STRATEGIC MANAGEMENT
CONTINOUS ASSESSMENT
“INDUSTRY ANALYSIS – IT INDUSTRY”
SUBMITTED BY
GLORY GILL(2022007759)
HIMANSHU KOUNDAL (2022
SHRADHA PATNI (2022578716)
SURAJ SINGH (2022002955)
HARSHITA AGGARWAL (2022514971)
MBA – (A) – BANKING & FINANCE
SUBMITTED TO
PROF. RAJ KOVID
ASSISSTANT PROFESSOR
SCHOOL OF BUSINESS STUDIES
SHARDA UNIVERSITY, GREATER NOIDA – 201306
1. Evolution and Growth of the Industry
The Information Technology (IT) industry has undergone a remarkable evolution and witnessed
exponential growth over the past few decades. The roots of the industry can be traced back to the mid-
20th century with the advent of mainframe computers. These large, expensive machines were primarily
used by governments and large organizations for data processing and scientific computations. However,
as technology advanced, computers became smaller, more affordable, and accessible to a wider
audience.
The true transformation of the IT industry began with the development of personal computers (PCs) in
the 1970s and 1980s. Companies like Apple, IBM, and Microsoft played pivotal roles in popularizing PCs
and making computing power available to businesses and consumers alike. This era saw the emergence
of software development as a significant aspect of the industry, with the creation of operating systems,
productivity software, and early video games.
The late 20th century witnessed the rise of the internet, which revolutionized communication,
commerce, and entertainment. Companies like Netscape, Yahoo, and later Google capitalized on the
potential of the internet, offering search engines, email services, and web-based applications. The dot-
com boom of the late 1990s marked a period of unprecedented growth and investment in internet-
based companies, although it was followed by a significant market correction.
The 21st century brought further advancements in technology, including the proliferation of mobile
devices, cloud computing, and the Internet of Things (IoT). Companies like Apple, Google, and Amazon
led the way in shaping the modern digital landscape, offering a wide range of products and services that
have become integral parts of everyday life for billions of people around the world.
Today, the IT industry encompasses a diverse range of sectors, including software development,
hardware manufacturing, telecommunications, e-commerce, and digital media. It continues to evolve
rapidly, driven by ongoing innovation, changing consumer behaviors, and the relentless pursuit of
efficiency and convenience.
2. Industry Segmentation
The IT industry is segmented into various categories based on the products and services offered. These
segments include:
1. Software Development: Companies in this segment specialize in creating software applications
for various purposes, including productivity, entertainment, communication, and business
operations. Examples include Microsoft, Adobe, and Oracle.
2. Hardware Manufacturing: This segment involves the design, production, and distribution of
computing hardware such as personal computers, servers, mobile devices, and networking
equipment. Major players include Apple, Dell, HP, and Lenovo.
3. IT Services: IT services companies provide a wide range of technical support, consulting, and
outsourcing solutions to businesses and organizations. This includes managed IT services,
cybersecurity, cloud computing, and software development outsourcing. Leading firms in this
segment include IBM, Accenture, and Tata Consultancy Services (TCS).
4. Telecommunications: Telecommunications companies are responsible for providing
communication services, including voice, data, and internet connectivity. This segment includes
traditional telecommunications providers, as well as cable and satellite companies. Examples
include AT&T, Verizon, and Comcast.
5. Internet Services: This segment encompasses companies that offer internet-based services such
as search engines, social media platforms, e-commerce, and cloud computing. Key players
include Google, Facebook, Amazon, and Netflix.
Each segment of the IT industry has its own unique characteristics, competitive dynamics, and growth
opportunities. While some companies operate exclusively within a single segment, others may have
diversified business models that span multiple segments.
3. Regulatory Framework and Macro Level Relevant Recent Changes in Industry
The IT industry operates within a complex regulatory framework that governs various aspects of business
operations, including intellectual property rights, data privacy, cybersecurity, and competition. In recent
years, there have been several significant developments in the regulatory landscape that have impacted
the industry.
One of the most notable regulatory changes in recent years is the implementation of the General Data
Protection Regulation (GDPR) in the European Union. GDPR is a comprehensive data privacy law that
imposes strict requirements on how companies collect, store, and process personal data. It has forced
companies to reevaluate their data handling practices and invest in new technologies and processes to
ensure compliance.
