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Essay Subject: Analysis of company's strategivc option of entering the long distance market. History of company; 1984 breakup; analog-digital "war." Market analysis. SWOT analysis. Media strategy.... More...

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Paper Abstract: Analysis of company's strategivc option of entering the long distance market. History of company; 1984 breakup; analog-digital "war." Market analysis. SWOT analysis. Media strategy. Paper Introduction: Executive Summary This paper is a consideration of Bell Atlantic’s strategic option of entering the long distance market. The recommendation for entering this market is supported by the financial evidence presented in the first part of the paper, which shows that even though Bell Atlantic’s Q3 loss was substantial, the growth in recurring revenues, core businesses, and new business products all showed exceptional growth. The company section focuses briefly on the history of the company following the 1984 breakup, and concludes with a discussion of the analog-digital war. A market analysis section shows the size of the potential of the long distance market, and a SWOT analysis summarizes the company’s status quo in 1997, an essential consideration when pursuing a new entry. A modified marketin Text of the Paper: The entire text of the paper is shown below. However, the text is somewhat scrambled. We want to give you as much information as we possibly can about our papers and essays, but we cannot give them away for free. In the text below you will find that while disordered, many of the phrases are essentially intact. From this text you will be able to get a solid sense of the writing style, the concepts addressed, and the sources used in the research paper. Whilebasic rates for long distance service in the United States are the lowestin the world, they are increasing rapidly. That is notpossible today because users must sign on with individual telephony serviceproviders in each of the regions they wish to call or the telephonyprovider must sign numerous relationships with other providers outside itsregion. Since these local telephone companies are prohibitedfrom offering long distance or international telephone services, mostcustomers use the services of at least two, and sometimes more, telephonecompanies. 16), Pioneers, Computer Reseller News, 189. As Karlgaard describes the situation, 1997 was a violent and loud warbetween "telcos" (such as Bell Atlantic) and "digitals" (people who wantedthe Internet). 21 -22 . . Andthe way that the companies were responding was not positive to say theleast. The revenue decline of this situation was $15 million. , Fortune, Forbes, Business 2. . If customers can't get a high speed Internet connection, they might not upgrade their PCs. Nobody's survival is at stake. Telecommunications in America, as opposed to most of the rest of theworld, is completely free market, and customers may choose and combine theofferings of different suppliers. One of the leaders in technology, Bell Atlantic has DSL service. Between July 1993 and June 1994alone, AT&T's basic rates increased by nearly 15 percent, and its largestcompetitors matched these price increases. . Chance to provide "total service package" to new customers . Karlgaard, R. 9).Digital Warriors Want Baby Bell's Blood.The Wall Street Journal. Looking at the figures more closely, however, one sees that recurringrevenues were actually up 9.6 percent, and the merger will result ingreater cost savings than the company originally expected. Already, some Internet Telephony providers are offering discountsof from 4 percent to 5 percent off standard international telephonerates. Marketing Intelligence& Planning, 16. "Cut-rate phone calls over the Internet soon will transform the hugetelecom business, especially on expensive international routes," (Kiani,1998). Wilen, J. Point A could talk to Point B ifboth of them were connected by hard line. Entering LDM will let Bell Atlantic become a full-service provider. 1 per minute for calls within inthe same city to US $ .35 for calls to cities more than 15 kilometers (93miles) away. It is this growth of the competition that adds the urgency to thisstrategic decision. Long distance expert management not in place . Friends with the FCC and the state public utility commissions, friends with the long distance carriers. In addition, deregulation is creating a plethora of long distanceoptions that are confusing and irritating the customers, both residentialand commercial. If Sprint, or AT&T or MCI, or Time-Warnertakes advertising pot shots at us, the best reaction will be to ignorethem. Shake hands and lift a glass. The merger had made it possible for BellAtlantic to be positioned to receive a larger share of