Comprehensive Analysis of India's International Competitiveness

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This report presents a competitiveness analysis of India, specifically focusing on the Bangalore IT hub. It begins with a reflective piece on the author's learning journey, followed by an introduction to competitiveness analysis and a country profile of India. The report examines India's economic growth, assesses national and regional competitiveness using GDP, scorecards, and PESTLE analysis, and identifies key competitiveness issues. It explores the role of clusters, particularly the Bangalore IT hub, in national competitiveness, utilizing Porter's Diamond model. The report concludes with recommendations for enhancing competitiveness and includes references. The analysis covers various aspects, including economic indicators, political and social factors, and technological advancements, providing a comprehensive overview of India's competitive landscape and strategies for improvement.
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Running head: INTERNATIONAL COMPETITIVENESS
International Competitiveness
Name of the Student
Name of the University
Author Note
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1INTERNATIONAL COMPETITIVENESS
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2INTERNATIONAL COMPETITIVENESS
Table of Contents
Reflective Piece:.........................................................................................................................4
Where was I at the beginning?...............................................................................................4
Where am I now?...................................................................................................................4
What Skills have I developed?...............................................................................................4
What I think of the block learning?........................................................................................5
Description of the module and what I learnt from it..............................................................5
1. Introduction.........................................................................................................................6
2. Country Profile.......................................................................................................................6
3. Economic Growth..................................................................................................................7
4. Assessment of national/regional competitiveness..................................................................8
4.1 GDP & Composition........................................................................................................8
4.2 Scorecards - WEF /Ease of doing business ranking.........................................................8
4.3 Country Competitive Issues.............................................................................................8
4.4 Policy Recommendations.................................................................................................9
4.5 PESTLE............................................................................................................................9
5. Key Competitiveness Issues facing the region.....................................................................10
6. Clusters and their role in national competitiveness..............................................................10
6.1 Definition.......................................................................................................................10
6.2 Benefits and Limitations of the cluster..........................................................................11
6.3 Nature of clusters...........................................................................................................11
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3INTERNATIONAL COMPETITIVENESS
6.4 Major clusters.................................................................................................................11
6.5 Influence of government policy in fostering clusters.....................................................11
6.6 Factors that aided the cluster..........................................................................................12
7. Porter's Diamond analysis....................................................................................................13
8. Recommendations and Conclusions....................................................................................14
References:...............................................................................................................................17
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4INTERNATIONAL COMPETITIVENESS
Reflective Piece:
Where was I at the beginning?
At the beginning of the module and curriculum, I was at an uncertain stage of my career, with
no specialized understanding of international businesses and administration. My professional
competencies then were significantly limited due to poor communication skills. Due to a lack
of experience, my team working skills as well as problem solving and analytical skills were
also limited. The lack of experience also resulted in a poor level of confidence which in turn
hampered my performance. Moreover, my limited knowledge at the beginning of the module
also was a significant barrier against by professional growth and development.
Where am I now?
After the completion of the module, my knowledge and understanding on international
business have increased. Undertaking researches on foreign business markets have helped me
understand the various variants that affect competitiveness of markets. The increased
knowledge and understanding have also helped me to develop better confidence. These
factors were essential to help me achieve professionals well as personal growth and
development. The knowledge gained from the module has therefore been pivotal to help me
improve my professional competencies that have in turn helped me to secure a stable
employment. Therefore I believe that I am in a much stronger employment position than
before.
What Skills have I developed?
Over the duration of the module, I have been able to develop several skills and competencies.
One of the most significant one was that of communication that I was able to develop through
continued practice and discourse on the subject and through repeated interactions with study
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5INTERNATIONAL COMPETITIVENESS
peers and professors. The module also helped me gain knowledge and thereby improve my
confidence and competencies as well. By the completion of the module, I also was able to
develop my problem solving skills and time management skills that proved to be key
competencies in my profession.
What I think of the block learning?
