Assignment

Of
Business Environment
On

“The Bangalore Brand”

Submitted to :
Submitted by:
Mr. Mandip Saini
Pallavi Modi
Dept of Management
R315A22
LSB
10801939

MBA 1st Sem

Lovely Professional University

2008-10
On the fast track: With people migrating to Bangalore falling in love with its
culture, food and weather, the profile of the Bangalorean has changed
dramatically.

About Bangalore
Beyond the steel and glass high-rises that starkly epitomise Bangalore’s
unfettered modernist push, beyond the pubs, the IT companies, the
space-starved pathways, there exists a people, alive, breathing life every
day to build a brand called Bangalore. It is that vibrant, demographic mix
that gives this city its image, its magnetic aura to trigger inward
migrations decade after decade and earn Bangalore its “A-1” city tag.
This seldom-heralded dynamism of the Bangalorean could well be the
springboard for out city to eventually wear the coveted “World City” tag.

Long journey
The journey of that change had begun much before, when the British
cantonments triggered the first influx. Then came the 1940s and 1950s
which spurred a rapid growth driven by the steady inflow of Kannadigas
from the rest of Karnataka. The 1960s had the new public sector giants
unleash the third major Bangalore rush. Then came the job seekers from
Kerala and Tamil Nadu, West Bengal and Gujarat. The arrival of Texas
Instruments in 1985 as the first multinational proved a defining moment
for Brand Bangalore. The stage was firmly set for the city’s eventual
emergence as an IT hub, a Silicon Valley, a symbol of India’s software
potential. The clichéd Pensioners Paradise suddenly turned an
uncomfortable sobriquet to wear. Bangalore yearned for a bigger tag, a
global brand name. The world city tag beckoned big time. The transition
was quick. Foreigners who, well, once looked foreign, were no longer
strangers. They were not missionaries or tourists anymore. The
Americans, the Europeans, the Chinese, the Japanese were the new
business partners. Some were even employees. They had a new home:
Bangalore, no lesser than where they came from. Interacting on equal
footing with the Bangalorean, they collectively redefined the city’s image.
For some, it was the culture, for others it was the food and weather. Some
had even fallen in love with someone here. Among the expatriates were also
students pursuing professional education or internships from an assortment of
countries such as Iran, Bangladesh, Sri Lanka, Germany and France.

Bangalore Brand
Because of the competitive advantage of Bangalore has helped it earn the
name, the "Silicon Valley of India". Today, Bangalore is one of the
favourite destinations for IT&ITES companies in India and abroad. The
proactive role is played by the state government in developing the city as
an IT destination. However, Bangalore has recently been facing stiff
competition from other cities so far as investment from domestic and
foreign companies is concerned. It seems to be losing its competitive
advantage for doing business to other emerging destinations. So they are
looking into the infrastructural problems Bangalore is facing and the
growth of alternative destinations such as Hyderabad and Chennai.

The factors that contribute to the competitive advantage of a Bangalore

are:

» Sustainable competitive advantage and the factors that are important

for this kind of advantage

» The role of the government in developing and sustaining the

competitive advantage of a place

» The role of infrastructure and civic amenities in making a place an

attractive investment destination
» The impact of political decisions on business and the relationship
between business and politics.

Introduction

Referred to as the 'Silicon Valley of India,' Bangalore, the capital of the

southern state of Karnataka, had a population of 5,686,844 in 2001,
making it India's fifth largest city3 (Refer to Exhibit I). Around 1300
information technology (IT) companies operate in Bangalore and it is
home to around 110,000 technology workers. This is in addition to the
60,000 people working in Business Process Outsourcing (BPO) firms.