these revenues,especially since statistics showed approximately 3 percent of America'sinternational calls are made from the new Bell Atlantic's turf ("And thisis", 1996, 67). Executive Summary This paper is a consideration of Bell Atlantic's strategic option ofentering the long distance market. Charges typically range from US $ . Size of the Potential Market By 1997, following the acquisition of Nynex, the economics of the longdistance market was becoming apparent to Bell Atlantic. (1997, Dec. The software needed to make Internet voice calls now comes bundledwith the latest Web browsers, and also can be freely downloaded. . However, that does lead the company to ponder thedecision that is focused on in this analysis. This would juxtapose nicely withthe new telecommunications services it is offering. Financials Start Up Requirements (Millions)|Item |Range ||Legal and accounting | .3 ||Personnel | 3.4 ||Management | 1.2 ||Product Ramp | 16.2 ||R & D | 2 ||Legislation | 12 ||Creative (Ads) | 2 ||Production (Ads) | 2 ||Placement (Ads) |2 ||Total |275.1 | Projected Sales Five Years (Billions)|Category |Y1 |Y2 |Y3 |Y4 |Y5 ||Commercial |1.2 |1.4 |1.6 |2.1 |2.8 ||Residential | .7 | .9 |1.1 |1.2 |1.3 ||Internet | .5 | .7 | .8 | .9 |1. Truncated financials show the estimated start up costs, salesprojections for five years, and projected shares of the market after fiveyears. ||Cellular | .7 | .9 | .9 |1 |1.1 ||Total | 3.1 |3.9 |4.4 |5.2 | 6.2 | Market Share 5 Years|Category |Y1 |Y2 |Y3 |Y4 |Y5 ||Commercial |14 |17 |22 |24 |31 ||Residential |12 |15 |18 |2 |2 ||Internet |2 | 4 |4 |8 |8 ||Cellular |12 |14 |15 |16 |17 | References And this is competition? The recommendation for entering thismarket is supported by the financial evidence presented in the first partof the paper, which shows that even though Bell Atlantic's Q3 loss wassubstantial, the growth in recurring revenues, core businesses, and newbusiness products all showed exceptional growth. However, in 1994, with the increase in the Internet, and the growth ofcompetitive long distance carriers, and the development of digital versusanalog transmissions, this revenue stream was threatened. It might appear strange to include wireless asa product category, but this is a competitive force that must beconsidered. This technology allows people to communicate using a number ofmedia simultaneously over the Internet. , Barrons, Wall StreetJournal, Business Week, and Time)TV (Network event buys and cable spot buys)Direct Mail (inserts in all commercial billings)Internet (Special Bell Atlantic business web site will be developedfocusing on B2B customers.) ResidentialPrint (full page ads in New York Times, Newsday, Daily News, Village Voice,and special regional editions of Family Circle, Reader's Digest, Time,Newsweek, Entertainment Weekly, People)TV (Network event buys and cable spot buys)Direct Mail (inserts in all residential billings)Internet (Special Bell Atlantic business web site will be developedfocusing on customer life style, consumer tips, health advice, and othertips.) InternetPrint (full page ads in Wired, PC, Internet Week, Knowledge Management)TV (Network event buys and cable spot buys)Direct Mail (targeted E-mail opt ins with special offers)Internet (Special Bell Atlantic web development site focusing on youngdot.coms and dot.orgs). The rates forinternational service vary even more widely. lost $8 .1 million, or 1 cents per share. CommercialPrint (full page ads in Fortune, Forbes, Business 2. Telecoms mergers. 185-194. Products Market research suggests that if Bell Atlantic does get permission toenter the long distance market, that we will have to offer add on serviceswhich have become accepted customer requests in 1997 (Freiden, Goldsmith,Takacs, & Hofacker, 1998). "Seven BabyBells" (one of which was Bell Atlantic) that handled local service, leavingAT&T with long distance and Western Electric. We will offer Local, Regional, Long Distance, Wireless, Cable, Video and Internet services. These companiesoffer lower rates with comparable service, but often do not have nationwidenetworks of service centers to provide local support. CellularPrint (full page ads in Wired, Business 2. Wilen summarizes savings thus: "...at the end of 1996, the old BellAtlantic had 27 employees per 1 , access lines and Nynex had 35...Thecombined entity ended the quarter with 31 per 1 , " (Wilen, 1997,Online). Increased, or even surprise regulation from Federal Government, FTC, FCC and state authorities . DSL technology can deliver speeds 12 times faster than the fastest cable modem. Strong community ties, supporting local economies and school systems. These three control 85 percent of the market and charge the highestbasic rates. Changes in LATA . Good access to capital markets Weaknesses . New to the Long Distance Market place