The Financial Crisis Of 2007-08 - 1439 Words

Several factors lead to the 2008 financial crisis. The 1999 repeal of the Glass-Steagall Act effectively removed the separation between investment banks and depository banks in the United States. Credit rating agencies failed to price the risk involved with mortgage-related financial products accurately. The Government, concerned with not performing economically as well as the Clinton administration believed increasing home ownership was the answer and reduced obstacles (like loan income/debt documentation). The world s insurance companies began insuring mortgage instruments. Excessive investment leverage, especially in the Banks and venture capitalist communities. And the Government did not adjust their regulatory practices to address 21st-century financial markets- especially in credit default swaps (CDS). These factors set the stage for disaster and greedy speculators wanting to short the housing market triggered it by systematically exposing the mortgage risks to the world. The financial crisis of 2007–08, also known as the Global Financial Crisis, is considered by many economists to have been the worst financial crisis since the Great Depression of the 1930s. Mr. Ben Bernanke, Chairman of the Federal Reserve at the time, believed it was equally problematic in many ways; although unemployment only reached half the level due to the Fed’s actions combined with a $700B stimulus. It collapsed large financial institutions, and stock markets dropped to half theirShow MoreRelatedThe Financial Crisis Of 2007-081150 Words   |  5 PagesDuring the lead up to the financial crisis of 2007-08, a term was coined to describe what was happening in the financial markets. The term was: Shadow Banking System. The creation of the term was attributed to economist and money manager, Paul McCulley, who described it as a large segment of financial intermediation that is routed outside the balance sheets of regulated commercial banks and other depository insti tutions (St. Louis Fed). In simpler terms, institutions that are in the shadow bankingRead MoreThe Financial Crisis Of 2007-081894 Words   |  8 PagesThe definitive event of the early twenty-first century was The Financial Crisis of 2007-08. Since that event, scholars have tried to identify what the causes and the effects of the crisis. The causes and effects of the collapse are varied and many scholars show a consensus about what these causes and effects are. Scholars who researched The Financial Crisis of 2007-08 agree that bank deregulation starting in the early 1970’s a major contributor. The deregulation allowed for banks to increase inRead MoreThe Financial Crisis Of 2007-081389 Words   |  6 PagesThe financial crisis of 2007–08, also known as the Global Financial Crisis, is considered by many economists to have been the worst financial crisis since the Great Depression of the 1930s. Mr. Ben Bernanke, Chairman of the Federal Reserve at the time, believed it was equally problematic in many ways; although unemployment only reached half the level due to the Fed’s actions combined with a $700B stimulus. It collapsed large financial institutions, and stock markets dropped to half their pre-crisisRead MoreThe Global Financial Crisis Of 2007 / 081194 Words   |  5 Pagesdollars. The Australian government has to deal with multiple issues in the macroeconomic world to achieve three goals. The factors affecting thes e goals have to be identified and either harnessed or blocked by the government. The Global Financial Crisis of 2007/08 also caused the Australian government to deal with its failure to reach its macroeconomic goals. The three domestic objectives of government Australia’s three macroeconomic goals are equally important in keeping stability in the economyRead MoreGlobal Financial Crisis Of 2007-082494 Words   |  10 PagesIntroduction The global financial crisis of 2008-09 that spread contagiously across the globe has particularly hit the European economies hard, accentuating turmoil in the world financial markets and precipitating the European sovereign debt crisis almost instantaneously. This has consequently wiped away all of the EU’s accomplishments in economic growth and job creation (European Commission, 2010a:3). Statistics published subsequently exposed the magnitude of the crisis: real GDP contracted by 4%Read MoreDeregulation Is The Underlying Cause Of The 2007 / 08 Financial Crisis1382 Words   |  6 Pagesderivatives. The Financial crisis in 2007-2008 brought the massive hurt to everyone in the world. The worldwide financial problem affected thirty million people loosing their jobs and cause many countries getting close to go bankrupt (Peah, 2014). This is the global issue that everyone should be consider of. The purpose of this essay is to determine if the deregulation was the underlying cause of the 2007/08 financial crisis. The essay argues the deregulation was the underlying cause of the 2007/08 financialRead MoreThe Global Financial Crisis Of The Usa1383 Words   |  6 PagesThe recent global financial turmoil started on July 2007 ,mainly in the USA and spread among developed nations in the later part of 2008 and subsequently shifted to the developing nations .this crisis consisted of some prime drawbacks not only for the developed countries but also for developing countries .the most talked