Block Learning, or Ready, Relevant Learning (RRL) in my opinion is an effective learning
strategy that can ensure relevance as well as readiness of knowledge, to be used in real life.
Considering the rapid and tectonic changes in the IT sector, due to the continuous
development of new technologies and tools, it is necessary for the IT employees to be
continuously updated with the new systems to be able to successfully use and implement
them in working practice. Block Learning or RRL can support such a dynamic market,
helping to ensure that the IT professionals are always abreast with the latest trends and
developments in the industry and a knowhow on how to utilize them in real practice.
Description of the module and what I learnt from it
The module went through the systematic stages of understanding country profiles, factors that
represent economic growth, assessment of the national and regional competitiveness through
measures like GDP, scorecards, competitive issues and PESTLE analysis. The module also
helped to understand the factors that creates competitive issues and the role of lusters to
national development and growth. I also was able to learn about the Porter’s Diamond model.
This knowledge has helped me significantly increase my skills and competencies as a
professional.
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6INTERNATIONAL COMPETITIVENESS
1. Introduction
Competitiveness analysis is a strategic approach towards the analysis of the key competitors
in the market and understanding their strategies to identify the weaknesses and strengths and
compare them with the owned business (Daniels et al. 2019). Competitiveness analysis can
help to understand the competitive advantage and thereby help in effective business
administration. The competitiveness analysis takes into account the factors that influences
competition in the industry or market including the potential entrance, buyers, suppliers and
substitutes (David and David 2017). The competitiveness analysis can utilize various
frameworks ad approaches through which such understanding and be developed and thereby
help to support better decision making process.
The aim of this report is to present a competitiveness analysis of India and in specific the
cluster of Bangalore City IT hub. The study would try to critically evaluate and highlight the
importance of clusters as a tool to enhance national competitiveness in context of India. In the
report the profile of the company, its economic growth patterns would be evaluated long with
an assessment of regional or national competitiveness in terms of its GDP and composition,
score cards, Potter’s Diamond model, country competitiveness issue, policy
recommendations and PESTLE analysis (Andriani et al. 2005). Analysis of the key
competitive issues facing India and the role of the Bangalore IT hub cluster in national
competitiveness is studies along with discussion on key recommendation for enhancing the
competitiveness on a national scale.
2. Country Profile
India is the heritage of an ancient civilization and has a rich and diverse cultural heritage and
has seen significant socio-economic progress since its independence 72 years ago. The
country lies in the India subcontinent covering an area of 32,87,263 SQ Kms covering from
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7INTERNATIONAL COMPETITIVENESS
the Himalayas and extending up to the Indian ocean at the Tropic of Cancer. The country is
surrounded by the Bay of Bengal, Arabian Sea and the Indian Ocean. The bordering countries
include Afghanistan, Pakistan, China, Bhutan Nepal, Myanmar, Bangladesh and Sri Lanka.
The country occupies a major part of the subcontinent and its natural resources include iron
ore, coal, mica, manganese, titanium, bauxite and so on. The geographic terrain is mainly
divided into the mountain region, the Gangetic and Indus plain, the desert region and the
southern peninsular (Barney and Hesterly 2018).
The country has a population of approximately 1,210,193,422 as of 2011 with a sex ratio of
940/1000 males, life expectancy rate of 65.8 years for male and 68.1 for female. The major
racial and Ethnic groups includes Australiod, Mongoloid, Europoid, Caucasian and Negroid.
The country has a democratic, socialist, secular and sovereign republic system comprising of
29 states and 7 Union Territories with the capital being New Delhi. Bangalore is currently of
the IT hubs based in the state of Karnataka that has seen enormous progress over the last few
decades and investment from various foreign IT businesses (Barney 2019; World Economic
Forum 2018).