Similarly, in the United States, the California Consumer Privacy Act (CCPA) and other state-level
regulations have introduced new requirements for data privacy and transparency. These laws give
consumers greater control over their personal information and require companies to disclose how they
collect and use data.
In addition to data privacy regulations, the IT industry has also faced increased scrutiny from regulators
regarding competition and antitrust issues. Tech giants like Google, Facebook, Amazon, and Apple have
come under fire for their dominant market positions and alleged anti-competitive behavior. Regulatory
agencies in the US and Europe have launched investigations into these companies' business practices
and are considering potential remedies to address concerns about market concentration and unfair
competition.
The regulatory landscape is constantly evolving, and companies operating in the IT industry must remain
vigilant to ensure compliance with new and existing regulations. Failure to comply with regulatory
requirements can result in significant financial penalties, reputational damage, and legal liabilities.
4. Analyzing Competitors
Competitive analysis is a crucial aspect of strategic planning for companies in the IT industry. By
understanding the strengths, weaknesses, and strategies of their competitors, companies can identify
opportunities for growth and development. In this section, we will provide a brief overview of some of
the main competitors in the IT industry, including their products, strengths, and weaknesses.
1. Microsoft Corporation
Microsoft is one of the largest and most influential companies in the IT industry, with a diverse portfolio
of products and services. The company is best known for its Windows operating system, Office
productivity suite, and Azure cloud computing platform. Microsoft's strengths include its strong brand
reputation, extensive distribution channels, and deep integration across its product ecosystem. However,
the company faces challenges such as increasing competition in the cloud computing market,
cybersecurity threats, and regulatory scrutiny.
2. Google LLC
Google is a global technology company that specializes in internet-related services and products. The
company's primary offerings include its search engine, advertising platform, Android operating system,
and cloud computing services. Google's strengths lie in its advanced technology infrastructure, vast user
base, and diverse revenue streams. However, the company has faced criticism for its handling of user
data, privacy concerns, and allegations of anti-competitive behavior in various markets.
3. Apple Inc.
Apple is a leading manufacturer of consumer electronics, software, and online services. The company's
flagship products include the iPhone, iPad, Macintosh computers, and Apple Watch. Apple's strengths
include its loyal customer base, strong brand identity, and ecosystem of integrated hardware and
software products. However, the company faces challenges such as declining iPhone sales, increasing
competition in the smartphone market, and regulatory pressures related to antitrust and privacy issues.
4. Amazon.com, Inc.
Amazon is the world's largest online retailer and a major player in the cloud computing market. The
company offers a wide range of products and services, including e-commerce, digital streaming, and web
hosting through its Amazon Web Services (AWS) platform. Amazon's strengths include its extensive
distribution network, customer-centric approach, and leadership in cloud infrastructure services.
However, the company faces criticism for its treatment of workers, market dominance, and
environmental impact.
5. Oracle Corporation
Oracle is a multinational technology company that specializes in database software, cloud engineering
systems, and enterprise software products. The company's offerings include Oracle Database, Oracle
Cloud Infrastructure, and various business applications for finance, human resources, and customer
relationship management. Oracle's strengths include its established presence.
5. Industry Consolidation: Status of M&A, Alliances
The IT industry has experienced significant consolidation through mergers and acquisitions (M&A) as
companies seek to expand their market share, enhance their product offerings, and gain competitive
advantages. M&A activity in the industry fluctuates depending on market conditions, technological
advancements, and strategic priorities of companies. Some recent notable M&A transactions in the IT
industry include:
1. IBM's Acquisition of Red Hat: In 2019, IBM acquired Red Hat, a leading provider of open-source
software solutions, for approximately $34 billion. This acquisition allowed IBM to bolster its
cloud computing capabilities and strengthen its position in the hybrid cloud market.
2. Salesforce's Acquisition of Slack: In 2020, Salesforce announced its acquisition of Slack
Technologies, a popular workplace communication platform, for $27.7 billion. This strategic
move aimed to enhance Salesforce's collaboration and productivity offerings and better compete
with rivals like Microsoft.
3. Microsoft's Acquisition of LinkedIn: In 2016, Microsoft acquired LinkedIn, the world's largest
professional networking platform, for $26.2 billion. This acquisition provided Microsoft with
access to LinkedIn's vast user base and valuable data, enabling it to integrate social networking
features into its products and services.
