.-d). GlobalEDGE: Your Source for Global Business Knowledge. Web.
World Bank. (2022). Secure Internet servers (per 1 million people). The World Bank: Data. Web.