after a 13 year absence . Recommendations The evidence uncovered in the research suggests that if Bell Atlanticdoes not go into the long distance market, the company will have to acceptthe fact that it has a good chance of losing its position as a "player."The evidence shows that consumers want more access and they want it fasterand at lower costs. The problem is bottom- line defined. The campaign themeswould be developed along the line of argument that "Just because somethingis new, doesn't mean it's better." Every aspect of the positioning strategy, to be successful, must bepro-active and not re-active. In 1974, anantitrust suit led to AT&T's 1984 breakup and the formation of. More heavily regulated by the FCC and PSC compared to competitors. Bell Atlantic fiber optical cable reach is three times greater than AT&T . Table 1 -- Third Quarter 1997 Growth|Revenue Item |% Growth ||Core |5.2 ||High-speed ISDN lines |37.5 ||Second residential lines | 16 ||U.S. Separate divisions will handle each of these product categories, andrequests for bids will be issued to different ad agencies and marketingpromotion firms to bid on the category accounts. They must be destroyed (Karlgaard, 1997, 1). The agencies will beselected based on A) Creative concepts, B) Short term tactics, C)Long termpositioning strategies.Media Strategy The following media will be used with each of these productcategories. Bell Atlantic handles 7 million customers a year. Wilen (1997) reported "Bell Atlantic is now placing a higher value onsynergy than it originally expected... One exception to this free market is thefact that, under the terms of the various laws enacted from 197 to today,most areas have only one company that is licensed to provide basic localtelephone service; rates for this service are normally set by stategovernment agencies. Traditional marketing structure in place that has not concentrated on new product introduction Opportunities . Chance for improved positioning in European market . Transmitting data, however, was a different story. Karlgaard (1997) in a long essay in the Wall Street Journal tracedthe dilemma that companies such as Bell Atlantic faced because of theirtechnology. If we do not go into long distance now, we might not be able to runthe distance. We're a monopoly. Freiden, J., Goldsmith, R., Takacs, S., & Hofacker, C. Competition Bell Atlantic will face competition for the general and businessconsumer from more than 1, providers of long distance services in theUS. Possible whiplash reaction from people who will claim "the return of the monopoly . The filing also states that the FCC rules on access fees (new thatyear) also negatively impacted revenues. They're stupid jerks and they must be destroyed...[the problem is that systems like Ethernet] work grandly inside the confines of the PC architecture, but is emasculated once its data stream hits the tiny bandwidths ruled by the telcos. These telco morons aren't keeping up. SWOT Analysis Strengths . MCI, the second largest, offers a wide range of innovative marketingprograms, but lacks the microwave and satellite communications desired bythe customers who prefer -- and, in the case of Internet and Extranetconditions -- require state-of-the-art telecommunications transmission. Hates them like ball bearings hate sand like sailors hate the doldrums. Increased use of Internet Telephony Potential Marketing PlanPositioning Strategy The choices for telephone service cause a great deal of confusionamong consumers. Access fees are charged by localservice companies (Bell Atlantic) to long-distance providers to reachcustomers through their local network). Opposed to this, companies such as Bell Atlantic were "Hemmed in byancient technology, crippling regulations, and a high-volume, low-marginmonopolistic structure, the telcos are reacting only as they know how. The development of fiber optics andthe concurrent development of "digital" transmissions became However, thegrowing technology of the Internet created a demand for faster access up to2 million instructions per second. However, much of the profit from these calls does not go to BellAtlantic but to AT&T, MCI and Sprint, America's three big long-distancecarriers. A competitive threat comes only from three of these - AT&T, MCI, and USSprint. In addition, we will make our presence visible in everyindustry trade show. The digital crowd hates the telcos. Not branded for Long Distance like some of the competition (AT&T, MCI, and Sprint) . Bell Atlantic can take advantage of this confusion andadopt a positioning strategy of "Return to the basics." The basics in thiscase would be time-tested business values such as integrity, honesty, fairplay, good customer service and so on. The study suggests that "the potential for substantial savings,compared to calls on traditional phone networks, is the primary motivationfor using Internet telephony." The report also notes that since Internetaccess generally is purchased at a fixed monthly rate, individuals orcompanies with the proper equipment can place Internet voice or fax callsbetween computers anywhere without incurring per minute fees. .it matters not. cellular subscribers |24.9 ||Overseas cellular subscribers |176 |Source: 1997 Bell Atlantic Annual Report In a forward-looking section, the filing said "[The Company] expectsavings from the Nynex merger...