Global expansion strategies for software firms

Abstract

The business competition in the software industry is increasingly becoming a global competition. In this era with a fast-paced innovative environment, strategy plays an important role for managers in software companies in defining its own globalization approach. This thesis discusses the competitive dynamics of a wide variety of product segments in the software industry - IT services, packaged software, Internet services and e-commerce - to illustrate the different nature of the business in the software industry, especially with the focus on globalization. The work first discusses the current global competition in the software industry. The analyses cover the competitive landscape in certain product segments as well as in certain regions. Second, a Global Winner-Takes-All-or-Most framework is introduced to simplify the thought process in determining which business a firm is competing in, what are the implications of global competition and what a firm should think through when it considers international expansion to another country or region. Third, a DAC framework (local demand, accessibility and complementarity) is also introduced to simplify the thought process in determining which countries or regions a firm should focus its resources on, along with the implications of competition and what a firm should think through. Next, three aspects of execution implications - new market expansion, organizational design and leadership - are discussed. These frameworks and findings are backed up with sketches of global software firms to highlight the best practices in the software industry in terms of globalization, with an emphasis on software firms. Finally, a summary of the findings from this research and recommendations are provided for software firms headed for globalization.