about issue in the recent financial arena in the global financial crisis ,which started to show its effect in the middle of the year 2007.the turmoil ,however ,was rooted in theRead MoreEssay On Regulating American Banks1033 Words   |  5 Pagesrestructure the elephantine law which had recast financial regulation following the 2007-08 crisis. Thus, he asked Steven Mnuchin, the Treasury secretary to measure all the rules of America against 7 broad principles, bail-outs prevent ion by taxpayers as well as instituting more efficient regulations inclusive. Mnuchin provided a report on banks where he proposed installments to cover capital markets, asset, and insurance management together with financial technology and nonbank institutions. Also, allRead MoreFinancial Crisis : The Fiscal Crisis1355 Words   |  6 Pagesgeneral, a financial crisis is not an accident; it may take several years and has complex and interlaced causes (Claessens and Kodres, 2014). The 2007-08 global financial crisis is a typical case due to long-term non-intervention policy and loose regulation for financial market from government. Moreover, it involved the complex relationship between government and financial institutions. In order to look at this issue in particular, this essay first goes though the timeline of the 2007-08 financial crisisRead MoreThe Financial Crisis Of The Housing Bubble1482 Words   |  6 PagesThe Financial Crisis that started in 2007 The 2007-08 financial crisis that started in the US is often dubbed as the housing bubble. Although, the burst of the housing bubble is the tipping point of the crisis, the true causes have building up slowly and steadily for almost over a decade. The burst of the housing bubble was merely a reflection of the built up baggage. This crisis is a classic example of how dangerous derivatives can turn out to be if not properly managed. Causes of the crisis and

Understanding Capstone Project for Sale

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Album The Devil and God Are Raging Inside Me Essay Example For Students

Album The Devil and God Are Raging Inside Me Essay The Devil And God Are Raging Inside Me is the third studio album by the American alternative rock band Brand New. It was released on November 20, 2006, through Interscope Records. The album’s name came from a conversation that Jesse Lacey, the lead singer of Brand New, had with a friend regarding the musician Daniel Johnston, who suffers from schizophrenia and bipolar disorder. The album cover was discovered by the band at Nicholas Prior’s â€Å"Age of Man† art show. The photograph is titled â€Å"Untitled #44. Brand New consists of Jesse Lacey (lead vocals, rhythm guitar), Vincent Accardi (lead guitar, backing vocals), Brian Lane (drums), Garrett Tierney (bass guitar, backing vocals), and Derrick Sherman (keyboards, guitars, backing vocals). The band’s influences range from pop and classic rock bands such as The Beach Boys, Squeeze, and The Cars; to more contemporary acts such as Weezer, Foo Fighters, and Radiohead. Frontman Jesse Lacey is also known for his fondness of The Smiths and Morrissey. Though Brand New cannot be put into any one genre, they are most often described as alternative rock, indie, and emo. Brand New has evolved their sound since their first album, Your Favorite Weapon. Their sound went from teenage-angst with a slight twist of maturity, to extremely mature and dark, to unrefined and deep. The Devil And God Are Raging Inside Me (The Devil And God) was a different approach to music than Brand New had taken with either of their previous two albums. Instead of recording a normal album, they used their album to bridge the gap between personal grief and public entertainment. Although its often attempted, its rare to see such a personal album be so well received by a mass audience. The majority of Brand New fans agree that this album is lyrically the best even if they do not consider it their favorite. The Devil And God seems like and excuse for Jesse Lacey to channel his inner demons, rather than to produce an album just to make the fans happy. The Devil And God includes a new level of passion and aggression that would be almost impossible to duplicate because of how personal it is. The emotion in The Devil And God Are Raging Inside Me is tangible from the very start. In the first track, â€Å"Sowing Season,† Lacey is heard despairing over the loss of his friends. What starts out as a calm, soothing rhythm turns into an explosion of guitars and aggressive drumming. The instruments help to create the feelings of loss and helplessness that Lacey is trying to convey through his lyrics. â€Å"Millstone,† while still demonstrating the sound of this album, will appeal to older fans with its classic ear-catching chorus. This song contains a reference to Matthew 18:6 (â€Å"A milestone around my neck Be my breath, theres nothing I wouldnt give†), continuing the theme of religion which is obviously hinted at in the name of the album. In â€Å"Jesus Christ,† which is the biggest look into the mind of Jesse Lacey, we hear him question death and his faith. â€Å"Degausser† is probably my favorite song of the whole album just because of its sound and the overall meaning. It is the only song on the The Devil And God that more than two band members had a hand in writing. A â€Å"degaussing tool† is used to