Telecommunications companies are under tremendous pressure to compete with the masses and maintain profitability. Confidence in the telecommunication industry on Wall Street is waning. Shareholders have lost confidence in diminishing returns and question the industry's ability to rebound. Global Communication has definitely had their share of dissipating returns. In the past three years, the company has watched stocks trade from a high of $28 per share to an alarming $11 per share, which is more than a 50% depreciation.
The problem with the telecommunication industry is that there is too much competition among local, long-distance, and international markets. They all are competing for the same business, but with different services and options. Cable companies have taken the lead by offering complete solutions that encompass computers, televisions, and plain old telephone service (POT). In addition, the impact of entering into the international market has yield mixed results in the industry.
Global Communication senior leadership team has developed a two-pronged aggressive approach to become more competitive with local telephone and cable company. First, the company plans to focus their new strategy on small business and consumer customers. The plan will increase the company's growth by offering new services in both the local and long-distance market across country. To facilitate this growth, Global will create alliances with a satellite provider to offer video and broadband services. Global will also partnership with a wireless provider to offer small business owners with internet access using wireless telephone or PC cards. Second, the team has identified cost-cutting measures that will improve profitability. The team plans to market Global on an international level with the goal of becoming a global resource with this aggressive approach.
Situation Analysis
Issue and Opportunity Identification
Global Communication and other telecommunication companies are under tremendous pressure due to the abundance of competition amongst local, long-distance, and international markets. In fact, Global stocks have dropped an alarming 50% over the past three years. In order to be competitive, Global has to update their current hardware and services to meet the demands of the market. If not, cable companies will continue to saturate the market by offering complete solutions that encompass computers, televisions, and plain old telephone service (POT). Global's primary focus in the local market has caused major financial pressures for the company to the point where the company's revenue and profits are impacted.
The dominant economic traits of this industry start with having an enormous amount of capital required for staying competitive. One is also required to spend lots of money on research and development, as the telecommunications industry seems to be the vision of the future. More and more companies like AT&T are trying very hard to combine their network services of phone line, video and data transfer, high speed internet access, and television cable via one line in the consumers homes. With a successful combination of the above stated services AT&T is hoping to be the industry leader in the near future.
As the largest telecommunication company in the United States, Verizon sells the superiority of its network as the number one competitive advantage. However, over the course of a decade the telecommunication industry changed and having the best network was simply not enough to stay relevant. Telecommunication is an expensive business. “The financial challenges of keeping up with rapid technological change and depreciation can be monumental” (Investopedia, 2015). The Porter’s 5 Force Analysis of the telecommunication industry revealed that the availability of substitutions are high. This drives increase competition in the industry. Furthermore, deregulation has helped to increase new entrants.
This battle for supremacy over who will control the future of communication will be fought largely between the telecommunications companies and the Cable TV companies. Perhaps mergers will be sought, or some companies will be run out of business because of their inability to keep up. Millions of dollars will be lost and billions will be made, but the end product will create a closely-knit global community, able to communicate instantly regardless of language or location.
Americatel is positioned within the small to mid-sized market in the telecommunications sector. However, their primary competitors Movistar and Claro compete within the large-sized market. With only 10% overall market share, Americatel has the potential to capture additional growth as the industry growth rate is growing at 6%. To accomplish this we recommend that Americatel own their position in the small to mid-sized market by capitalizing on their competitive advantage of providing superior customer service as well as leveraging new solutions to further drive customer satisfaction.
Years later, the Telecommunication Act of 1996 triggered dramatic changes in the competitive landscape. SBC Communications Inc. established itself as a global communications provider by acquiring Pacific Telesis Group and becoming the new AT&T. The merger of AT& T and BellSouth, along with the ownership consolidation of Cingular Wireless and YELLOWPAGES.COM, will speed convergence, competition and continued innovation in the communications and entertainment industry, creating new solutions for consumers and businesses and positioned to lead the industry in one of its most signifi...
Global Communications needed to go global to try increasing profits. A new study that Duke University is challenging the belief that the common reason companies go to China and India are because of the lower salaries. (Mary Hayes Weier). Studies that outsourcing creates U.S. job (MSN Money Staff). If that’s the case, then Global Communications could create more jobs here in the United States.