[a savings prediction that is] largely aresult of Bell Atlantic imposing cost discipline on operations in Nynex'sformer territory" (1997 1 Q, 7). Mergers among competition which could diminish market share . Kiani, G.R., (1998), Marketing opportunities in the digital world.Internet Research, 8. (Strengths, Weaknesses, Opportunities,Threats). Bell Atlantic has the experience and facilities to handle high volume of calls. The 1 Q suggests that the loss and the earnings reduction is seriousbut not dangerous. A suspected competition has been apparent since 1996, and, while notsignificant now, it has the potential of having a major impact on ourbusiness -- Internet Telephony, or the merging of telephony and theInternet. For clarity, we shall now examine the Bell Atlanticcompany. A market analysis section shows the size of the potential ofthe long distance market, and a SWOT analysis summarizes the company'sstatus quo in 1997, an essential consideration when pursuing a new entry. "Because 45% of those calls both start and finish on its territory,however, the new Bell Atlantic could carry them from end to end, instead ofpassing part of each call--and its profit--to the long-distance carriers"("And this is", 1996, 67). The company actually earned $1.25per share on recurring operations, but lost 43 cents of that to mergerexpenses, and 92 cents to asset write-downs, the costs of exiting its videobusiness, regulatory liabilities and other merger-related costs" (Wilen,1997, Online). The service area covered by local telephone companies is oftendetermined by state lines, a metropolitan region such as New York orPhiladelphia that lies across more than one state line may be served bymore than one company. We can pass on our costs (Karlgaard, 1997, 1). An uncertain market competition also can come from carriers thatprovide specialized services for targeted groups, such as small businesses,educational institutions, or international organizations. Improved ancillary markets . The conclusion is that to maintain a competitive position, the companymust enter the market. Customer base of approximately 8 million customers . The highest cost per minute for domestic long distance service chargedby a major telephone company at the end of 1994 was US $ .38 per minute.The average per minute cost was US $ .22; specialized telephone companiesfrequently will offer rates of US $ .15 per minute or less. . (1997, Oct. Telcos were described as very "clubby" typified by a businessstrategy that called for The genial settlement, the desire to make... . Local measured rate service typically costs about US $2 permonth, per line. In 1968, the government broke the equipment monopoly allowing rivals,led by MCI (now MCI WorldCom), to use its network (1969). We can enter this market with a minimum of barriers sincewe already have these elements in our business model: * Solid landline infrastructure * Facilities in place * Personnel complement in multiple languages * A name that suggests reliability, substance, power and authority. Theimportant thing is that it is a very real perception, and one that BellAtlantic must be aware of as it considers entering the long distancemarket. Because of our excellent infrastructure and European penetration, weexpect to be able to compete quite well regarding price points. (1998, Nov. So relax. Theverdict is still out concerning the competitive impact that MCI's marketingpartnership with British Telecom will have on our strategy.The third largest long distance company, US Sprint, offers a nationwidenetwork of fiber-optic transmission facilities, but it lacks the capacityof its larger competitors. As the Economistpointed out at the time of the 1996 merger, $2 billion of long-distancecalls per year originate in the two regions covered by Bell Atlantic andNynex. Bell Atlantic, for instance, owned many hundreds of miles of"hard wire" (coaxial cable that moved voice messages after converting theminto analog pulses across phone lines). 