IT Management assignment essay help study on: Engineering services in company & PEST analysis

Q? Write an essay on IT & engg. services in industry???Solution:

1. Introduction

The companies engaged in engineering services are majorly such companies which take into consideration development, designing as well as utilization of the various tools, machines, materials, systems, structures, processes, etc. Services which may be included in engineering services would be to prepare feasibility studies, preliminary plans, provide advice & in the end prepare the final plan finalizing the designs, installation, and inspection as well as evaluating the various engineering projects.

Engineering services refers to one of the booming sections of the industrial world. This section or sector approximately measures revenue of 750$ billion every year. These type of services majorly takes into consideration of the various types of design as well as support services which is quite essential in order to function the industry at large in the entire spectrum of engineering.

Heavy portion of such type of services would be outsourced & there is a high level of potential for outsourcing the same in this particular field. This helps in order to interact as well as share the various types of information amongst the different departments (Higgins, 2006).

Engineering services refers to the kind of services which would deal with the hard core engineering process. Some of the examples for engineering services would be as under. They are:Þ    Auto design

Þ    Computer Aided Manufacturing  (CAM)

Þ    Computer Aided Design (CAD)

The distinction which could be made between the engineering functions as well as the engineering service functions. The engineering function would relate to the manufacturing support services.

1. Five Forces Model

                                                (Source: Poter, 2008)

The Five Forces Analysis refers to the 5 Forces Porter’s Model which should be used as one of the techniques in order to audit the marketing environment. This analysis would help in providing an exact picture related to the level of competition in the external environment.

The five major forces which would be taken into consideration under the Porter’s Model would be as under:Þ    Threat to entry

Þ    Bargaining power of supplier

Þ    Bargaining power of buyers

Þ    Threat of Rivals

Þ    Potential new competitors

Threat of Entry

Threat to entry refers to the first aspect of the 5 Forces Porter’s Model. As mentioned above that, engineering services refers to one of the most booming industries. The engineering services refer to the type of industry which earns return on capital & acts as one of the magnets for the firms outside the industry. Engineering Services refers to a type of industry which would have a rate of profit that might fall under the competitive level.

The threat of entry would rather become an actual entry which would sufficiently ensure the prices at a constant level. For example, in case of the American Airlines the direct service i.e. the flight flying from Dallas till Forth Worth & Santa Barbara, were enjoying monopoly in the services they used to offer as compared to the other airlines prevalent in the similar destination in the aviation industry (Poter, 2008).

The engineering services refer to the type of sector where there would be no barriers to entry as well as exit. The prices would be quite reasonable, contestable & the profits earned from such type of the sector would be quite competitive in nature. The competition enjoyed by this type of industry would be within the industry (Higgins, 2006). The competition totally depends upon the sunk cost. This type of cost refers to the type of cost where the entry would require certain level of investment & this value will not be able to recover in the years to come.

Bargaining Power of Buyers

The second type of aspect covered under five forces of model consists of bargaining power of the buyers. The engineering services refers to the type of industry which would operate under two types of market i.e. market for input & market for output. In the engineering service industry, the firms would purchase components, raw materials, labor as well as certain financial services (Poter, 2008). Whereas, in case of the market for output the engineering service would be able to sell their good & services to their respective customers. In case of both the markets, both the buyers as well as the sellers would be able to gain profit which would depend totally upon the economic power (Higgins, 2006).

The power of bargaining would depend upon their customers & the two main factors such as buyers’ price sensitivity & relative power for bargaining.

Bargaining Power of Suppliers

The bargaining power of suppliers would refer to the third aspect in case of the 5 forces Porter’s model. Fair analysis of the determinants would refer be done between the various producers & the suppliers would try to create a fair relationship with the producers as well as the buyers (Poter, 2008). The main difference refers to the firms in the engineering services industry where in the buyers along with the sellers would produce inputs which are known as suppliers. The major issues which would lead to a switch between the different suppliers as well as the relative bargaining power for each of the party. The labor unions refer to one of the major sources which would help in order to provide power (Higgins, 2006).

Competition from Substitutes

Competition from the substitutes refers to one of the major aspects in the Five Forces of Porter’s model. The customers would be willing to pay the price for a given product depending upon the availability of the substitute goods for a particular sector. The absence of the substitute goods will make the entire market or segment price sensitive. This means that, people who are addicted to certain commodities such as cigarettes, etc would be willing to pay any price which the marketer would charge them (Kotler, P & Armstrong, 2010).

Whereas, on the other hand presence of close substitutes will lead to a frequent shift from one substitute good to another (Kotler, P & Armstrong, 2010). With the help of advancements in e-commerce, a new way of substituting the competition would be proven & help in order to establish the business. For example, in case of travel agency industry covered in engineering services would push maximum number of reservations with the help of the reservation system applicable in this sector.

