Question: Use the following case study to answer the questions below: Global Tech LLC ( Global Tech ) is a privately - owned information technology (
Use the following case study to answer the questions below:
Global Tech LLC Global Tech is a privatelyowned information technology IT and business processing outsourcing BPO services company that was founded in with headquarters in Silicon Valley, California. In the company also started operations in Hyderabad, India, and its business model was simple. The US operations would generate business from US clients, and the Indian operations would fulfill the business by providing IT and BPO services. The companys vision was To be the best IT and BPO services company in the world.
was a boom time for the IT industry, especially companies with Indian operations, who were able to leverage cost advantages to patch older software for YK compliance. To aid business development, Global Tech quickly hired salespeople in the US and this helped the company reach $M annual revenue within five years. Although the company is tightlipped about current revenue and profit, analysts estimate that revenue had a compound annual growth rate CAGR of from till today. The company has also grown from around employees in to employees today, most employed in India, but also including USbased salespeople. Global Techs competitive strategy was and still is driven to a large extent by cost differentiation, using hourly billing rates as low as $ to acquire new clients, and then providing satisfactory services to secure repeat business at similarly low billing rates, resulting in gross margins of less than as opposed to the to margins made by other companies in the same industry.
A simplified value chain of the IT industry suggests that companies at the high end engage in differentiated activities that are more proprietary and less imitable, allowing them to appropriate more value. These include firms such as Google, SAP, and Microsoft, who engage in R&D services to develop their own products and services. IT consulting companies such as IBM and Accenture engage clients to understand business and functional requirements that can be fulfilled by products or services from companies such as Google and SAP. IT consulting companies then pass this information on to their IT services SBUs or other IT services providers. IT services providers work on these requirements to develop, port, maintain, or test IT systems and software that meet clients requirements. Development is the most lucrative as it allows providers to create new solutions that typically command a higher price, followed by porting, which involves migrating an existing solution from one environment to another for example, Windows to Windows Maintenance and testing are less lucrative as they involve troubleshooting or validating existing solutions, although maintenance comprises the largest volume of business for many companies. IBM and Accenture have their own IT services SBUs, and are major players in this space, along with HP Fujitsu, and Indian IT companies such as Tata Consultancy Services TCS and Infosys Limited. Finally, BPO services in the IT industry typically focus on call center operations and other back office operations such as finance and accounting services and human resources management services, with Capgemini and Genpact among the major players. For the most part, Global Tech is focused on IT and BPO services, although it also provides IT consulting services to some clients.
A majority of the companys business comes from North America, with three clients Costco Wholesale, Safeway, and WellPoint Health Networks making up almost In addition to these three clients, the company has almost smaller US clients in various industries such as banking & financial services, energy & utilities, media & entertainment, public sector, retail, and telecommunications. Most of the work for Costco and WellPoint involves the maintenance of legacy mainframe solutions, but this has been decreasing over time as clients port their old mainframe solutions to more stable solutions from Oracle and Microsoft. The work for Safeway, on the other hand, involves a balanced mix of development, porting, and maintenance, and the work for the companys other clients broadly follows its balanced mix for Safeway. Global Tech also has alliances with IBM and Microsoft, which allow it to position itself as a preferred IT services provider for products, services, or consulting solutions involving these companies.
Although the company has been around for more than years, it has grown organically along many dimensions, and the senior management has been exploring some strategic moves to set course for the next ten years and beyond. For starters, almost everyone on the senior management team felt that the company needed a clear mission statement that went beyond the companys vision. Additionally, they agreed on the need to have a clear positioning, but they could not agree on what wo
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