de-magnetize a tape-head in order to avoid problems of background noise in analog recording devices. In the song, it is used as a metaphor for de-magnetization of a relationship. Limousine (MS Redbridge)† is probably the most interesting and gruesome song of the The Devil And God. It tells the true story of the death of 7-year-old Katie Flynn. Each verse of the song is from a different perspective. The first verse is from Katie’s mother’s perspective. She refers to Martin Heidgen, the drunk driver responsible for Katie’s death, as the man who has â€Å"volunteered with grace† to end Katie’s life. The second verse was written from the guilt-ridden perspective of Heidgen (â€Å"Can I get myself out from underneath this guilt that will crush me†). .u696809e806eb10d11105d1b69d216f3b , .u696809e806eb10d11105d1b69d216f3b .postImageUrl , .u696809e806eb10d11105d1b69d216f3b .centered-text-area { min-height: 80px; position: relative; } .u696809e806eb10d11105d1b69d216f3b , .u696809e806eb10d11105d1b69d216f3b:hover , .u696809e806eb10d11105d1b69d216f3b:visited , .u696809e806eb10d11105d1b69d216f3b:active { border:0!important; } .u696809e806eb10d11105d1b69d216f3b .clearfix:after { content: ""; display: table; clear: both; } .u696809e806eb10d11105d1b69d216f3b { display: block; transition: background-color 250ms; webkit-transition: background-color 250ms; width: 100%; opacity: 1; transition: opacity 250ms; webkit-transition: opacity 250ms; background-color: #95A5A6; } .u696809e806eb10d11105d1b69d216f3b:active , .u696809e806eb10d11105d1b69d216f3b:hover { opacity: 1; transition: opacity 250ms; webkit-transition: opacity 250ms; background-color: #2C3E50; } .u696809e806eb10d11105d1b69d216f3b .centered-text-area { width: 100%; position: relative ; } .u696809e806eb10d11105d1b69d216f3b .ctaText { border-bottom: 0 solid #fff; color: #2980B9; font-size: 16px; font-weight: bold; margin: 0; padding: 0; text-decoration: underline; } .u696809e806eb10d11105d1b69d216f3b .postTitle { color: #FFFFFF; font-size: 16px; font-weight: 600; margin: 0; padding: 0; width: 100%; } .u696809e806eb10d11105d1b69d216f3b .ctaButton { background-color: #7F8C8D!important; color: #2980B9; border: none; border-radius: 3px; box-shadow: none; font-size: 14px; font-weight: bold; line-height: 26px; moz-border-radius: 3px; text-align: center; text-decoration: none; text-shadow: none; width: 80px; min-height: 80px; background: url(https://artscolumbia.org/wp-content/plugins/intelly-related-posts/assets/images/simple-arrow.png)no-repeat; position: absolute; right: 0; top: 0; } .u696809e806eb10d11105d1b69d216f3b:hover .ctaButton { background-color: #34495E!important; } .u696809e806eb10d11105d1b69d216f3b .centered-text { display: table; height: 80px; padding-left : 18px; top: 0; } .u696809e806eb10d11105d1b69d216f3b .u696809e806eb10d11105d1b69d216f3b-content { display: table-cell; margin: 0; padding: 0; padding-right: 108px; position: relative; vertical-align: middle; width: 100%; } .u696809e806eb10d11105d1b69d216f3b:after { content: ""; display: block; clear: both; } READ: Stress: Meditation and Music EssayTowards the end of the song, is Katie’s perspective, which Lacey portrays as trying to be thankful that she will not ever have to deal with the loss of anyone that she loves (â€Å"Well never have to buy adjacent plots of earth Well never have to rot together under the dirt Ill never have to lose my baby in the crowd Well I should be laughing right now†). The lyrical meaning in this track is easily the most powerful of all the songs. â€Å"You Won’t Know† has been interpreted in many different ways. Some say that it is a continuation of Heidgen’s perspective; others say it is about an abortion or a past r elationship of Lacey’s. All of those interpretations make sense, though I believe it was a continuation of Hiedgen’s perspective. â€Å"Welcome to Bangkok† and â€Å"Untitled† are the two purely instrumental songs on The Devil And God. They act as transition pieces and help you be able to really think about what you have heard. â€Å"Not the Sun† is supposedly about a man proposing to a woman. She says â€Å"no† because and tells the man repeatedly that he is â€Å"not the sun,† which hints at the fact that he thinks that world revolves around him (the sun). Luca† is a reference to Luca Brasi from the novel The Godfather, who is drowned with a pair of cement boots to ensure that he’ll sink and never float up and be discovered (â€Å"So weve fixed you with cement galoshes And no one can save you now†). â€Å"The Archer’s Bows have Broken† is the only constantly fast-paced track on The Devil And God. It is the adrenaline rush that you needed at this point. The transition from â€Å"The Archer’s Bows have Broken† to the last and slowest song of the album, â€Å"Handcuffs,† is a surprisingly easy transition. Handcuffs† is honest and does its job of summing up The Devil And God beautifully because of its theme of trying to be â€Å"the better man†, and having the realization of how hard it is to be one. The Devil And God Are Raging Inside Me ’s meaning gets deeper with each listen, and I am taken into a dark but incredibly moving place. This album will forever be one of my favorite albums of all time simply because it has the same profound effect on me, if not more, since the very first time I heard it. I could listen to it a thousand times and the meaning would never be lost.