In addition to M&A activity, companies in the IT industry also form strategic alliances and partnerships to
leverage complementary strengths, resources, and expertise. These alliances may take various forms,
including joint ventures, licensing agreements, and technology collaborations. By working together,
companies can accelerate innovation, expand market reach, and create value for customers.
6. Industry Attractiveness: Porter’s Model
Porter's Five Forces framework is a valuable tool for assessing the attractiveness and competitiveness of
an industry. Let's evaluate the IT industry using Porter's model:
1. Threat of New Entrants: The threat of new entrants to the IT industry is relatively low due to high
barriers to entry. These barriers include significant capital requirements for research and
development, established brand reputations of incumbent companies, and economies of scale
achieved by large players. Additionally, the rapid pace of technological innovation creates
challenges for new entrants to differentiate themselves and gain market share.
2. Bargaining Power of Buyers: Buyers in the IT industry, including businesses and consumers, have
moderate to high bargaining power. This is due to the availability of numerous alternative
solutions, relatively low switching costs for many products and services, and the abundance of
information accessible to buyers through the internet. As a result, companies must continually
innovate and offer competitive pricing and value propositions to retain customers and attract
new ones.
3. Bargaining Power of Suppliers: Suppliers in the IT industry, such as semiconductor
manufacturers, software developers, and cloud service providers, wield moderate bargaining
power. While there are multiple suppliers available for most components and services, certain
critical inputs may be controlled by a limited number of suppliers, giving them some leverage in
negotiations. However, advancements in technology and globalization have increased
competition among suppliers, mitigating their bargaining power to some extent.
4. Threat of Substitutes: The threat of substitutes in the IT industry is significant, driven by the
continuous evolution of technology and the emergence of disruptive innovations. For example,
traditional software applications may be replaced by cloud-based software-as-a-service (SaaS)
solutions, and physical hardware may be substituted by virtualized or software-defined
alternatives. Companies must monitor market trends and invest in research and development to
stay ahead of potential substitutes.
5. Intensity of Competitive Rivalry: Competitive rivalry in the IT industry is intense, characterized by
numerous competitors vying for market share, technological leadership, and customer loyalty.
Key factors contributing to this intensity include rapid technological advancements, low barriers
to entry for certain segments, aggressive pricing strategies, and constant innovation. Companies
must differentiate themselves through product innovation, quality, customer service, and brand
reputation to succeed in this competitive landscape.
While Porter's Five Forces framework provides valuable insights into the dynamics of the IT industry, it's
essential to recognize that industry attractiveness can vary across different segments and geographic
regions. Additionally, the model may not fully capture the influence of external factors such as regulatory
changes, macroeconomic conditions, and socio-cultural trends on industry dynamics.
7. Value Chain of the Industry
The value chain of the IT industry encompasses a series of interconnected activities involved in the
creation, production, distribution, and support of technology products and services. Understanding the
value chain is essential for identifying opportunities for cost optimization, process improvement, and
value creation within the industry.
The value chain of the IT industry can be broadly divided into the following stages:
1. Research and Development (R&D): This stage involves the creation and innovation of new
technologies, products, and services. R&D activities may include basic research, applied
research, and product development. Companies invest heavily in R&D to stay ahead of
competitors, drive innovation, and address customer needs and preferences.
2. Design and Engineering: Once new technologies and products are developed, they undergo
design and engineering processes to translate concepts into tangible products and solutions.
Design and engineering activities may include prototyping, testing, and optimization to ensure
functionality, performance, and reliability.
3. Manufacturing and Production: In this stage, physical products such as hardware components,
devices, and equipment are manufactured and assembled. Manufacturing processes may vary
depending on the type of product, materials used, and production scale. Companies may choose
to manufacture products in-house or outsource production to contract manufacturers to
optimize costs and flexibility.
4. Marketing and Sales: Marketing and sales activities are essential for promoting products and
services, generating demand, and acquiring customers. Marketing efforts may include
advertising, branding, public relations, and digital marketing campaigns to reach target
audiences and communicate value propositions. Sales teams are responsible for engaging with
customers, closing deals, and driving revenue growth.
