InterSoft of Argentina (A) Case Solution

1. Based on your analysis of the software industry, why was InterSoft under pressure to internationalize?

(Exploit vs enhance?) Software industry started to experience a boom when industrial giants began to expand their network and system of operations. The trend of automated manufacturing, inventory control, and accounting system became popular among the new entrants along with the existing market players of the economy. Quality software system became an integral part of any company’s operational design; however, there were some conditions attached with the demand of this kind of software. Companies perceived a better image of foreign made software than domestic ones. Furthermore, the price factor created a strong impression of the software to be of a premium quality and high worth.

Intersoft made use of the concept of enhancing the prospect of increasing demand of their software. Hence they relied on reasonable pricing strategy and moral values of the company itself. The only solution to compete with the prominent names of the industry was to internationalize. Hence, the company decided to work with Russian programmers to achieve their target.

2. Based on your analysis of the software industry, why was InterSoft under pressure to internationalize? (Exploit vs enhance?)

Russia, at that time, had 70,000 programmers working to improve the system of communication and automation of industries. The wages of IT industry mostly varied between $400 and $1600. Orgland was a company based on creative and innovative solutions to the problem of communication. It developed a system of electronic mail before the invention of web site network. Its small group of employees had exceptional technical and analytical skills. The foresaid reasons played a vital role in creating the acquisition appealing to InterSoft. InterSoft strategically decided to compete with the rivalry and improve demand conditions in the market through acquisition. The use of Russian engineers was supposed to make a strong market for InterSoft products among related as well as supporting industries. Orgland was expected to handle the offshore, outpost and server segments, leading into source and contributor. A common lead was expected to be the final result.

3. What went wrong and how could it have been prevented? Was the problem that technological complexity (see Santos et. al.) or inadequate management?

After a period of time, partnership between the two companies started facing various problems hindering the growth of InterSoft. One of the major problems was a change of culture and a different set of communication skills at both ends. Communication between the two partners became a difficult and tiresome process as many of the Russian employees complained of misunderstandings due to cultural and language barriers. The problem did not have much to do with the technological processes and complexity but with the cultural differences of employees of both firms. The nature of the problem was purely related to adequate management of workplace and project. Russian programmers seemed to lack in the field of project management resulting in a lack of cohesion and coordination. In my opinion, investment should be for improvement in the management skills of every employer InterSoft and Orgland.