Effective competition is widely seen as a key to the development of telecommunications services. The ability of new telecommunications networks to interconnect fairly and efficiently with existing networks is critical to the development of competition. AT&T has undergone numerous changes since its inception in the late 19th century. The McKinsey 7 S framework as applied by Pascale is recommended to manage the changes they are facing to adopt a greater competitive presence in the global economy. In conjunction with this framework, numerous other models were applied to analyse the global competitive position of AT&T. Recommendations for a revised strategy and direction for AT&T have been made throughout this document including two scenarios of how the telecommunications industry might develop towards 2000, while outlining the impact on AT&T.
AT&T provides professional network service to enterprises. Services for Asia Pacific region include integrated Global Enterprise Management System, Internet data centers, voice over internet protocol, virtual private network, and data hosting. In order to provide a complete network solution to clients, AT&T, at the backend, is supported by their own data/network center, protocol and the undersea cable network. AT&T is proposing a network solution to one of their big clients BHP Billiton. BHP Billiton has subsidiaries in over 30 countries and they are considering to implement a professional network for better internal communications. The project will involve setting up an approximately two hundreds network sites in different countries within a tight time flame. The successful of wining this contract will drive AT&T Asia Pacific team to earn double of their existing annual revenue. This would be very attractive to AT&T due to the lost of a number of clients as a result of the economic crisis earlier in the year. An effective strategic decision process, as found by ...
There has been an increasing demand of telecommunication services in the last few decades which has led to an all time high demand of global operations in businesses , their capital investment as well as mobilization of the resources. This has further resulted in a lot of changes in the lifestyle of the people within specific geographies that includes an increasing demand for the latest of technology as well.
The telecommunication industry has seen significant regulatory reform from the 1990s onwards to the present date. There are major sectors in the industry such as fixed line telephony, television delivery, mobile telephony, fixed wireless access, satellite service, radio and postal sector. I am going to predominantly focus on mobile telephony sector of the industry. Particularly on what were the attractive features of the industry analyzing it by using porter’s five forces which determines the attractiveness of the industry. I will discuss what attracted Meteor into the industry; analyze Meteor strategies entering the market and what factors caused them to alter their strategies and finally how I envisage the telecommunication industry in five years time.
The events that led to the changes Global Communications are making came about with the shift in technology and the competition within the telecommunications industry. With companies able to compete globally, there is too much competition within the industry from other telecommunications companies as well as cable companies who can offer all the same services. With increased companies offering a wide range of services, Global is forced to cut costs in order to compete effectively and increase profitability. To this end, Global Communications senior management has come up with an approach to outsource some of their call centers to India and Ireland and expand new services to small business and consumer customers. Global also joined with a satellite provider to offer video services and a satellite version of broadband. This will mean job cuts and a reduction in salary for employees who remain and are relocated. The plan was accepted quickly and now management is under the gun to communicate the changes effectively to the employees without risking a morale problem that could affect productivity. Also, since the employees belong to a trade union and the union was not involved in the process of negotiating these changes, Global has to consider the legal and public relation implications of not fulfilling their contractual obligation to the trade union.
The telecommunications industry is changing creating the need for a more competitive company. The changes that are happening are that there is greater competition in the market with foreign firms such as China Netcom and China Telecom are entering the UK market[1] increasing the number of firms. Also the European Union is looking to improve competition by breaking open the telecommunication markets further by giving national authorities stronger powers[2]. The type of competition is also changing in recent times as firms grow in size and capability as they merge. The recent trend being the buy out broadband and telephone companies so that firms are then able to offer bundled services[3].
Global Communications is a financially struggling telecommunications company. Its stock has depreciated fifty percent in three years. Currently, the organization is faced with too much competition within the telecommunications industry. Local, long-distance and international markets are all competing for the same business. In addition, the industry suffered a huge blow at the hands of the cable companies, who stepped in to provide complete solutions encompassing computers, televisions and plain old telephone service (POT).
The three alternatives to ensure Motorola’s long term success follow the directional strategy. Despite their difficulties in 2006, they are the largest vendor and a leading provider in mission-critical systems worldwide with over 65 years of experience in complex network design, voice and broadband data, sophisticated technology, public and private networks, rugged devices, and optimization and implementation. They are also the leading provider of digital cable boxes in North America. Their strong market position follows the directional strategy for growth and stability in addition to their heavy investment in research and development (Motorola, inc., 2007). The expected growth of Asian Pacific is to reach one billion in phone sales by 2009. The India market should surpass China in 2009 with 139 million units.
The economic problem was that WorldCom had a vast supply in telecommunications capacity that emerged in the 1990s, as the industry rushed to build fibre optic networks and other infrastructure based on overly optimistic projections of Internet growth (Lyke and Jickling, 2002)