3. Economic Growth
India has one of the fastest growing economies in the world that has been achieved since
2014. The country is the 7th largest economy globally in terms of GDP and the 3rd largest in
terms of the purchasing power parity. It has been speculated that the young population of the
country has significantly helped in the positive growth of the economy along with the relative
proficiency in English and improvement in health savings, strong individual financial
stability and investment rates and improved integration with the global economy. Between
2015 to 2016 the economy of the country grew by 7.6% thereby topping the World Bank’s
growth outlook. However, it has also been pointed out that the poor infrastructure,
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8INTERNATIONAL COMPETITIVENESS
bureaucracy and inflexible labour laws have been the key reasons for a slowed economic
growth (Besanko 2013).
4. Assessment of national/regional competitiveness
National/regional competitiveness refers to the competing outlooks of countries or regions in
terms of their performance, expansion, growth and development. Assessment of the national
and regional competiveness can be made based on various factors and models as discussed
under.
4.1 GDP & Composition
The current GDP has been estimated to be at 2.98 trillion USD (nominal) and 11.47 trillion
(PPP). A growth of 8% in the GDP occurred within FY 2019 with a Per Capita GDP of 2199
USD (Nominal) and 8484 USD (PPP). Service sector is the biggest contributor towards GDP.
It contributes about 54.4% of the economy followed by industry contributing 29.73% and
agriculture contributing 15.9%. The inflation was estimated to be at 3.04% as of May 2019
and a base borrower rate of negative 6.25%. The estimated labour force was 510.4 million,
within an unemployment rate of 6.1% and 3.7% living below the poverty line (COM 2008;
World Economic Forum 2018).
4.2 Scorecards - WEF /Ease of doing business ranking
The World Economic Forum Report scorecard is based on the report to understand the
economic performance of growth of a country based on various indices covering social,
economic and health factors. India has been ranked at 108th in terms of gender gap index and
is the 3rd lowest in terms of health. The economic participation has been ranked at 142 (2019)
(D’Aveni 2007).
4.3 Country Competitive Issues
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Land is one of the four major pillars of economic stability. The biggest competitive issue that
has been faced by India ta a national scale is the shortage of land for the development of
infrastructure. The rapid industrialization and agricultural growth in India have resulted in the
loss of 13.7 million hectors of land and ranked at 10th worst deforestation radar in the world
(Davies and Ellis 2000).
4.4 Policy Recommendations
In order to improve and support further growth and development and mitigate the land
shortage issue, two important policies can be recommended which includes 1) Diversification
of the products and services so as to gain better global market advantage and 2) collaborating
with neighbouring countries in order to develop a conglomerate that can share resources and
support suitability (Delgado et al. 2011; Department of Enterprise, Trade and Employment
2008).
4.5 PESTLE
Political: the current political power within the country has a strong focus on industrial and
service sector growth that has further bolstered the growth of the Bangalore IT hub.
Economic: The rapid economic progress in terms of GDP have helped in the growth of
businesses and supported foreign direct investments (FDI).
Social: A significant shift from the social implication of the heritage occupation of
agriculture to that of service has helped in the growth of the IT sector.
Technological: The country is struggling to adopt the technological advantages throughout
the country because of the significant diversity and economic gap within the country.
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Legal: The legal system of the country is quite complicated and rigid and therefore is a
challenge at bureaucratic and administrative levels.
Environmental: A global environmental change and weather patterns have been affecting the
sub-continent with increasing severity that has led to massive losses in productivity.
(Economist Intelligence Unit 2012)
5. Key Competitiveness Issues facing the region
Some of the key issues that influence the competiveness and market competition with the IT
industry in India are as follows:
Entry into the market: The expenses of starting a business or entering into the market
in India is quite high compared to the OECD countries. The total procedures takes
almost 27 days compared to the OECD average of 12 thereby costing 49.8% of the
Per Capita Income.
Permits for construction: Procuring permits for construction takes approximately 196
days and involves 34 procedures. This can include collecting permits from the
building proposal office and obtaining NOCs from various departments of the
government.