Porters 5 Forces free essay sample

Porters 5 forces analysis is a framework for industry analysis and business strategy development developed by Michael E. Porter in 1979 of Harvard Business School. It uses concepts developed in Industrial Organization (IO) economics to derive 5 forces that determine the competitive intensity and therefore attractiveness of a market. Porter referred to these forces as the microenvironment, to contrast it with the more general term macro environment. They consist of those forces close to a company that affect its ability to serve its customers and make a profit. A change in any of the forces normally requires a company to re-assess the marketplace. Strategy consultants use Porters five forces framework when making a qualitative evaluation of a firms strategic position. The framework is textbook material for modern business studies and therefore widely known. Porters Five Forces include three forces from horizontal competition: threat of substitute Porter provided a framework that models an industry as being influenced by five forces. We will write a custom essay sample on Porters 5 Forces or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page The strategic business manager seeking to develop an edge over rival firms can use this model to better understand the industry context in which the firm operates. Our primary objective is to analyze the Telecommunication industry of Sri lanka using Porter’s Five forces frame work.. In this report we try to discuss about the Porter’s Five forces ,taking each of them individually and come up with its interrelationship with the existing Telecommunication industry. Nowadays in Sri lanka, Telecommunication is an industry which has a rapid growth with the time. As there are number of competitors competing with each other to get the attraction of the customers ,we can have a satisfactory service which can fulfill our desires. The basic concepts of Porter’s rule clearly defines the main roles of a particular competitor which tries to survive in the industry of Telecommunication in Sri Lanaka. Telecommunication is an industry which has spread over a wide range. But, Porter’s rule can be applied to this industry to get an overview of how the industry is being controlled by those factors. What are Porter’s five frame factors and how they are interrelated with each other. The above picture illustrates the main concepts in the Porter’s five frame work. These concepts plays the major role of existent of a particular industry. Telecommunication is an industry which has obtained a considerable amount of development through the last few years. With respect to Telecommunication industry we can analyze the above five factors. 1. )Rivalry among existing firms.. With the development of the industry, a number of companies came to party. These companies use several techniques to attract the customers towards their company products. Examples of a few companies in Sri Lanka which delivers the telecommunication services to the society: Dialog Mobitel Suntel Sri lanka Bell 2. )Threat of new entrants. We know that in near future ,the number of competitors competing in the telecommunication industry in Sri Lanka will grow up. Eg: We know that a company named as â€Å"Airtell† is above to loach their company in Sri Lanka in near future. 3. )Bargaining power of suppliers It is clear that the companies which provide telecommunication services to the society do not implement the equipment they use,but they buy those equipment from the existing equipment suppliers. *Supplier concentration *Importance of volume to supplier *Differentiation of inputs *Impact of inputs on cost or differentiation *Switching costs of firms in the industry *Presence of substitute inputs *Threat of forward integration *Cost relative to total purchases in industry Eg:Dialog use the Telecommunication equipment produced by the CISCO. 4. )Bargaining power of buyers. Customers have a right to buy the product which they think is the most suitable. Further more they can choose the product according to their income. *Bargaining leverage *Buyer volume *Buyer information *Brand identity *Price sensitivity *Threat of backward integration *Product differentiation *Buyer concentration vs. industry *Substitutes available *Buyers incentives Eg: Some customers use prepaid connections while some other customers use connections with monthly rental. 5. )Threat of substitute product or services. Human being is a creature which has a great amount of curiosity in his mind to discover new things. As a result of this the existing Telecommunication industry may be replaced by a new industry which use a different approach and a different technology. Eg; A new technology might be implemented in future to provide a better communication via the whole world with a little cost of money. 1. ) Rivalry among existing firms.. A larger number of firms This increases rivalry because more firms must compete for the same customers and resources. The rivalry intensifies if the firms have similar market share, leading to a struggle for market leadership. If w e consider about the situation in Sri Lanka ,there is only a limited number of people living in Sri Lanka. As a result of that ,the number of people ,who uses the modern technology to communicate with each other is limited. Eg: Total number of Dialog customers is equal to 10 million. There are a lot of Telecommunication companies competing with each other to attract the customers to their company. But there are only a limited number of people who uses these Technology to fulfill their desires. Slow market growth This causes firms to fight for market share. In a growing market, firms are able to improve revenues simply because of the expanding market. As a result of limited population in Sri Lanka ,market growth is comparatively slow. This leads to a big competition between the companies to obtain profit. Low switching costs This increases rivalry. When a customer can freely switch from one product to another there is a greater struggle to capture customers. If we consider about the Telecommunication side,one customer might switch from one company to another. Eg: Dialog customer may switch to Tigo. This leads to a critical issue, where companies are struggling to capture the customers. Porters 5 Forces free essay sample Five Forces analysis for IT industry Wipro Technologies is a global information technology (IT) services company. It provides custom application design and development, IT consulting, systems integration, technology infrastructure out sourcing, software products and BPO services. Michael Porters Five Forces Model looks at five key areas- the threat of entry, the power of buyers, the power of suppliers, the threat of substitutes, and competitive rivalry. Threat of new entrants: New entrant in the market may have an effect on share of older counterparts Threat of substitute: Due to technological advances, Quality constraints or cost effectiveness there can be a threat of the substitute on the industry. Bargaining Power of customer: This is the bargaining power of the customer -one who is consumer of the goods. Bargaining Power of suppliers: This is the bargaining power