5. Distribution and Logistics: Once products are manufactured and sold, they must be distributed
to customers through various channels. Distribution and logistics activities involve managing
inventory, transportation, warehousing, and order fulfillment to ensure timely delivery and
customer satisfaction. Companies may utilize a combination of direct sales, retail partnerships,
and e-commerce platforms to reach customers efficiently.
6. Customer Support and Service: Providing excellent customer support and service is crucial for
maintaining customer satisfaction, loyalty, and retention. Customer support activities may
include technical assistance, troubleshooting, warranty services, and product training.
Companies invest in customer relationship management (CRM) systems and support
infrastructure to deliver timely and personalized assistance to customers.
7. Research and Development (R&D): This stage involves the creation and innovation of new
technologies, products, and services. R&D activities may include basic research, applied
research, and product development. Companies invest heavily in R&D to stay ahead of
competitors, drive innovation, and address customer needs and preferences.
8. Design and Engineering: Once new technologies and products are developed, they undergo
design and engineering processes to translate concepts into tangible products and solutions.
Design and engineering activities may include prototyping, testing, and optimization to ensure
functionality, performance, and reliability.
9. Manufacturing and Production: In this stage, physical products such as hardware components,
devices, and equipment are manufactured and assembled. Manufacturing processes may vary
depending on the type of product, materials used, and production scale. Companies may choose
to manufacture products in-house or outsource production to contract manufacturers to
optimize costs and flexibility.
10. Marketing and Sales: Marketing and sales activities are essential for promoting products and
services, generating demand,
8. Key Success Factors in Industry
Success in the IT industry is influenced by various factors that contribute to a company's
competitiveness, growth, and sustainability. Some key success factors in the industry include:
1. Innovation: Continuous innovation is critical for staying ahead in the fast-paced IT industry.
Companies that invest in research and development (R&D), embrace emerging technologies, and
anticipate market trends are better positioned to create innovative products and services that
meet evolving customer needs.
2. Technological Expertise: A deep understanding of technology and expertise in areas such as
software development, data analytics, artificial intelligence, and cybersecurity are essential for
success in the IT industry. Companies that possess technical skills and capabilities can deliver
high-quality solutions, differentiate themselves from competitors, and drive innovation.
3. Market Responsiveness: The ability to adapt quickly to changing market conditions, customer
preferences, and technological advancements is crucial for success in the IT industry. Companies
that are agile, flexible, and responsive can seize opportunities, mitigate risks, and maintain a
competitive edge in dynamic and competitive markets.
4. .Customer Satisfaction: Building and maintaining strong customer relationships is paramount in
the IT industry. Companies that prioritize customer satisfaction, deliver superior products and
services, and provide excellent customer support can foster loyalty, generate positive word-of-
mouth, and drive repeat business.
5. Partnerships and Collaboration: Collaboration with strategic partners, suppliers, and ecosystem
players can enhance a company's capabilities, expand its reach, and drive innovation.
Partnerships enable companies to leverage complementary strengths, resources, and expertise
to create value for customers and achieve mutual objectives.
6. Financial Stability: Sound financial management, prudent investment decisions, and sustainable
growth strategies are essential for long-term success in the IT industry. Companies that maintain
financial stability, manage costs effectively, and generate consistent revenue and profitability are
better equipped to weather economic downturns and capitalize on growth opportunities.
7. Talent Acquisition and Development: Attracting, retaining, and developing top talent is critical
for building a skilled and motivated workforce in the IT industry. Companies that invest in
recruiting, training, and career development programs can cultivate a culture of innovation,
creativity, and excellence, driving organizational success and competitiveness.
8. Ethical and Responsible Practices: Upholding ethical standards, promoting diversity and
inclusion, and demonstrating corporate social responsibility are increasingly important in the IT
industry. Companies that operate with integrity, transparency, and accountability can earn the
trust and respect of customers, employees, investors, and other stakeholders, enhancing their
reputation and brand value.
9. Strategic Groups in Industry
The IT industry can be classified into strategic groups based on various factors such as market focus,
product offerings, business models, and competitive strategies. Some common strategic groups in the IT
industry include:
1. Hardware Manufacturers: This strategic group includes companies that design, manufacture, and
distribute hardware components, devices, and equipment such as personal computers, servers,
smartphones, and networking devices. Examples include Apple, Dell, HP, and Lenovo.
