Company Operating Profit/ Employee
Company Operating Profit/ Employee Revenue/ employee 10,674 AZIZA Average of US Companies 18,789.
50 1 15,909. 80 From ten above tale, when comparing Intones Walt ten average us companies, assuming that the labor cost will be the same as average cost of US companies after entering the US market, if the revenue per employee of Inflows does not increase, the operating profit per employee of company will be dramatically decreased because of bearing higher cost of labor. Using operating profit as a guideline, the differences between these two countries re not large comparing with the using revenue instead.
The main reason is from the wage differentiation from two countries, U. S.
‘s labor gets approximately 4 times higher than Indian. In order to maintain competitive on the global basis, Inflows needs to close the gaps between revenue per capita of these two countries. We can achieve three objectives to solve these problems. The first, we have to penetrate in the new market. Then, we have to obtain new and bigger project in order to create new product lines.
We also have to maintain a long relationship with the customers. The second, increase Inflows brand equity.
They should use a buzz method around the Inflows name but they need to use a differentiation approach. The last is to increase the amount of fixed price contracts we work on. 2. The case describes how Inflows differs from other software companies in India.
To what degree is Inflows’ performance show this fact. Please cite numbers and examples. To come up with the difference of Inflows from other Indian software companies, there are some interesting factors, which makes Inflows become one of the most outstanding software companies in India.
That is; Giving high priority to human sources Since the company needs to create an environment that would enhance the overall experience for employee, Inflows built the company’s campus, which has many facilities in order to create a grate environment to work. Moreover, Inflows has realized that there are three reasons why people would stay with a company if there were learning value-added, financial value-added, and emotional value-added.
On the learning side, Inflows gives chance to all employees and allows them to progress quickly in organization.
On the financial side, Inflows does not gives only salary to employees, but it is also he first company in India where issue a stock option to its employees. Moreover, Inflows offers low interest and zero interest loans while the current market interest rate are at 16%-18%. On the emotional side, Inflows has emphasized this as the most important element in the organization. They are always be there to help out when people gets tough times. For this reason, Inflows was considered to be one of the most desirable places of employment among Indian students.
It can be confirm by attrition rate, which Infinity’s rate was 11%, compared to the Indian average 25%-30% Belong transparent company Due to the old regime of wealth tax, there has been very little transparency in traditional Indian businesses. Nevertheless, Inflows is the first Indian company to file ASK and the first to perform a full audit according to US GAP. As Inflows emphasized on being high level of transparent, it has won many awards in India and throughout Asia fir the standards it has set in the company’s reporting and disclosure policies.
Being debt free company Inflows has the policy not to take any debt Highest ROCK ROCK% ADS Software 29. 2 46.
1 KNIT 35. 7 Pinafore Software 27. 5 Astray Computer 25. 2 Data Infected Wiper 25. 8 From the above table, Inflows has the highest return on capital employed (ROCK), means it uses the most efficient capital among software companies. 3.
According to their stock price in late December 1998, what does this price imply for Inflows’ growth and key operating ratios if we assume that the price reflect the true operation of the firm?
As we can see from exhibit 1 from the article, Inflows’ share price had been increasing from the year 1993 of PIP to the year 1999 with the stock appreciation at % per annum. 10 compare Walt Index, ten snare price AT Intones Ana significantly exceeded the BASE index since the year 1997. With the clear upward trend of Inflows’ share price, it strongly proves the success of Inflows’ performance and implies the ability of firm to have a sustainable growth in the future given that the price reflects the true operation of the company.
Moreover, the company can highly utilize its own capital. By using ROCK as key operating ratio shown in exhibit 8, we can see that ROCK had been increasing over years.
It implies that operating profit had been increasing over its capital. Thus, this makes investors feel very confident to invest in the company. 4. How can Inflows grow further? What competitive threats does the company face in and abroad? Human capital is one of the keys driven growth for Inflows Company. The company seeks the candidates that have the highest degree of learnable.
In order to attract high skilled labor, the company provides a learning value added, financial value added and emotional value added. Beside, the company’s philosophy is based on legal and ethic manner that make the company transparent which attracts foreign investors. Moreover, in order to grow further, the company needs to compete in the lobar basis by increase its productivity. There are 3 main objectives that the company needs to achieve. First, increase customer penetration by taking on more projects or taking on bigger projects.
Second, increase brand equity by creating a buzz around the Inflows name using word of mouth publicity.
Third, increase the amount of fixed price contract however there are some risks to concern. Also, listed in US stock exchange market is the way to increase opportunity to grow of the company. Going global is the best way to help the company achieves many goals. However, there are threats that the company needs to concern both domestic and international. For domestic threats, there are a bunch of competitors in the market. Also, Macs will compete to get high skilled labor in India.
For international threats, YAK project creates a lot more competitors in the industry. Also, after the project of YAK, the software segment would be slowdown and the company needs to exploit the new segment that had begun namely E-commerce. 5. What is an appropriate value of Inflows in 1999 and please identify your reason and criticize your valuation method? 0 compute ten value AT Tall, tender are 4 me tunas consist AT 1 Multiple moment Discount cash flow method, 3. Venture Capital method, and 4. Assets based method.
However, each has its own assumptions and constraints.