- Describe the determinants of competitive
- Recognise the difference between the fundamental view and the dynamic view ofcompetitive
- Develop a business strategy based on a comprehensive situational
You are a strategic analyst for a large consulting firm and specialise in the analysis of Australian companies. You have been asked by your manager to write a report analysing an Australian company’s underlying strategy that has resulted in it moving some of its activities offshore with the loss of a number of local jobs as well as expanding into other international markets.
Note: You are to choose any of the following companies.
- Superloop(telecommunications) [www.supcom]
- MantraGroup (Hotel) [mantragroup.com.au]
- IDPEducation (Education) [idp.com]
- CollinsFoods (Food) [collinsfoods.com]
- FlightCentre (Travel) [www.fligcom.au]
- PriceWaterhouse Coopers (PWC) (Professional Services) [www.pwcom.au]
This is part one of your e-portfolio which will also be part of Assessment 3. In your analysis you are required to:
- Evaluate the external issues that are affecting the company and have driven it to employ astrategy that has resulted in moving jobs
- Analyse the internal issues that are making the company consider moving jobs offshore as partof its strategy.
- Identify the stakeholders in this company and discuss how the shift of offshore activities willaffect these stakeholders.
- explain what is the competitive advantage for the company in moving in either expandingoffshore and/or moving some jobs offshore
- list and assess the issues of this strategy, including risks, cost savings and/or revenue increase.Evaluate any other issues that you see are relevant to its success or otherwise. What are the strategic implications?
PWC, Australia operates as a global network in no less than 157 countries with massive workforce working together to deliver quality solutions in assurance, advisory and tax related services. In Australia, PWC works following a code of conduct to build a relationship of trust within society by solving critical issues within their industrial boundary. Understanding the nature of customers is important while providing solutions in finance and accountancy. As argued in Ebiringa and Kule (2014), based on the core business model, they seek for continuous improvement aligning with the client company’s value of services. This report will enlighten the business leaders by analysing its ongoing external and internal issues, which are responsible for employing strategy of moving the jobs offshore. Inevitably, this strategy will have a deep impact on different stakeholders and it will further analyse the company’s benefit from moving the jobs offshore in terms of gaining competitive edge and improving the business. As described in Grappi, Romani and Bagozzi (2013), apart from various advantages, this strategy will invite risks as well. Evaluating those issues, this given report will try to analyse its relevancy in terms of increasing revenue.
The central issue with PWC is, after successfully re-entering into consulting business, they are facing immense competition from newly emerged businesses. They are consistently trying to get hold of the current market position in midst of such increasing competition (Tate et al. 2014). They have a requirement of keeping their market share in a stable place to ensure sustainability as the business place is consistently increasing.
Political factors in developed countries are stable and fairly reliable in most of the cases yet in case of developing countries the company needs to verify closely the areas of taxation policy, labour law, trade and environmental regulations or tariff systems. The current scenario is the company is trying to get hold of the global market as well for being competitive and for that all these factors need to be handled with care to remain relevant with correspondent market.
Economic factors are important of the business place as the buying power of customers determines sales and revenue. The recession in UK and even in Australia affected the business in terms of sales profit and growth. Therefore, opportunity of offshoring the jobs or hiring other firms with the same offerings in services can be an effective solution to remain cost effective yet affected profitability.
Social influences like cultural differences and behaviour has become another risk factor for the company. As the service deals with highly professional work, Australian population could not manage to supply skilled expertise to manage the workload. Better employment packages and benefits have become futile in front of this crisis of skilled and efficient workforce. Therefore, company’s decision of offshoring the jobs can be considered as appropriate and cost effective as well. However, issues of cultural barriers and language are disturbing the balance.
Further, technological changes could act as a restriction in front of organisational operation. New technological inventions, emerging software and coupled with that changing customers’ perception is the biggest challenge of industry. As described by Chen et al. (2014), to gain competitive edge in market PWC needs to improve their IT infrastructure for ensuring better performance from employees Woking both in home location and offshore. As described in Manning (2014), improved IT mechanism is one of the important resources of any business firm to satisfy contemporary requirements of customers. However, balancing with rapid changes and innovative technology is critical for PWC midst of staff scarcity.