of the supplier -one who supplies sources that are needed for finished goods. Comparative Rivalry within Industry: It tells about extent of competition in between firms in an industry. We will write a custom essay sample on Porters 5 Forces or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page Porters Five Forces helps to analyse how these forces act together to cause the company to increase or decrease profitability of the company. The strategy of the company should be to influence these forces to maximise profitability. Hence below is a study of the IT industry and study of profitability in custom application design development, systems integration, technology infrastructure management segments of IT Threats and barriers to entry Economies of scale and Capital Investment Requirements: IT requires very low investment and hence we have hundreds of startups starting every year. While it is easy to invest and start a software company sustaining growth does not come easy. All these start-ups also play in an area where Wipro does not compete like low value projects or in subcontracted work. Hence they are not a threat to the profitability of Wipro. India is the favourite destination for off shoring Information Technology (IT) and IT enabled Services. The Indian IT/ITES industry commands more than 50% of global ITES off shoring market share. The IT/ITES exports are set to cross USD 60 billion by 2010 and Nasscom (The National Association for Software and Services Companies), estimates that the industry will account for USD 63. 7 billion of revenues and direct employment is expected to reach nearly 2. 3 million. The IT industry contributes around 26 per cent of Indias total exports and was around 6. 1 percent of Indias GDP for financial year 2009-2010 (NASSCOM, 2010). 2 Customer switching costs Wipro works across verticals like telecom, BFSI, Media and Communication, Automobiles, Government, Technology, Manufacturing, Energy, Healthcare, Hospitality etc and has several ODC or offshore development centres for nearly all top companies in the world. These offshore development centres have thousands of resources working with multi year projects earning millions of dollars of revenue a year. The cost of shifting or switching even a part of these projects to other companies would involve huge set up, transitioning costs with no guaranteed results. Wipro has quality certifications like Cmmi Level 5, PCMM Level 5,BS9977 etc and new entrants will face a barrier in this regard. Global contracts will not be given to companies with the lack of certification. The lack of security certifications will cause customers to have security related concerns while sending data offshore. 3 Access to distribution channels and technology This poses no difficulty. Many top business unit heads have previously quit from Wipro and spawned off their own company which has grown and sometimes taken a part of the market share of Wipro. Since the industry thrives on knowledge workers when a senior person leave he takes access and knowledge of customer base and customer contacts with him. The Internet is present everywhere and software technology in the era of open source is easily accessible to all. 4 Government Subsidies and policies Current favourable policy by government for new ITES-BPO firms is creating competitive situation for Wipro and other established players in the India IT industry. The reforms have reduced licensing requirements and made foreign technology accessible. The reforms have also removed restrictions on investment and made the process of investment easier. This has tremendously helped the IT industries. The Indian government is actively promoting FDI and investments from NRIs (Non-Resident Indians). FDI can be brought in through the automatic route, based on powers accorded to the Reserve Bank of India. Improvement and reach of telecommunication can aid new entrants into the IT industry. Similary improvements in infrastructure and power sector can also aid new entrants into the IT industry. Recognizing the importance of Venture Capital Funding, the Ministry of Information Technology has set up a National Venture Fund for the Software and IT Industry with a corpus of Rs. 100 crore. The main aim of the venture capital Fund is to provide Venture Capital to start up software professionals and small IT units. Nasscom (most important promoter of the IT/BPO industry) has been playing a crucial role in helping the IT industry achieve the IT and ITES vision and make India far ahead of other players in the field of IT and BPO. But new entrants and start ups can never be in the league of Wipro which adds 20-30 new customers every quarter and earns revenue in the range 0f 50-60 billon USD every quarter. 5 Brand Loyalty Since Wipro is in multi year relationships with most of it’s customers and since the relationship is driven top down from CEO level and exists sometimes with entire IT organisation of the customer, there is a deep brand loyalty that cannot be forsaken. Wipro trades on NYSE and is a well respected global company. Threat of Substitute Price is most often the main differentiator among key players in the software industry quality of service being the same. Indian IT firms like Wipro face stiff competitions from their counterpart in other emerging market like Russia, Brazil, Mexico, Philippines and China. The IT providers in these markets charge competitive rates as compared to Wipro. But Wipro has development centres in China , Philippines so that they can leverage the same advantage. At the same time Wipro attracts a huge pool of resources from the many leading technical institutions across India . These resources are trained to work in many technologies and also are very flexible with respect to work timings. Additionally, the Wipro has been exceptionally quality focused being the first Indian Cmmi Level 5 company with high-skilled pool of knowledge workers with English speaking Hence it has an upper edge over other offshore locations like China, Philippines or Latin American countries 1 Quality/Value proposition While start-ups work like a flash in the pan and sometimes do attract a first time IT outsourcer it is MNCs like IBM and Cognizant which can be identified as substitutes for Wipro. Cognizant with it’s steady and continued growth rate has taken a part of the market share of companies like Wipro. An MNC with a formidable history and background can e work as substitute for Wipro in the software industry due to the differentiation that they bring in terms of delivery models, senior people/leadership in the organisation, RD focus, steady focus on not yet mature verticals (like healthcare in Cognizant’s case for example) and pumping back money into the business. These MNC bring a better value to the customer and engage the customer at a more strategic level . Buyer’s willingness and relative price/performance of substitute As per a report in Economic Times Emerging near shore rivals, including Ness Technologies of Israel, CPM Braxis of Brazil and Mexico-headquartered Softtek are increasingly becoming attractive for top outsourcing customers such as GE, Citibank and several others seeking to work with local, specialised vendors