Property registration: registering property also incurs a significant expense involving
5% of the property on stamp duties and 1% charge at the sub registrar level fee.
Additional charges can be incurred from the legal proceedings and lawyer fees.
Financial credits: India has one of the best performance in terms of getting credits in
South Asia with a rank of 23 in the world according to IFC and world Bank.
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11INTERNATIONAL COMPETITIVENESS
Cross border trading: the process of importing and exporting goods across the border
still faces several challenges because of the different layers of bureaucracy that
influences how the goods move and the restrictions imposed on their movement.
(Ghemawat 2010; Grant 1991)
6. Clusters and their role in national competitiveness
6.1 Definition
Cluster can be understood as a group of closely associated objects or people that carry or
share common characteristics (Harrison 2014). Within the IT sector the Bangalore IT hub
forms one of the most significant cluster that has contributed towards the growth of the
economy to a significant extent and is estimated to become the largest IT cluster in the world
by 2020 (Hill 2014).
6.2 Benefits and Limitations of the cluster
The key benefit of the Bangalore IT cluster is the young and talented workforce who are
highly driven towards progress and development. The limitation of this cluster the excessive
work pressure and a high level of employee turnover rate that shows poor retention of
employee in the cluster (Huggins et al. 2013).
6.3 Nature of clusters
The nature of the Bangalore IT cluster is a strong one that came about through significant
reforms in the IT policies as well as industrial policies that allowed an attracted several
international businesses such as Microsoft, Google, IBM, HP, DELL, Apple and Facebook.
This has also supported a vast development in the infrastructure of the city (Huggins and
Williams 2011).
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6.4 Major clusters
The major clusters within the Bangalore IT segment includes the clusters from the various
companies operating from Bangalore each having its unique and dedicated workforce. The
major clusters include Facebook, Apple, IBM, Amazon, DELL, HP, Microsoft, Google,
Infosis, TATA and many other IT companies across the world (IMD World Competitiveness
Center 2017; World Economic Forum 2018).
6.5 Influence of government policy in fostering clusters.
The government policies that influences the Bangalore IT cluster includes favourable
business policies and easier process of gaining permits, registering properties and getting
credits. This has allowed the Bangalore cluster to contribute to 38% of the it exports
amounting to 45 billion USD and created employment of 30,00,000 people (Izushi and
Huggins 2011)n.
6.6 Factors that aided the cluster
The key factors that aided the development of Bangalore IT cluster include the involvement
in International business drawing direct foreign investments, more favourable state policies,
high availability of skilled IT workforce, direct increase in employment and development of
the human resources and a continuous improvement of IT that contributes to the GDP (Ketels
2013; Ketels 2006).
Factor conditions include a positive support from the government and engagement of
the workforce.
Demand conditions include a high demand for skilled workforce.
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Infrastructure /logistics distribution ease in of doing business has led to the
development of the IT hub in Bangalore which in turn have supported an increase in
employment and investment.
The strong global business network has allowed employment of 2.8 million people
directly and 1.2 million people indirectly bringing an investment of more than 20
billion USD.
Export markets have developed within this cluster making it India’s version of Silicon
Valley and having the potential of being the IT capital of the world by 2020. This
has also developed through the involvement of the global IT leaders in the cluster.
The technological development have also helped in the maintenance of innovative
practices and therefore improved a development in skills and competencies.
