British Telecom - Assignment Example

British Telecom is one of the leading telecommunication companies in the world. It is one of the largest telecommunication providers in the market and is well-known for efficient services that it provides. British Telecom is an undisputable leader in the fixed-line service market and one of the most important players in the market of fixed business calls. Currently, telecommunication services are living through the process of modernization: the number of telecommunication providers that operate in conjunction with online internet companies has been increasing rapidly. The ability of British Telecom to survive in current highly-competitive and ever-changing telecommunication industry depends on its capacity to take effective steps to surmount the challenges that it faces. In order to understand and evaluate them one needs to analyze the marketing position of British Telecom and assess the strength and weakness of its position in the market as well as opportunities that can be explored by the company and the threats which it should avoid. SWOT Analysis. Internal Factors. + - Marketing. Strength. Weakness. Pool of existing and potential customers. Strength. Weakness. Personal and management. Strength. Weakness. Convergence of the services. Strength. Weakness. Marketing. Strength. British Telecom is one of the largest telecommunication companies in the world and it holds large share of the market of telecommunication industry. It possesses enough financial and economic resources to compete in the market, especially against new players in the niche where it operates. The company conducts aggressive and effective advertising campaign in order to stay abreast of the current trends in the market and lure potential customers to use its services. The company has started successful advertising campaign with Kris Marshall (the budget of the campaign is 40million GBP). Apart from traditional television advertising campaign British Telecom has recently shifted its focus on online advertising which will expand the pool of its customers. If one takes into account the fact that British Telecom intends to advertise its broadband services, then the move to concentrate on online advertisement is undoubtedly the step in the right direction as this type of advertisement campaign will target the potential customers of broadband services. Apart from the traditional national market, the company expands rapidly in the overseas markets as well. British Telecom operates in Western European market as well as Scandinavian countries and nations of ex-Communist block. It also provides the services to the customers of Asia and Northern America. Rapid expansion in new developing markets reflects high flexibility of the company. Weakness. In spite of the fact that the company can operate successfully, only if it takes efficient steps to react to the changes in modern technology, it must not forget that it is a telecommunication company. One should try to concentrate on this niche of the market and not to expand rapidly in the market of online industry; if the company expands in other markets and starts providing too many services, unrelated to telecommunication market, it might entail "erosion" of its brand. Customers who now associate British Telecom with telecommunication company will not be able to associate this brand name with any particular industry and rather will have association with multiple services, if the company expands too rapidly in other markets. Overexpansion on other market of other countries may reduce its market share in the United Kingdom and might require additional resources. Large pool of existing and potential clients. Strength. The company has one of the largest pools of potential and existing customers in telecommunication industry. The service of fixed exchange lines has been rising steadfastly since 2002, more robust growth was evident in the wholesale of ADSL end users of the British Telecom (the growth constituted more than 250% during the period of 2002-2004). The number of BT broadband customers has increased by 760% during the same period. Expansion of the British Telecom will increase the pool of existing customers and will facilitate getting new ones. Weakness. Expansion and getting new customers in new niches of the market might entail the reduction in the number of the customers in traditional ones, especially if the resources of the company are overstretched. The share of British Telecom in traditional fixed-voice called market reduced to 70% in the year 2004, compared with the 73% in 2003. Despite the fact that it was a slight reduction, it is nevertheless a worrying sign as fixed-voice market is the most important niche in the business of the company. One can expect some serious difficulties for the BT, if this negative trend continues. Personal and management. Strength. The company possesses highly- experienced and well-educated workforce. It recruits experienced professionals as well as young graduates from colleges and universities. The workforce of the British Telecom is both professional and diversified, and can resolve multiple tasks that the company faces in competitive environment. Weakness. The constant expansion of the company especially in the new niches and areas of the market might entail reeducation and reassignment of its workforce. Consequently, higher expenditures on education might be required. Workers may not be flexible enough to meet the challenges of changing environment. Expansion may also lead to the increase in demand on some high-skilled workers who are unavailable locally. Recently, British Telecom has decided to outsource its IT development branch to India as it has been unable to find sufficient number of qualified workers in the UK. Convergence of the services. The company maintains leading position in the fixed-lines services, data communication services and still holds eminent place in the market of distant national