instead of sending all projects to offshore locations like India. Though Wipro is growing it’s presence in the emerging markets of Latin America, Eastern Europe and Asia, they face stiff competition from these newer rivals. For many customers who already have significant presence in offshore locations like India, it’s a risk diversification, Some customers having 70-80 per cent of their offshore resources in India are realising that they need to look at the third category of suppliers that are local and niche. Over the past two years, companies such as CPM Braxis, EPAM Systems, Ness Technologies, Softtek, Merchants and Spi Global have emerged as stronger rivals for Indian tech firms, especially while bidding for an outsourcing contract being fleshed out by a ‘first-time outsourcer’. Brazilian firm CPM Braxis, for instance, which counts GE, ABN Amro and Whirlpool as clients, reported revenues of around $567 million in 2008. One of the top four Brazilian banks, Bradesco, is also among the biggest customers for the company. While these emerging outsourcing rivals are not yet in the big league of mega, multi-year contracts, they are still able to gain business because of their niche and local market expertise. On an average, these companies are able to win contracts worth $2-5 million in annual contract value. Bargaining power of customer Concentration of buyers and sellers There are a large numbers of playes in the software industry. While India and Indian software companies with demonstrated performance are the lead runners, players across the world and especially from other developing countries like Brazil etc are in the run. Hence the customer has huge bargaining power. 2 Profitability of buyer OF late due to the cut in IT spending, while IT spend of the custome rs may have reduced, the number of players are vying for the same budget. Hence cost advantages become very major and customer drives the billing rates. This is because most of the projects are in maintenance or integration and quality differentiation may not be there among number of players. 3 Switching Costs But for existing projects where switching costs are high , new higher billing rates have been worked on on contract renewal even in the recession period. Also with a tighter monitoring of IT spend of customers and in an effort to distribute the risks customers also rarely give an entire project to one customer often distributing the project to all key players hence igniting rivalry and competition. Forward Integration Many captive companies have leveraged the same advantage as companies like Wipro of resource availability at low costs and have opened their captive centres in India, which acts as an IT wing of their company and develops software for them. Examples are many like Shell , JP Morgan, man international banks, Bosch, Boeing etc. Bargaining power of supplier 1 Concentration of suppliers and demand Since there are a lar ge number of technical institutions campus recruitments bring in thousands of entry level people at low salaries. But at the same time attrition is very high in the software field since with experience resources may move to greener pastures. 2 Profitability of suppliers There is a huge demand for experienced professionals in key skill areas. Companies need to continually invest in resource development and training in upcoming technologies and keep them from leaving the company by attractive remunerations, trips abroad etc. Since many of the suppliers who support the IT service industry -are local and IT industry earning capitalize on the rupee dollar difference . The suppliers are happy to be in engagement with the IT company and are happy with what they are offered though it is a miniscule of what the IT company earns. Example are cab companies. Rivalry or Competition 1 Structure of competition The key players in the IT industry are in intense competition with each other. All the major players like TCS, Infosys etc have the same kind of delivery models, verticals focus, billing rates and also almost the same customer base, geographical presence etc. So most of the competition is around excelling in domain knowledge, gaining thought leadership in technology areas and building customer relationships. But the large players are only a few in number who are clear market leaders. Still Startups concentrate on niche technologies and domains and beat inroads into the IT companies market share. Start-ups thrive on a hire and fire policy where the resources are taken on at the beginning of a project at high salaries and fired after it’s completion. Since there is no service differentiation the customer believes in divide and rule policy where the each key player is given a near equal piece of the pie, pitching one player against the other and igniting intense rivalry. The key to getting good projects is good experienced resources, number of people with a specific skill etc. Hence resource poaching is a common phenomenon. 2 Cost structure of the Industry Companies like Wipro have high overheads owing to it’s size and complex organisation structure. New companies with none of the legacy of Wipro, can come in with niche focus and take a portion of maket share related to RD, innovation where creativity, technicall prowess is more key than standard processes, certifications etc. So time and again projects are lost to smaller companies who are more nimble and lean and once that happens it can plot the growth story of a new rival in that specific domain for Wipro. Wipro thrives majorly on large offshore multi-year dollar contracts in application maintenance, infrastructure management where skills are not high end. The requirement is to maintain large bench strength to quickly source these projects. This adds to the cost of most key players in the Indian IT scene. 3 Strategic Objectives For the past 5 years Wipro and other key players have had relatively lesser focus on moving up the value chain. All key players are still milking the standard IT services industry demand for maintenance, testing, infra management contracts with global companies in an primarly offshore model. Growth strategies are mainly to expand to newer geographies access the same standard IT services demand. Growth of all key players have been demand driven and more or less uniform. There have been few acquisitions but no aggressive growth stories amongst competing players. It can be concluded that Wipro is a key player in the IT industry and carries on with it’s brand name, sheer size and momentum as also it’s leadership and service quality. But to up the ante key differentiations have to be brought in which needs to be paradigm shift in the way business is done. Whether the innovation is thru new technologies like cloud computing or whether it is through the review of business models to emerge as a product and/or consulting company where it engages with the customer strategically – change is to be brought in. Else the MNCS like Cognizant, near shore companies like Ness etc may soon catch up or take a part of the pie. Porters 5 Forces free essay sample Technologies is a global information technology (IT) services company. It provides custom application design and development, IT