In 2003, on an average, two research and development (R&D) centers of

MNCs were opened every week in Bangalore. AMD, AOL, Cisco, Dell,
Delphi Automotive Systems, Deutsche Bank, Eastman Kodak, E&Y,
Google, HP, Intel, IBM Corp, Motorola Inc., Oracle, Lucent, Nortel Networks
Ltd, SAP, Tektronix, Texas Instruments, and Yahoo have a presence in the
city and some of the Indian IT majors like Infosys Technologies (Infosys),
MindTree Consulting (MindTree), Wipro Technologies (Wipro) etc., are
headquartered in Bangalore.Fourteen of the top 20 IT exporters in India
(Refer to Exhibit II) have a development center in the city.
The anti-outsourcing debate in the US in the early 2000s could not stop an
outflow of Rs. 19.7 billion as foreign investment to Bangalore in the year
2003-04 to set up 110 software and BPO companies. Also during the year,
software exports from Bangalore constituted around 36 per cent of the
total exports from the Software Technology Parks of India (STPI). In the
previous year too, Bangalore had been the leader in software exports .Of
the $4 billion IT export revenues from Karnataka in 2003-04, 95 percent
came from Bangalore. The first four months of fiscal 2004-05 have seen
61 IT companies setting up operations in the Garden City. Bangalore has
been reported as the largest job-creating city in India with more than
65,000 jobs likely to be created in 2004. However, the rapid growth of the
city has resulted in infrastructural bottlenecks like traffic congestion, lack
of hotel accommodation, lack of public service amenities etc., in the
recent past.

The Bangalore brand has also been facing stiff competition from upcoming
cities like Hyderabad and Chennai, for being projected as the IT hub of
India. With the support of the respective state governments, these cities
are being projected as the alternative destination for new IT ventures.

Growth of Bangalore
Bangalore has a legacy of high quality research institutions starting with
the Indian Institute of Science (IISc) built in 1909. The Government of
India's (GoI) decision to locate high-level R&D centers in Bangalore (Refer
to Exhibit IV) laid the foundation for the technological prominence of the
city. Being the pioneer in India in introducing engineering colleges
through private participation, Karnataka has a large pool of technically
qualified people. In Bangalore alone, 40,000 graduates trained in
technology pass out from 50 colleges every year.

In 1985, Texas Instruments became the first MNC to open a center in

Bangalore with the establishment of its circuit design and development
center. In 1991, the first Software Technology Park in India came up in
Bangalore. In 1992, Bangalore became the first city in India to set up a
satellite earth station for high-speed communication services to facilitate
software exports. In 1996, the National Association of Software & Service
Companies (NASSCOM) came up with a plan intended to help Karnataka
overtake the State of California in the US (known as the Silicon Valley),
both in terms of number of software companies and revenue by 2020.

Competition

Competition to Bangalore has come from cities like Hyderabad, Chennai,

Pune, NCR, Kolkata , Jaipur, Chandigarh, Pune, and Kochi, among others.
Wipro Ltd., with 11,000 employees in Bangalore, has been looking for
growth beyond Bangalore. "Bangalore is a zero-sum game. In terms of
infrastructure, there has not been any material improvement in the last
five years. As a result, it is becoming difficult to sustain growth here. As
part of our retention management, we want to move for an incremental
growth outside Bangalore as much as possible," said Vivek Paul, vice-
chairman, Wipro. As per reports, IBM Corp. has been considering Kolkata
as the hub for its software and IT services activities in IndiaSaid Kiran
Karnik, President, Nasscom, "The city (Bangalore) attracts new entrants,
but bigger players are beginning to look elsewhere." Added Subroto
Bagchi, COO, MindTree, "Bangalore has not yet lost its edge, however, if
the situation deteriorates, it could lose business to smaller towns and
cities, where lower population levels provide more room for growth."

Looking ahead

A CII paper brought out in 2004 recommended to the Karnataka

government to put in place a plan for implementation of infrastructure
projects like the IT corridor project and the Bangalore-Mysore Expressway
project. In order to decongest Bangalore and spread development across
the state, the paper recommended that the government support the
development of satellite townships and other cities in Karnataka.
According to Nasscom, India is expected to achieve revenues of $62
billion by 2008-09 and $148 billion by 2012 in ITES / IT, at a CAGR of 35
per cent over 2003 to 2012.

As said by Tom Peters

“Fifteen years ago, not one in 1,000 Americans could spot Bangalore on
the map. Today, six out of seven think Bangalore is the only city in India.
They basically believe 1 billion people live in Bangalore."

Bibliography

http://www.hinduonnet.com/2007/10/31/stories/2007103160300300.htm

http://www.asiacase.com/ecatalog/NO_FILTERS/page-EC_INDUS-
647924.html

http://www.icmrindia.org/casestudies/catalogue/Economics/The
%20Bangalore%20Brand-Economics.htm