HCL is the one of the leading Indian company that is operating in the IT sector. Company acquires IBM 7 products. Most of business environment factors are favorable to the company. Political party ruling India is preparing business friendly policy and IT sector is growing at fast pace. India Government is giving full assistance to the firms that are in IT sector. HCL technologically is advanced company and due to this reason on this front also there are ample opportunities available for the firm. More and more time people spend on mobile and internet and due to this reason there is lot of scope for internet marketing. Social environment is also supportive to HCL. Company have huge loyal workforce which have years of experience. Most of IT firms have low retention rate. Thus, it is sort of rare capability firm have and it is difficult to imitate it by rivals. It is concluded that firm must expand its business in the foreign market.
HCL Technology is the one of the world leading IT firm that is operating in multiple areas or provides IT based solutions to multiple firms operating in varied industries. Recently, HCL Technology has acquired IBM 7 products. In the present research study external and internal environment analysis is done and the impact of these on HCL Technology after acquisition of IBM 7 products is explained in detail. On the middle part of the report value chain analysis is done and areas where the firm has competitive advantage are identified. At the end of the report, recommendation is given whether must expand its business in the international market.
External and internal environment analysis
• Political environment: Government is the entity in the nation that make decisions that directly affect people and corporate. Government taxation policy, incentives to open a business and support provided to the business community, trade pact and related agreements with the foreign nations are some of the factors that come with this component. Policies Government prepare in its tenure reflect its approach and level ot attention it paid to the business community (Prajogo, 2016). In India, in last three years Central Government is focusing on giving immediate response to the problems that business community faced in the nation. Due to this reason HCL will observe the benefits in its business by acquiring IBM products. In India due to the support of local Government it becomes easier to commence business. In Davos in Summit Global CEO’S state that doing business in India become easy in last three years than before. Removal of red tapism for business firms is the Indian Government major priority. Apart from this, the Government also prepares business friendly policy to promote local business firms (HCL Technologies to acquire select IBM software products for $1.8B., 2018). In Acquisition HCL acquire 7 IBM products like AppScan, BigFix, Unica, Commerce, Portal, Notes and Domino, connections. All these are IT related products and due to Government support in the past few years, IT industry grows at a rapid pace in India. It can be said that Government initiatives to promote business are creating huge opportunity for the business firm. Hence, HCL through these products surely will be able to create new clients in the Indian market and multiple in its earnings will be observed. It can be said that political environment is in favor of the HCL Technology.
• Economic environment: Economic environment refers to the economic condition of the nation and its performance on varied parameters like GDP, inflation rate, PMI and IIP. Automobile sector is witnessing downtrend due to consistent reduction in demand for cars in the Indian market. In past few months some of banks in India are identified to be involved in corruption. Many banks tighten their rules considered to issue debt to the company (Bah and Fang, 2015). If economic condition of the nation is good then it means that there is balance between demand and supply and firms are getting abundant opportunity to earn higher amount of revenue and profit in the business. At the India GDP growth rate decline at sharp rate from 7% to 4.7%. This is one of the major matters of concern for HCL Technology. This reflects that demand decline or due to less availability of finance or unfavorable global economic conditions business firms is not getting clients in business or are not able to satisfy demand of clients and customer base. Hence, due to poor economic conditions of the nation and global market after the acquisition of IBM products by paying large amount, it may be difficult for IBM to get a higher ROI on services provided through IBM products. Thus, on front of the economic factor firm is facing threats on a large scale.
On the basis of the above discussion, it is concluded that there is significant impact on the business environment on the business firms. HCL Technology has a strong technological base and due to this reason it can compete with any rivals. The business environment is favorable and creates opportunity for the firm. However, there is a threat to the economic environment. The firm has a large client base and a strong patent portfolio. Apart from this, the company has loyal workforce have years of experience. Hence, firm must expand its business in the foreign market.
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HCL Technologies to acquire select IBM software products for $1.8B., 2018. [Online]. Available through:< https://www.hcltech.com/press-releases/products-and-platforms/hcl-technologies-acquire-select-ibm-software-products-18b>.