consulting, systems integration, technology infrastructure out sourcing, software products and BPO services. Michael Porters Five Forces Model looks at five key areas- the threat of entry, the power of buyers, the power of suppliers, the threat of substitutes, and competitive rivalry. Threat of new entrants: New entrant in the market may have an effect on share of older counterparts Threat of substitute: Due to technological advances, Quality constraints or cost effectiveness there can be a threat of the substitute on the industry. Bargaining Power of customer: This is the bargaining power of the customer -one who is consumer of the goods. Bargaining Power of suppliers: This is the bargaining power of the supplier -one who supplies sources that are needed for finished goods. Comparative Rivalry within Industry: It tells about extent of competition in between firms in an industry. We will write a custom essay sample on Porters 5 Forces or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page Porters Five Forces helps to analyse how these forces act together to cause the company to increase or decrease profitability of the company. The strategy of the company should be to influence these forces to maximise profitability. Hence below is a study of the IT industry and study of profitability in custom application design development, systems integration, technology infrastructure management segments of IT. Threats and barriers to entry Economies of scale and Capital Investment Requirements: IT requires very low investment and hence we have hundreds of startups starting every year. While it is easy to invest and start a software company sustaining growth does not come easy. All these start-ups also play in an area where Wipro does not compete like low value projects or in subcontracted work. Hence they are not a threat to the profitability of Wipro. India is the favourite destination for off shoring Information Technology (IT) and IT enabled Services. Wipro works across verticals like telecom, BFSI, Media and Communication, Automobiles, Government, Technology, Manufacturing, Energy, Healthcare, Hospitality etc and has several ODC or offshore development centres for nearly all top companies in the world. These offshore development centres have thousands of resources working with multi year projects earning millions of dollars of revenue a year. The cost of shifting or switching even a part of these projects to other companies would involve huge set up, transitioning costs with no guaranteed results. Wipro has quality certifications like Cmmi Level 5, PCMM Level 5,BS9977 etc and new entrants will face a barrier in this regard. Global contracts will not be given to companies with the lack of certification. The lack of security certifications will cause customers to have security related concerns while sending data offshore. 3 Access to distribution channels and technology This poses no difficulty. Many top business unit heads have previously quit from Wipro and spawned off their own company which has grown and sometimes taken a part of the market share of Wipro. Since the industry thrives on knowledge workers when a senior person leave he takes access and knowledge of customer base and customer contacts with him. The Internet is present everywhere and software technology in the era of open source is easily accessible to all. 4 Government Subsidies and policies Current favourable policy by government for new ITES-BPO firms is creating competitive situation for Wipro and other established players in the India IT industry. The reforms have reduced licensing requirements and made foreign technology accessible. The reforms have also removed restrictions on investment and made the process of investment easier. This has tremendously helped the IT industries. The Indian government is actively promoting FDI and investments from NRIs (Non-Resident Indians). FDI can be brought in through the automatic route, based on powers accorded to the Reserve Bank of India. Improvement and reach of telecommunication can aid new entrants into the IT industry. Similary improvements in infrastructure and power sector can also aid new entrants into the IT industry. Recognizing the importance of Venture Capital Funding, the Ministry of Information Technology has set up a National Venture Fund for the Software and IT Industry with a corpus of Rs. 100 crore. The main aim of the venture capital Fund is to provide Venture Capital to start up software professionals and small IT units. Nasscom (most important promoter of the IT/BPO industry) has been playing a crucial role in helping the IT industry achieve the IT and ITES vision and make India far ahead of other players in the field of IT and BPO. But new entrants and start ups can never be in the league of Wipro which adds 20-30 new customers every quarter and earns revenue in the range 0f 50-60 billon USD every quarter. 5 Brand Loyalty Since Wipro is in multi year relationships with most of it’s customers and since the relationship is driven top down from CEO level and exists sometimes with entire IT organisation of the customer, there is a deep brand loyalty that cannot be forsaken. Wipro trades on NYSE and is a well respected global company. Threat of Substitute Price is most often the main differentiator among key players in the software industry quality of service being the same. Indian IT firms like Wipro face stiff competitions from their counterpart in other emerging market like Russia, Brazil, Mexico, Philippines and China. The IT providers in these markets charge competitive rates as compared to Wipro. But Wipro has development centres in China , Philippines so that they can leverage the same advantage. At the same time Wipro attracts a huge pool of resources from the many leading technical institutions across India . These resources are trained to work in many technologies and also are very flexible with respect to work timings. Additionally, the Wipro has been exceptionally quality focused being the first Indian Cmmi Level 5 company with high-skilled pool of knowledge workers with English speaking Hence it has an upper edge over other offshore locations like China, Philippines or Latin American countries 1 Quality/Value proposition While start-ups work like a flash in the pan and sometimes do attract a first time IT outsourcer it is MNCs like IBM and Cognizant which can be identified as substitutes for Wipro. Cognizant with it’s steady and continued growth rate has taken a part of the market share of companies like Wipro. An MNC with a formidable history and background can e work as substitute for Wipro in the software industry due to the differentiation that they bring in terms of delivery models, senior people/leadership in the organisation, RD focus, steady focus on not yet mature verticals (like healthcare in Cognizant’s case for example) and pumping back money into the business. These MNC bring a better value to the customer and engage the customer at a more strategic level . Buyer’s willingness and relative price/performance of substitute As per a report in Economic Times Emerging near shore rivals, including Ness Technologies of Israel, CPM Braxis of Brazil and Mexico-headquartered