Europe's leading telecom companies : overstretched and under threat

Marine J.

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Europe's leading telecom companies : overstretched and under threat

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Résumé du document

According to Campbell in 2002, the classic prescriptive process can be defined as a "strategy that is planned in advance and which follows a rational process through each stage from analysis to implementation."

Widely recognised as the most principal theories for strategy development, the prescriptive process must be examined within the context of an increasingly dynamic, highly competitive and global business environment as the telecom industry. However, powerful external forces are driving organisations to reduce costs, enhance processes and identify new opportunities for growth.

Many telecom companies are compelled to make dramatic improvements not only to compete and prosper but also merely to survive. This brings to the fore the importance of determining how effectively the prescriptive process can meet the needs of today's businesses when formulating strategy. Consequently, to develop their strategies, companies have to set up long-term goals and objectives that will add value to their business and cope with the uncertainty of modern environment.

Sommaire

Given the lower levels of market growth coupled with the grip of existing telcos on their national markets, what are the advantages and problems with adopting the classic prescriptive strategy process to develop strategies in this market?
1. What is a classic prescriptive strategy process?
2. Frameworks in relation with the prescriptive strategy process
3. Five forces model
4. Value chain analysis of the european telecom market
5. Advantages of using the prescriptive strategy process
6. Problems of using the prescriptive strategy process
Some strategists argue that it is useless to predict what will happen, given that technology is uncertain. What would be the consequences if any, of following their advice in the European telecommunications market and not make any predictions? What implications does your answer have for a prescriptive strategy process that is built on the need to make predictions?
Can smaller companies attempting to find opportunities in this market also employ the prescriptive process? Or would they be better to use a process that is more radical and innovative to structure their approach? If so, do you have any suggestions on the process that might be employed?
1. Using swot to analyse smaller companies in the european telecommunications market
2. Decision
3. Suggestions on the new process
4. Strategic group in Telecommunication field
5. Suggested strategies
6. Suitability, feasibility and flexibility matrix applied to alternative strategies

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Extraits

[...] The combination of both prescriptive and descriptive strategy will allow the telcos to be more innovative and reactive on their environment Can smaller companies attempting to find opportunities in this market also employ the prescriptive process? Or would it be better to use a process that is more radical and innovative to structure their approach? If so, do you have any suggestions on the process that might be employed? As mentioned in the first part, using prescriptive process has both pros and cons. [...]

[...] The telcos had to fight their competitors, in order to buy companies to extend their network and coverage. The bubble also raised the prices of the companies, making M&A expensive and high risk operations but essentially needed to grow in their markets. Human resources management: As mentioned earlier, the new ways of selling merchandise and services (via the web essentially); allowed telcos to adapt their human resources, in order to reduce staff costs. Internet platforms need less people to sale merchandise. [...]

[...] Considering the situation of small companies and their characteristics, it can be suggested that they should adopt an innovative approach. Several suggestions can be listed based on the above analysis. Meanwhile, the SFF matrix is used to measure these approaches; small companies should make the maximum use of their advantages and develop strategies such as differentiating markets and building up the word-of-mouth promotion (suggestion 1 and suggestion 3). On the one hand, these two basic strategies are very efficient and effective and are not so risky; on the other hand, they are economical strategic plans. [...]

[...] Suggestions on the new process Considering the characteristics of smaller companies, they not only need to follow the general competitive strategy principal but also have to formulate a particular strategy to gain market shares. In 1989, Lester concluded that “firms must accelerate the shift away from the mass production of low cost standardized products”. This theory does also fit for the smaller and newly entered companies. Lester identified seven best practices, which are: Continuous improvement in cost, quality, service and product innovation. Breaking down organizational barriers between departments. Eliminating layers of management creating flatter organizational hierarchies. [...]

[...] The telcos decided to enter the mobile market. It was a successful strategy, even if it was costly, because in 2002, they owned 60% of the overall market share. If the telcos would have not predicted that mobile market would be rising they would have lost market shares and profitability. Moreover, it was the only way for telcos to survive as the mobile providers were getting more customers and there was a possible switch to mobile phone. Related diversification into the mobile market, was an opportunity to the telcos as they could take advantage of their previous telecommunication experience, rely on their client base to strengthen their positions. [...]

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