2. Software Developers: This strategic group comprises companies that develop and license
software applications, operating systems, and development tools for consumers, businesses, and
organizations. Examples include Microsoft, Adobe, Oracle, and SAP.
3. Cloud Service Providers: This strategic group includes companies that offer cloud computing
infrastructure, platforms, and software-as-a-service (SaaS) solutions to businesses and
organizations. Examples include Amazon Web Services (AWS), Microsoft Azure, Google Cloud
Platform, and IBM Cloud.
4. IT Services Providers: This strategic group encompasses companies that offer a wide range of IT
services, including consulting, outsourcing, system integration, and managed services, to help
businesses and organizations optimize their technology investments and achieve their
objectives. Examples include IBM, Accenture, Tata Consultancy Services (TCS), and Infosys.
5. Telecommunications Companies: This strategic group includes companies that provide
communication services, including voice, data, and internet connectivity, to consumers,
businesses, and organizations. Examples include AT&T, Verizon, Comcast, and Vodafone.
6. Internet Companies: This strategic group comprises companies that offer internet-based
products and services, including search engines, social media platforms, e-commerce, and digital
content distribution. Examples include Google, Facebook, Amazon, and Netflix.
Each strategic group within the IT industry has its own competitive dynamics, market trends, and growth
opportunities. Companies within the same strategic group often compete directly with each other for
market share, customers, and talent, while also collaborating and forming alliances to address common
challenges and pursue shared objectives.
10. The Road Ahead: Challenges, Opportunities, and Overall Scenarios for the Industry in the Near
Future
As the IT industry continues to evolve and grow, it faces a range of challenges, opportunities, and
uncertainties that will shape its trajectory in the near future. Some key factors to consider include:
1. Challenges:
- Rapid Technological Advancements: The pace of technological innovation in the IT industry is
accelerating, leading to shorter product lifecycles, increased competition, and greater
uncertainty. Companies must continuously invest in research and development, anticipate
market trends, and adapt quickly to stay ahead.
- Regulatory Complexity: The IT industry operates in a complex regulatory environment
characterized by evolving data privacy laws, cybersecurity regulations, and antitrust scrutiny.
Companies must navigate regulatory compliance requirements, manage legal risks, and maintain
transparency and accountability in their operations.
- Cybersecurity Threats: With the proliferation of digital technologies and interconnected systems,
cybersecurity threats are becoming more sophisticated, pervasive, and damaging. Companies
must prioritize cybersecurity measures, invest in robust defenses, and adopt proactive risk
management strategies to protect against cyber attacks and data breaches.
- Talent Shortage: The IT industry faces a growing shortage of skilled professionals in areas such as
software development, data analytics, cybersecurity, and artificial intelligence. Companies must
invest in talent acquisition, training, and retention initiatives to address skill gaps, foster
innovation, and sustain growth.
- Geopolitical Uncertainty: Global geopolitical tensions, trade disputes, and regulatory changes
can create uncertainty and disruption for IT companies operating in international markets.
Companies must monitor geopolitical developments, assess risks, and diversify their operations
and supply chains to mitigate geopolitical risks.
2. Opportunities:
- Digital Transformation: The ongoing digital transformation across industries presents significant
opportunities for IT companies to provide innovative solutions and services that enable
businesses and organizations to digitize their operations, enhance productivity, and create new
sources of value. Companies that offer cloud computing, artificial intelligence, data analytics,
and cybersecurity solutions stand to benefit from increased demand for digital technologies and
services.
- Emerging Technologies: Breakthrough technologies such as artificial intelligence, machine
learning, block chain, and the Internet of Things (IoT) are reshaping the IT landscape and
creating new opportunities for innovation and growth. Companies that invest in emerging
technologies, develop novel applications, and explore new business models can gain a
competitive edge and unlock new revenue streams.
- Global Expansion: The increasing globalization of markets and the rise of emerging economies
present opportunities for IT companies to expand their presence, enter new markets, and tap
into growing demand for technology products and services. Companies that develop localized
offerings, forge strategic partnerships, and adapt to cultural and regulatory differences can
capitalize on international opportunities and diversify their revenue sources.
- Ecosystem Collaboration: Collaboration and partnership within the broader technology
ecosystem, including startups, academia, governments, and industry associations, can foster
innovation, drive ecosystem growth, and create new market opportunities. Companies that
engage actively in