31), Bell Atlantic loss masks strong growthsynergies, Philadelphia Business Journal, online athttp://www.bizjournals.com/philadelphia/stories/1997/11/ 3/newscolumn1.html Chance to lease long distance lines to long distance service brokers . (Nynex and Bell Atlantic),(1996, April 27), The Economist, 67 Dunlap, C. Excellent brand name recognition . (1998),Information as a product: not goods, not services. Should it petition to enterthe long distance carrier market? This decline was $5 million inthe quarter.Third quarter core businesses grew 5.2 percent, while the newerbusiness products grew more effectively, as shown in Table 1. . This loss was attributed,according to notes in the filing, to two factors: A) at least one aspect oftelecommunications deregulation, and B) costs and write- downs associatedwith its merger with Nynex Corp. Whether that perception is accurate is a moot question. For example, at the end of1994 the highest published rate for a one-minute call from the US toAustralia was US $3.1 with AT&T (from New York), compared with the lowestpublished rate of US $ .34 with ITS Passport (from San Francisco). To compete, we must be prepared to offer theseproducts, most of which are already a part of the Bell Atlantic localservice package on a fee basis:Hunt Function -- This load switching mechanism establishes a series of telephone linesto which incoming calls will be delivered in succession, substantiallyreducing the chances that the caller will receive a busy signal.Call forwarding -- This internal switching mechanism allows another telephone number toreceive all incoming calls until cancelled, without limiting the ability tomake outgoing calls on the same line.Busy call forwarding -- This automatically routes incoming calls from one telephone line toanother if the first line is busy.Call return -- A feature which recognizes and stores the number of the last incomingcall and calls it back when the customer dials a special code. Expanding Internet business Threats . The company section focuses briefly on the history of the companyfollowing the 1984 breakup, and concludes with a discussion of the analog-digital war. Q3 1997 was, according to the filing, the first complete recording ofthe increasing competition in toll-calling markets (those which go beyond acustomer's area code that are also not far enough to cross LATA, an acronymfor Local Access and Transport Area boundaries and become long-distancecalls). A 1997 study showed that thiscould end up costing phone companies some $8 billion in lost revenuesworldwide over the next four years. This does lead to confusion since various local phone companiesprovide services that are similar, but not necessarily uniform, and ratestructures can differ quite a bit. Such a move would increase the revenuestream reduction created by access fees; and it would give a new boost tosources of revenue that were available from the ever-changing telecom andtelephony market, expected t o to $1 billion a year by 2 . ,Barrons, Wall Street Journal, Business Week, and Time)TV (Network event buys and cable spot buys)Direct Mail (inserts in all commercial billings)Internet (Special Bell Atlantic business web site will be developedfocusing on cellular customers.)PromotionA complete press release program will be instituted, using Business Wire ona contract basis. However, in the case of Bell Atlantic,during the period from 1984 to 1994, the revenues from this measured rateservice that provides access to other calling services and charges a smallamount per minute for each local call was sufficient for a steady increasein earnings. Analog connections, suitable for voice, could handle datatransmissions but at a very slow rate. Improved services to businesses . Before considering the marketing strategy specifically, we mustdetermine the feasiblity of entering the long distance market by using aS.W.O.T. All too often, people tend to forget that we are the leader, and thebenchmark which the competition uses as a norm.Product Strategy The product strategy will be to divide the products and services intofive primary categories: A) Commercial, B) Residential, C) Internet, D)Cellular, and E) Wireless. Current Status of Problem In third quarter 1997, according to its 1 Q SEC filing, Bell AtlanticCorp. A modified marketing plan includes positioning strategy, productstrategy and a proposed media selection broken down by product category. The Company What is now Bell Atlantic was organized in 1984, although much of thebusiness model and infrastructure is much older, based on the old BellTelephone company founded by the man who invented the telephone, AlexanderGraham Bell. Fearing the monopolistic position of the company (comprisedof Bell Telephone, AT&T, IT&T and Western Electric) the United Statesgovernment tried, in 1949, to force AT&T to sell Western Electric but thatplan was thwarted. The early datarequirements of the fax machine gave hints of how the system would have tochange. If this paper is not what you are looking for, you can search again: Search for: or Click here to request an essay written just for you.