and international telephone services. The conjunction of the services mentioned with the company's ownership of several telephone lines increases the pool of existing customers. The company has managed to diversify its services and thus does not rely on one niche of the market. Weakness. The conjunction of the services may lead to the increasing expenditures on the maintaining of the services and may reduce profit of the company, which would certainly affect the capital growth of the company. The fact that it has several services may hamper the possibility of effective reactions to the changes in the respective niches of the market. Threats and opportunities. Opportunities. Threats. New Innovations. Trend among consumers. Growth of demand on broadband services. Competition in broadband services. Launching of project Openzone. Voice over Internet Protocol. Expansion in the new markets. Competition in the market of fixed network services. Opportunities. New Innovations. Opportunities. In order to enhance its operations the company should maintain its innovative approach. It has developed several new technological devises such as Project Bluephone, which can be developed into new technological devise which would allow switching from fixed to mobile phone network. If this project is implemented successfully it will reduce incentives from the customers to move from traditional fixed line services to modern mobile service convergence providers; it also allows using one phone service provider instead of several ones. Threats. Current trend among consumers. There is a visible trend of the increasing demand on mobile services. This is undoubtedly a worldwide tendency; the main threat for British Telecom, however remains the shifting from fixed to mobile services. If the demand on the mobile services continues to increase and this process accompanies by the reduction in the prices on the mobile phone services, then it might entail some difficulties for the business of British Telecom. The customers who use fixed -line services might shift to mobile phone services just for convenience. The company should develop new strategy in order to countervail the negative impact of above mentioned tendency. One of the possible solutions to this problem might be the implementation of Project Bluephone project, however it is too early to predict whether it will be successful and how it will compete against the reduction of the prices on mobile phone services. Growth in the demand on broadband services. Opportunities. The demand on broadband services has been rising steadfastly during the last several years. Growing demand on these services represents excellent opportunities for British Telecom. Threats. With increasing number of internet providers the competition in the broadband services will intensify. There is a possibility that new players could either devise some new strategy or start providing new types of services. Opportunities. Openzone. Expansion in the market of wireless broadband services. BT is a leading provider of broadband wireless services in the Great Britain. It has maintained 2400 Openzone sites in the UK since 2004. It has signed the deals of installing Openzone sites with the chain of McDonalds restaurants as well as many lounges of British Airways. Threats. Voice over Internet Protocol (VoIP) represents one of the most serious challenges that should be surmounted by British Telecom. VIP affects the business of traditional fixed lines companies as it allows the customers to shift the voice traffic from fixed telephone networks to DSL line. This tendency, if it continues, might decrease the demand on fixed telephone services. Such segments of the market of telecommunication industry as international distant calls are especially vulnerable. Opportunities. The company might try to expand in the market of fixed telephone services of developing countries. However, one should realize that possibilities for such expansion are currently limited; nevertheless this option can be considered as some of the countries still do not possess technical capacities for the developing of modern mobile networks. Threats. There is a threat of fierce competition in the market of fixed network services. In spite of the fact that British Telecom maintains eminent position in the market, its eminence is being undermined by legal initiatives of the government. New regulations aimed to increase competition in the market allow competitors to place their equipment in the vicinity of the exchanges of British Telecom. This measure affected market position of British Telecom, as existing and new customers can now use the networks of its main competitions. This led to the decrease in profit of BT as well the reduction of turnover of the company. By analyzing main opportunities and threats that the company faces one can draw several conclusions. First, in spite of fact that the company faces multiple tasks and challenges, the process of switching from fixed telephone lines to mobile networks represents the most serious threat for BT; the company undoubtedly has no power to control this tendency or to change it. That is why it will have to rely on new innovations in order to countervail the tendency mentioned or reduce its negative impact. In my opinion the project Blue Phone is of paramount importance for the business of the company. Certainly in order to succeed the project requires expenditure on R&D, but it is worth spending money on this project as it will bring benefits in the long run. Second the company should adapt to the increasingly unpredictable environment in order to succeed. Works cited. BT Group Plc, Datamonitor, 2005. Available from About British Telecom. Available from . BT reassigns TV apend to digital, Marketing(UK) October 26 2005, p2-2. BT cites lack of skills as reason for offshoring, Computer Weekly, October 18 2005, p5-5. Broadband boost as BT cuts local charge, Computer Weekly, November 29, 2005. Read More