Merger Strategy: Wipro Technologies - Bain & Company

Merger Strategy- Wipro Technologies with BAIN & Company

Index

Introduction
About WIPRO
About BAIN & Company.
Need of Merger. (SWOT ANALYSIS)
Difficulties in Merger
Merger.
The combined Entity.
External Audit
Internal Analysis.
BCG/SPACE Matrix
Strategy formulation for the future.

Introduction
Wipro Technologies is a IT services company based out of India with a turnover of US$ 6 Billion approx.
Bain & Company is world’s one of the best strategic consulting firm based out of Boston, USA. Its revenue is around US$ 2 billion.
Since, the margin of the services industry is declining WIPRO wants to effect an additional services and prudency in their product portfolio, which might open up newer avenues for their core IT services business and also give them a new niche product line to differentiate themselves from their competitors like Infosys, Accenture, Cap Gemini etc.
Looking at the market, WIPRO identified Bain & Co. for a merger as that will give them access to the 4500+ clients Bain & Co. has plus will give them expertise on strategic consulting domain which they lacked till now.
Looking at these positives, Wipro decided to merge with Bain & Co..
Now to know more about the two companies and the merger, the merged entities future strategy let us take a look at the individual companies first.

About Wipro Technologies

Wipro Technologies is a global services provider delivering technology-driven business solutions that meet the strategic objectives of our clients. Wipro has 55+ ‘Centers of Excellence’ that create solutions around specific needs of industries. Wipro delivers unmatched business value to customers through a combination of process excellence, quality frameworks and service delivery innovation. Wipro is the World's first CMMi Level 5 certified software services company and the first outside USA to receive the IEEE Software Process Award.
Offerings: IT Services, Product Engineering Solutions, Technology Infrastructure Services, Business Process Outsourcing, Consulting Services.
Management: Mr. AzimPremji- Chairman.

Wipro Technologies locations

About Wipro Technologies
CAGR of IT services Industry

About wipro technologies….

About Wipro Technologies…(SWOT Analysis)

About Bain & Company.
Bain & Company is a management consulting firm headquartered in Boston, Massachusetts.
Type Incorporated Partnership
Founded 1973 by Bill Bin
Headquarters Boston, Massachusetts
40 offices in 27 countries
Key people Orit Gadiesh, Chairman
Steve Ellis, Worldwide Managing Director
Industry Management consulting
Business Areas Management consulting services, includingchange management, Corporate strategy, cost and supply chain management, growth strategy, information technology, mergers and acquisitions, organization, performance improvement, private equity, revenue enhancement and Publishing of research findings.
Industry Aerospace and defence, automotive, conglomerates, consumer products, energy and utilities, financial services, health care, media, retail, services, technology, telecommunications, and transportation services industries.
Revenue US$ 1.9 billion (est. 2007)
Employees 4,300 employees worldwide
Website www.bain.com
Major Clients Charles Schwab, Dell Inc., Texas Pacific Group, De Beers

About bain & Company
Think and act liked owners.
Highly Intellect capital ex- MBAs from Ivy league B- schools.
Measure success in terms of their clients' financial results.
A strong capacity to change-a critical attribute that organizations must continue to evolve as strategic goals shift.
Help management make critical decisions on strategy, operations, mergers & acquisitions, technology and organization.
Strong Clientele base- 4150 major multinational clients.
Worked with corporations from every economic sector, in most of the regions across the globe.
Best in the Industry remuneration.

About bain & company (Location & Performance)
Create a Winning Strategy.
Build an effective organization.
Ensure excellence in operations.
Earn a return from technology
Improve the odds of success in mergers and acquisitions.
Corporate change
Bain & Co’s Clients have outperformed the market by 4 : 1.

About Bain & Company (SWOT analysis)
Strength
Opportunities
Weakness
Threats

Need for Merger
As can be seen from the strengths and weaknesses of both the companies:
Wipro, has a very low share in the consultancy business worldwide.
Wipro has the IT services to implement any IT strategy for any firm. However, IT might form a very small part of the entire process of the firm. Hence, they risk losing out on the whole pie.
Bain & Co. has more than 4500 clients, however they do not implement the solutions. Therefore they can lose out on a large amount of revenue.
Bain & Co. also has a lack of government clients. They can be a major source of revenue even in case of a downturn.

Difficulties of merger
The firms can faces the following difficulties in the merger process:
Cultural Issues.
Opportunity Costs: Trade off between acquiring a company and growing from within.
The integration process.
The appointment of the board of the companies.
Draining of talent from Bain due to the acquisition by Wipro.

Merged entity (Vision & Mission: 2020)

Vision: To become a globally respected, trusted and renowned name in field of technology and consulting leading to the betterment of the community
Mission: To offer integrated services to our customers by leveraging our core strengths in Information Technology and Consulting.

External Analysis for the New Entity (5 forces)
Threat of New Entry:

Bargaining Powers of Suppliers:

Bargaining powers of Buyers:

Threat of substitutes
Substitutes – Apart from the other major players, there can be backward integration in the form client’s own development center and its own dedicated team.

Threat of Rivals

Internal Analysis (value chain)
Firm infrastructure
HumanResourceManagement
Support
Activities
MARGIN
Product management
Services support
consulting
Technological
Developments
MARGIN
services
Sales and marketing
Operations
Primary Activities

Space matrix

23
SPACE Matrix
FS
Conservative
Aggressive
+6
+5
+4
+3
+2
0.825, 0.8
+1
CA
IS
-6
-5
-4
-3
-2
-1
+1
+2
+3
+4
+5
+6
-1
-2
-3
-4
-5
Defensive
Competitive
-6
ES

Position and key strategies
They should position themselves like end-end integrated service providers.
Leverage each others contacts and clients and goodwill in the market to benefit the company.
Should focus on emerging economies and developing nations like BRIC to reduce dependence on USA and Europe.
Should get into more end-to-end projects like turnkey projects.
Create a talent pool of consultants from India, who can then provide consultancy to lower tier companies.

New Product
The new profit center they can launch is a software consultant application.
A lot of SME companies around the world are not able to actually go for any consulting from firms like Bain & Co.
To target these companies, Wipro can leverage on their software skill sets can come up with a software which can be easily customized to a company environment and based on the inputs and problem can come up with an appropriate strategy for the period.
These strategy will be inferred from a whole bunch of cases done by the companies across the globe.
This product should be priced at a reasonable rates.
They can also integrate their hardware arm called Wipro InfoTech with this company and form a business like IBM’s.

China consolidation strategy
The Chinese economy is to grow by 30% from 2010 to 2030.
Both Bain & Co. and Wipro have their offices in China.
They should leverage the fact that China is a leader in skilled labor by expanding their operations in china. This will give them a high cost competitiveness and better value of deals.
Major companies from Outside wants to locate in china because of the low cost of production. The merged entity should be able to service these companies because of their worldwide presence.

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