External issues: strategically moving jobs to offshore
The sector PWC operates in is a critical part of their clients’ businesses. It is time consuming and depends on efficiency of workforce. As it deals with large sum of money and to avoid further legal complication for flawed solution the company can seek for skilled human resource by outsourcing efficient talents and remain cost effective at the same time.
Economic-environment of Australia is stable and based on their GDP growth it can be stated that offshoring jobs is favourable for solving the issues of such global business offering tax advisory and consultation services (Schröder 2013).
Strengths of PWC in midst of increasing competition is that their client base is wide and international. Therefore, according to Rodrigue, Magnan and Boulianne (2013), it will be favourable to move jobs offshore to recruit more knowledgeable, efficient workforce who have varied technological skills. Their international profile along with work culture and core values, company is capable of attracting international job market as well.
With such good profile and prospect the company can easily crack the opportunity to gain a stable position in international market by taking leverage of offshoring jobs. PWC will be able to gain more exposure if they shift jobs offshore to combat issues of increasing competition.
Weakness of the firm is, although they have international presence and considering offshoring job profiles as a strategic approach for combatting competition, remaining in the list of first four financial consultancy services is difficult for them due to poor brand management (Mite and Cruzes 2013). Besides, SMEs consider PWC as expensive in terms of asking financial and tax solutions. Strategic decision of outsourcing can make it difficult for management leaders for expanding size of organisation.
Such issues will lead them towards growth threats and competition will increase simultaneously. As a result, threat of losing reputation and market share is highly possible. Acknowledging these threats outsourcing skilled employees in a cost effective manner will be helpful for PWC.
According to Adam Cobb (2016), stakeholders are the people who are related to the business of a certain organisation both directly or indirectly. Their actions, goals, policies and procedures are able to influence or they can be influenced even by these factors. Investors, board of directors, employees and shareholders are internal, whereas, government, suppliers, customers are the external stakeholders of any business as in case of PWC as well. The entire market place from where the company can gain resources is the biggest stakeholder of businesses operating internationally.
- One of the major reasons companies tend to move their operations such as manufacturing and customer service units overseas and creating opportunities of new jobs, mainly for lower labour costs and more skilled employees relevant to business operations. However, the cost of maintaining IT infrastructure will be higher and investment will be needed for further training of employees.
- Company owners, shareholders, investors can save a large amount of monetary resources by saving from employee expenses if the country selected for offshore location is flexible in terms of legal, political regulations and labour cost is low.
- However, the home country and develop locations will face scarcity of jobs and for business turnover company will shift attention to offshore locations. Therefore, government will be answerable for that. Besides, government will not have to face immigration issues as locals wills remain at their place working under the same organisation.
- Customers will enjoy more efficient services by paying same price as before.
- Shareholders will experience profitability and employees have to learn more technological techniques in terms of managing offshore teams. Offshore employees can have experience of working under an international brand, learn new procedures and get enough benefit as per country’s norms which will make justice to their expertise.
While operating in Australia, PwC spotted that domestic market is more convenient in terms of recruiting engineers and not accountants. Consistently, two sessions of interviews in one year resulted in only ten desired candidates for helping the customers with tax issues. This has become the biggest concern for the organisation as they have to consult with and hire small and medium enterprises to handle the workload. Acknowledging this fact as a serious concern in terms of customer satisfaction and market competition if PwC could think for offshoring their half of the accountant and customer service department to another country preferably in an Asian location it will be successful as far as increasing competition is concerned Mihalache and Mihalache 2016). Factors which will increase competitive advantage are as follows.
- Offshoring jobs will give the company more brand recognition and more efficient service to customers.
- As a new unit in a different location it will try to conserve more money and operations will be fresh and faster than competitors. By saving staff costs investors can input that resources to development of human capital. Efficiency of HR department is not entirely imitable still competitors will be requiring time to train or recruit professional a workforce as PwC.