The Effectiveness of Barriers to Entry

Barriers to entry would refer to the last aspect in case of Five Forces Porters model. The research shows how the engineering services would protect the high level of entry barriers which would help in order to increase the average rate of profits per year. Investing the capital as well as advertising would refer to one of the most important ingredients to increase the level of productivity (Poter, 2008).

The barriers to entry would be quite effective or not would entirely depend upon the resources along with the capabilities that potential entrant’s posse. Barriers to entry in engineering services would be regarded as ineffective in order to diversify the industry. There are certain barriers to entry which would compete against the various firms using the similar type of strategies. This is the reason that, Mars one of the leading chocolate brand used a strategy in order to enter the ice cream market. Virgin on the other hand has entered into various types of brands ranging from airlines to telecommunications (Kotler, P & Armstrong, 2010).

1. Radar Plot 1

Radar plot refers to a graphical representation which would display multivariate data depicting different types of quantitative variables, from the same starting point. The radar chart also refers to a spider web or an irregular polygon or a star chart or a kiviat diagram, etc.

In the engineering services industry, the Spider or the Radar Chart could be identified as under

The measurements in the Radar Plot have been done on a scale of 10. It can be seen from the plot above that, the highest rating has been allotted to entry & exit barriers, followed by its competitive nature & the relative power of bargaining. The lowest rating has been allotted to Monopoly i.e. 6. All the ratings have been joined & a spider web has been made.

1.      Life Cycle & PESTEL Analysis

Political:

Political factor refers to the first actor while conducting the PEST analysis. It must be seen that government has supported the growth of the Indian automobile industry. It has allows 100% owners investment in case of the same. Government has also framed various norms, legislations, in order to ensure appropriate fuel policy to meet the carbon emissions in the atmosphere (Smith, 2007).

High levels of R&D have been done in order to innovate the products as per the need as well as requirements of the customers (Chambers, Cleveland, Kleinerm & Paul, 2003).

Economic:

Economic factor refers to the second factor to be taken into consideration while conducting the PEST analysis. The rate of inflation is at peak & the International economy has been growing a high pace (Smith, 2007). Taxes have been reduced drastically i.e. approximately by 150% in order to increase the level of sales in the automobile sector. Government has been granting high levels of concessions in terms of low rate of interest which has helped in export financing, etc. has granted concessions, such as reduced interest rates for export financing (Chambers, Cleveland, Kleinerm & Paul, 2003). The growth in the Indian economy has been estimated to be approximately 8.5% per annum. The rate of growth in case of the engineering sector has been approximately by 8-10 % per annum (Smith, 2007).

Social: The next factor to be taken into consideration refers to the Social aspect. Change in the culture, mind set up as well as purchasing power has led to an increase in the level of sales. Now days, the engineering sector has a huge cliental base (Chambers, Cleveland, Kleinerm & Paul, 2003).

Technological: The last factor to be taken into consideration while conducting the PEST analysis refers to the change in technology (Buffet, 2011). More emphasis is being put upon the R & D activities. This has helped many companies to innovate & have an edge over its rivals. Change in the technology would help the organizations in order to increase the profits thereby reducing the amount of loss. Continuous feedback would help the organizations in order to have an access of all the data (Smith, 2007).

1.      Drivers affecting the industry :

Some of the drivers which would affect the engineering services could be listed a sunder. They are as follows:

Þ    Upgraded Technology

Þ    Price Sensitivity

Þ    Relative Power of bargaining

Þ    Levels of competition

2.      Radar Plot 2

The Second Radar Plot would refer to the various aspects after conducting the PESTEL analysis of the same (Buffet, 2011). The various aspects to be taken into consideration would cover the following variables such as:

The ratings have been done on a scale of 10. The highest ratings have been given to the advanced technology being used in the engineering services. The differentiation in the product is quite low & has been rated 5 out of 10. The innovation & substitute goods have been rated as 8 & 9 out of 10 respectively.

1.      ComparisonAfter the comparison of both the Radar and Spider Chart, it could be analyzed that the demand in engineering services is expected to rise at a high pace. The government has been increasing the pace at which the infrastructure has been developed. With a continuous growth of the manufacturing sector, there have been certain factors which have led to a growth in this sector as well. The rise in the manufacturing sector has led to a boost in engineering services as well.

Some of the recent trends have shown that, engineering services would provide various opportunities in the years to come. Engineering as well as the manufacturing systems including designing, improvement of the product & maintenance has led to an increase in the outsourcing of the same (Buffet, 2011)

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