(Martin et al. 2011; Porter 1998)
7. Porter's Diamond analysis
Porter’s diamond analysis is the framework that helps to understand the strebgths and
weaknesses of investing in a market through an understanding of the competitive advantage
of nation’s or clusters which in turn are influences by several factors (Porter 1998; Porter and
Rivkin 2012). This model can help to understand how Governments can act like a catalyst to
improve the position of the country within the Global competitive economic market. the
Porter’s Diamond model explains the factors that supports competitive advantage for one
national market and can be used to describe the source of the competitive advantage of a
nation or how to attain such an advantage and can help businesses to shape their strategic
directions on their decision s to invest in a national market (Porter 1985; Porter 1990; Porter
2000). The model focuses on factors such as the strategy, structure and rivalry of a firm, the
demand conditions, the related and supporting industries and the factor conditions that in turn
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14INTERNATIONAL COMPETITIVENESS
influences how an organization interacts with its government. Using this model it is possible
to analyse and evaluate the competitive advantages that are inherent for the country and can
help the further growth and development of the Bangalore IT hub. Outlined below is the
analysis of the Bangalore IT cluster using the Porter’s Diamond model:
Factor conditions: The factor conditions include the physical resources, human
resources, capital resources, knowledge resources as well as infrastructure. The
specialized resources can be specific to the IT industry and are vital for its
competitive advantage.
Demand conditions: a competitive advantage within the domestic market has been
supported by the strong home market conditions that has been influenced by the
customers and buyers. This have led to more innovative practices been used by IT
firms.
Related and Supporting Industries: they can create and provide inputs that can support
innovative and creative practices aswell as the internationalization of the IT industry.
The inputs are moreover cost effective and influence the process of upgradation
thereby creating a competitive pressure on the IT firms.
Strategy, structure & Rivalry for IT firms: This is the fourth determinant of
competitiveness and influences how businesses are created and how their goals are
managed thereby supporting success. The rivalry also adds to the creative and
innovative pressure on the firms, to maintain competitive advantage.
Government: The government can have an influence on all the four determinants of
competitiveness. The influence of the government can extend to the supply conditions
of the production outputs, demand conditions within the domestic market and the
competitive relations between the IT firms. Moreover interventions from the
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government can occur at local, regional, state, national or at international levels
thereby having various extents of influence on the business.
Chance: This includes the factors that are beyond the firm’s control. This can include
the external environmental factors such as consumer mindsets as well as geopolitical
and climatic factors. These factors are significant as they can create discontinuities
that in turn influence competitive edge of the firm.
(Rugman et al. 2012; Slack and Brandon-Jones 2018)
8. Recommendations and Conclusions
In order to promote further growth and development of the IT sector in India, and thereby
also support further growth of the global IT industry, various recommendations can be made,
that can be implemented at local, regional or national levels. These recommendations include
the following:
Reducing bureaucratic complications for IT businesses: This can be an important
aspect to focus on, that can help to reduce a lot of operational complexity and
facilitate faster growth of the IT sector. Reducing the bureaucratic complexities can
also help to reduce operational expenses for the firms.
Increasing partnerships between IT firms to promote mutual growth and collective
advantage: Through the strategic alliances and partnerships, a competitive advantage
can be gained from the combined expertise of the partners. This can further allow an
improvement in the stability and sustenance of the firm in the national and
international market.
Increasing training programs to increase the number of IT workforce: This can allow
the government to create a larger workforce that is ready to address the future increase
in workforce needs in the IT sector.
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Adopting advanced technologies to support the growth and development of
performance: The advanced technologies such as Artificial Intelligence, Quantum
Computing, Neural Networks and Machine Learning Can support automation of
work, reduce manual errors and increase IT workforce competency.
Implementing international wage standards for the IT employees: This can help to
retain the IT employees and skills and thereby reduce the expenses of retraining and
rehiring as well as the employee turnover rates in the IT sector.
(Technation 2015; Thompson 2016)
From the above study various factors could be identified that helped in the growth of the
Bangalore IT hub cluster in India, making it one of the most promising IT cluster in the
world and the potential of being the leader by next year. Being compared to Silicon
Valley shows the future potential of the cluster. The contribution of the cluster to the
national economy can be identified from its contribution towards GDP and national
employment. However certain challenges were also identified from the study that
adversely affected the growth of the IT sector. Few recommendations were also made in
the course of the study that can be implemented at various levels to support better and
faster growth of the IT cluster discussed.
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