Softtek are increasingly becoming attractive for top outsourcing customers such as GE, Citibank and several others seeking to work with local, specialised vendors instead of sending all projects to offshore locations like India. Though Wipro is growing it’s presence in the emerging markets of Latin America, Eastern Europe and Asia, they face stiff competition from these newer rivals. For many customers who already have significant presence in offshore locations like India, it’s a risk diversification, Some customers having 70-80 per cent of their offshore resources in India are realising that they need to look at the third category of suppliers that are local and niche. Over the past two years, companies such as CPM Braxis, EPAM Systems, Ness Technologies, Softtek, Merchants and Spi Global have emerged as stronger rivals for Indian tech firms, especially while bidding for an outsourcing contract being fleshed out by a ‘first-time outsourcer’. Brazilian firm CPM Braxis, for instance, which counts GE, ABN Amro and Whirlpool as clients, reported revenues of around $567 million in 2008. One of the top four Brazilian banks, Bradesco, is also among the biggest customers for the company. While these emerging outsourcing rivals are not yet in the big league of mega, multi-year contracts, they are still able to gain business because of their niche and local market expertise. On an average, these companies are able to win contracts worth $2-5 million in annual contract value. Bargaining power of customer Concentration of buyers and sellers There are a large numbers of playes in the software industry. While India and Indian software companies with demonstrated performance are the lead runners, players across the world and especially from other developing countries like Brazil etc are in the run. Hence the customer has huge bargaining power. 2 Profitability of buyer OF late due to the cut in IT spending, while IT spend of the custome rs may have reduced, the number of players are vying for the same budget. Hence cost advantages become very major and customer drives the billing rates. This is because most of the projects are in maintenance or integration and quality differentiation may not be there among number of players. 3 Switching Costs But for existing projects where switching costs are high , new higher billing rates have been worked on on contract renewal even in the recession period. Also with a tighter monitoring of IT spend of customers and in an effort to distribute the risks customers also rarely give an entire project to one customer often distributing the project to all key players hence igniting rivalry and competition. Forward Integration Many captive companies have leveraged the same advantage as companies like Wipro of resource availability at low costs and have opened their captive centres in India, which acts as an IT wing of their company and develops software for them. Examples are many like Shell , JP Morgan, man international banks, Bosch, Boeing etc. Bargaining power of supplier 1 Concentration of suppliers and demand Since there are a lar ge number of technical institutions campus recruitments bring in thousands of entry level people at low salaries. But at the same time attrition is very high in the software field since with experience resources may move to greener pastures. 2 Profitability of suppliers There is a huge demand for experienced professionals in key skill areas. Companies need to continually invest in resource development and training in upcoming technologies and keep them from leaving the company by attractive remunerations, trips abroad etc. Since many of the suppliers who support the IT service industry -are local and IT industry earning capitalize on the rupee dollar difference . The suppliers are happy to be in engagement with the IT company and are happy with what they are offered though it is a miniscule of what the IT company earns. Example are cab companies. Rivalry or Competition 1 Structure of competition The key players in the IT industry are in intense competition with each other. All the major players like TCS, Infosys etc have the same kind of delivery models, verticals focus, billing rates and also almost the same customer base, geographical presence etc. So most of the competition is around excelling in domain knowledge, gaining thought leadership in technology areas and building customer relationships. But the large players are only a few in number who are clear market leaders. Still Startups concentrate on niche technologies and domains and beat inroads into the IT companies market share. Start-ups thrive on a hire and fire policy where the resources are taken on at the beginning of a project at high salaries and fired after it’s completion. Since there is no service differentiation the customer believes in divide and rule policy where the each key player is given a near equal piece of the pie, pitching one player against the other and igniting intense rivalry. The key to getting good projects is good experienced resources, number of people with a specific skill etc. Hence resource poaching is a common phenomenon. 2 Cost structure of the Industry Companies like Wipro have high overheads owing to it’s size and complex organisation structure. New companies with none of the legacy of Wipro, can come in with niche focus and take a portion of maket share related to RD, innovation where creativity, technicall prowess is more key than standard processes, certifications etc. So time and again projects are lost to smaller companies who are more nimble and lean and once that happens it can plot the growth story of a new rival in that specific domain for Wipro. Wipro thrives majorly on large offshore multi-year dollar contracts in application maintenance, infrastructure management where skills are not high end. The requirement is to maintain large bench strength to quickly source these projects. This adds to the cost of most key players in the Indian IT scene. 3 Strategic Objectives For the past 5 years Wipro and other key players have had relatively lesser focus on moving up the value chain. All key players are still milking the standard IT services industry demand for maintenance, testing, infra management contracts with global companies in an primarly offshore model. Growth strategies are mainly to expand to newer geographies access the same standard IT services demand. Growth of all key players have been demand driven and more or less uniform. There have been few acquisitions but no aggressive growth stories amongst competing players. It can be concluded that Wipro is a key player in the IT industry and carries on with it’s brand name, sheer size and momentum as also it’s leadership and service quality. But to up the ante key differentiations have to be brought in which needs to be paradigm shift in the way business is done. Whether the innovation is thru new technologies like cloud computing or whether it is through the review of business models to emerge as a product and/or consulting company where it engages with the customer strategically – change is to be brought in. Else the MNCS like Cognizant, near shore companies like Ness etc may soon catch up or take a part of the pie.