- Price will be location friendly, so there will be no chance of complaint from the small and medium enterprises regarding hiked service cost. Therefore, expanded offshoring will attract new customer base as well.
- Operating offshore will invite more technological and software oriented portals to get feedback, to control the quality and communicate. According to Zimmermann and Ravishankar (2016),well synchronised HR team likely to deliver work timely and creates a defined workplace culture. It attracts talents and increases competitive edge as well.
As per Jensen, Pedersen and Petersen (2013), shifting accounting and jobs of customer service to offshore PwC needs to be concerned about these following risks or issues.
- Difficulty regarding communication which means misinterpretation of requirements.
- Promised quality has been altered due to communicational issues or lack of quality surveillance.
- Unprotected intellectual property.
- In case of failure to understand the requirements analysing the criteria of customers, workforce’s ability to meet the requirements every possible aspects related to task need to be cross checked first. Frequent inspection on requirements will reduce incurred project expenses.
- Due to close deadline QA testing is being done in haphazard manner so before setting the deadline even the time must be estimated. Pro-activeness of employees are expected to avoid such cases. Regular checking of solved customers’ queries will be sent to quality assurance team to satisfy them.
- To protect the intellectual property PwC must have a strict security policy, secured IT infrastructure where customers are not allowed to have much internal information.
To conclude, it can be said PwC needs to expand business by shifting and expanding jobs offshore to gain competitive advantage. It will allow them to cut down staff costs and hire more skilled employees to satisfy dynamic customer demand.
Adam Cobb, J., 2016. How firms shape income inequality: Stakeholder power, executive decision making, and the structuring of employment relationships. Academy of Management Review, 41(2), pp.324-348.
Chen, Y., Wang, Y., Nevo, S., Jin, J., Wang, L. and Chow, W.S., 2014. IT capability and organizational performance: the roles of business process agility and environmental factors. European Journal of Information Systems, 23(3), pp.326-342.
Ebiringa, O.T. and Kule, L., 2014. Offshoring for sustainable value management. Serbian Journal of Management, 9(1), pp.105-119.
Grappi, S., Romani, S. and Bagozzi, R.P., 2013. The effects of company offshoring strategies on consumer responses. Journal of the Academy of Marketing Science, 41(6), pp.683-704.
Jensen, P.D.Ø., Pedersen, T. and Petersen, B., 2013. Do expectations match reality when firms consider the risks of offshoring? A comparison of risk assessment by firms with and without offshoring experience. In The offshoring challenge (pp. 287-299). Springer, London.
Manning, S., 2014. Mitigate, tolerate or relocate? Offshoring challenges, strategic imperatives and resource constraints. Journal of World Business, 49(4), pp.522-535.
Mihalache, M. and Mihalache, O.R., 2016. A decisional framework of offshoring: integrating insights from 25 years of research to provide direction for future. Decision Sciences, 47(6), pp.1103-1149.
Mite, D. and Cruzes, D.S., 2013, October. Expectations and achievements: a longitudinal study on an offshoring strategy. In 2013 ACM/IEEE International Symposium on Empirical Software Engineering and Measurement (pp. 123-132). IEEE.
Rodrigue, M., Magnan, M. and Boulianne, E., 2013. Stakeholders’ influence on environmental strategy and performance indicators: A managerial perspective. Management Accounting Research, 24(4), pp.301-316.
Schröder, M., 2013. How moral arguments influence economic decisions and organizational legitimacy—the case of offshoring production. Organization, 20(4), pp.551-576.
Tate, W.L., Ellram, L.M., Schoenherr, T. and Petersen, K.J., 2014. Global competitive conditions driving the manufacturing location decision. Business Horizons, 57(3), pp.381-390.
Zimmermann, A. and Ravishankar, M.N., 2016. A systems perspective on offshoring strategy and motivational drivers amongst onshore and offshore employees. Journal of World Business, 51(4), pp.548-567.
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