Text: Better Business



Video Title: Comparative and Competitive Advantages in Global Competition: Spotlight on InfoSys

Length: 7:06

Classroom Application: Instructors will find this video helpful in discussing some of the comparative and competitive advantages in the current global marketplace. The themes discussed in the video serve as a starting point for a discussion on what is involved in researching comparative and competitive advantages before entering a foreign market.

Synopsis

This video gives an overview of the comparative and competitive advantages in global competition by examining one company, InfoSys, as they emerged from India to become a world-class IT and consulting firm.

Discussion Questions

1. What is meant by comparative and competitive advantages?

To successfully enter and conduct business in a foreign market, a company needs both competitive and comparative advantages. Comparative advantage is defined as a country having superior features that provide unique benefits in global competition. Comparative advantage resides in the land, labor and natural resources, which help to create an advantage for a particular region. Competitive advantage, also known as firm-specific advantage, refers to the specific assets or competencies of a firm that are difficult for competitors to imitate, and are derived from specific knowledge, capabilities, skills or superior strategies. Competitive advantage is a firm’s ability, relative to its competitors, to transform inputs to goods and services at a maximum profit on a sustained basis.

2. What are some of the factors that lead to InfoSys’ success?

InfoSys was an effectively run company that was also well positioned to take advantage of the Indian governments liberalization initiatives in the 1990s. The Indian government systematically reduced trade barriers and embraced globalization. InfoSys took advantage of this opportunity and used its domestic strengths and relationships to begin its global ascent. InfoSys offers a complete range of IT services that are attractive to companies around the globe. InfoSys’ primary competitive strength stems from its location in India, which still has relatively low labor costs.

3. Describe InfoSys’ global delivery model (GDM).

GDM is a strategy pioneered by InfoSys that led to global outsourcing. It is a strategy of breaking tasks into small parts and distributing them where the best talent is available and the maximum value will be generated with the least amount of acceptable risk. The firm’s 63 offices (housing employees with specialized skill sets) and centers are innovatively linked to provide maximum networking and problem solving on behalf of the company and its clients. This strategic model has helped the company differentiate itself against its competitors.

Quiz

1. ______ is a firm’s ability, relative to its competitors, to transform inputs to goods and services at a maximum profit on a sustained basis.

a. International expansion strategy

b. Competitive advantage

c. Comparative advantage

d. Global integration strategy

Answer: b

Explanation: Competitive advantage is a firm’s ability, relative to its competitors, to transform inputs to goods and services at a maximum profit on a sustained basis, whereas comparative advantage is defined as a country having superior features that provide unique benefits in global competition.

2. Which of the following services does InfoSys NOT provide?

a. engineering services

b. consulting services

c. business process outsourcing services

d. financial planning services

Answer: d

Explanation: InfoSys offers a complete range of IT services, including engineering, consulting and business process outsourcing (BPO) services, to companies around the globe.

3. What is one of the factors that have contributed to InfoSys’ success?

a. the Indian liberalization initiatives of the 1990s

b. their acquisition by IBM

c. the large number of MBAs they employ

d. their relationships with international companies

Answer: a

Explanation: InfoSys was well positioned to take advantage of the Indian governments liberalization initiatives in the 1990s. The Indian government systematically reduced trade barriers and embraced globalization. InfoSys took advantage of this opportunity and used its domestic strengths and relationships to begin its global ascent.

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4. What is one of the greatest comparative advantages of operating a company in India?

a. increased production costs

b. a large educated workforce

c. greater access to marketing channels

d. more opportunity for mergers

Answer: b

Explanation: One of the comparative advantages of operating a company in India is the large, educated and English-speaking workforce.

5. One of the greatest advantages of having 63 offices located around the globe is that InfoSys_____.

a. has been able to maintain its competitive edge

b. has been able to hire many employees

c. has been able to work with local architects to design each office

d. has been able to keep its branding consistent

Answer: a

Explanation: The firm’s 63 offices and centers are innovatively linked to provide maximum networking and problem solving on behalf of the company and its clients. The company’s GDM strategic model (breaking tasks into small parts and distributing them where the best talent is available and the maximum value will be generated with the least amount of acceptable risk) has helped the company differentiate itself against its competitors and maintain its competitive edge.

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