Global Corporate Strategy

EXECUTIVE SUMMARY

Today's business corporation makes their future planning to achieve competitive advantage over its competitor. In the view of this aspect, the report was undertaken. To carry out this research British Group Plc was taken to explain how corporate strategies are made in the big organization. BT Group primarily was a government company but later on it was privatized. Currently the company was known to be as British multinational telecommunication Service Company. In the report it was identified that the firm expanded its wings in diversified market and product through adoption of various growth and development strategy. British Telecommunication Group mostly focused on acquisition strategy and with the help of this strategy company able to achieve competitive advantage in the industry. This joint venture enables the BT Group to expand in diversified market with numerous products. Concert helps BT in elimination of the restriction which the company was facing from long time. last but the not the least the report evaluate the way organization excellence is achieved.

INTRODUCTION

Global business strategy refers to the long term plans made by the business organizations to attain global competitiveness in the market. Global Strategy guides the activities of the business to meet the overall objectives of the business entity (Heidtmann, 2011). A strategy defines what needs to be done to establish competitiveness in the market, how the goals will be achieved, and matching the existing strength of the business entity with the global market requirement. This report is prepared to examine the global corporate strategy of British Telecommunication Group Plc (BT). BT is a British multinational telecommunications company having its headquarters in London, United Kingdom. Presently the company has its business operation in 197 countries worldwide. The company mainly provides its services to corporate and government customers in its area of operations (Coyle, B., 2000). The group has its business operations in diversified fields such as BT Global Services, BT Retail, BT Wholesale, Openreach, Broadband, BT TV and etc. This report will examined the external innovation and competitiveness of BT, its strategic alliances strategies, and its organizational structure and development for expansion in the world telecommunication industry.

TASK 1: EXTERNAL INNOVATION AND COMPETITIVENESS

In today's globalized world, organizations are bringing fast innovation in the industry as innovation helps business entities to establish competitiveness in the market. Innovation is taking place with the launch of new products, new services, and new technology (Kluyver, 2010). In present scenario, people behavior towards the product is changing at fast pace and because of this reason business entity like BT has to facilitate different and innovative products to the customers. As BT is dealing in telecommunication industry, the industry has seen tremendous changes in the past decade because of adoption of digital technologies. The industry has seen different phases in its expansion like challenges, opportunities and threats. These phases are encountered due to the influence of external environmental factors (Mennen, M., 2010). The impact of external environment in the BT innovation and competitiveness can be better understood from the porter five forces model-

a) Threat of New Entrants

Telecommunication industry which is termed to be an oligopoly market as there is few number of sellers who are providing telecommunication services in the market. The telecom market is dominated by few firms who holds maximum market share in the industry ( Berger, 2013). In the telecom industry each firm has its own brands value in the market. It is said that in the oligopoly market, sellers are the price setters and because of this reason they earn high profits. But the fear of entry of new entrants is present even though involvement of huge barrier in entry of new firms. In this industry barriers are seen usually related to government licensing, attainment of economies of scale, patents, use of high-end technology, and involvement high of price competition (Harris, 2002). Due to this barrier existing telecom companies earns abnormal profits from their business operations.

In this market, strategy of one firm influences the decision of other firms so it is highly interdependent and this could also be considered to be a reason for the barrier of entry. In this market price competition prevails in the market to a particular extent as after a point all firms makes losses and because of this reason non-price competition is highly seen in this industry (Mockler, 2001). So, in this industry, threat of entry of new firms is lesser as compared to other markets.

b) Threat of Substitute products or services

A Substitute product refers to those products or services which satisfy the need of consumers that another product or services fulfills. In other words, it is a product or service which has the same utility value as other. For example- Pepsi and Coke, British Telecommunication and Vodafone etc. Threat of substitute products arises in the presence three conditions i.e. relative price performance of substitutes, switching cost, and buyer propensity to substitute. Relative price performance of substitutes means the price of substitute product or services compared to the services available by the BT (Rajagopal, 2006). When the price of substitute services is lower then more consumer will inclined towards the other firm. In this, cross elasticity of demand prevails in the market that means change in price of Vodafone services will impact the demand of British Telecommunication.

The other factor which influences the threat of substitute is switching cost. The consumer will remain loyal with the BT till the time switching cost is high but when the switching cost will decreased consumer will opt for that services which is cheaper for him. So the companies have to provide better services at the lesser price to retain the market share in the industry (Majocchi, Mayrhofer, and Camps, 2013). The other factor which would be considered in threat of substitute product or services would be buyer propensity to substitute. It measures the extent to which buyers are ready to opt for other firms' products or services.

c) Bargaining Power of Buyer

In today's time, buyer is termed to be as the king of the market. It is because firms have to produce or avail goods and services as per the buyer need and requirement. All firms are making efforts to attain the buyer needs and objectives. The bargaining power of buyer will increased when the buyer has many alternatives for the buying options (Amiryany and et.al., 2012). In recent study of GfK it was found that telecom companies are failing to provide the differentiated services to the consumer and because of this reason consumer switch to another brand. In the study it was found that consumer behavior towards different telecom companies like Vodafone, British Telecommunication, and Sky are more or less the same (Tesseras, 2014).

In the research of GfK, it was found that people perception towards the BT group services stayed the same. Company has seen 21% improvement in the consumer perception towards its product and services (Hitt and Pisano, 2003). It is seen that corporate and government organization has high inclination towards BT because of its quality services indeed company also seen declination in the consumer perception because in telecom industry all companies are offering homogenous product and the buyer gets high bargaining power to switch to other telecom company (Gopinath, 2003). BT can reduces the bargaining power of buyer by adopting strategies related to cost-plus pricing, product innovation, sound distribution channel, and offering of the best service which is not been availed by other service providers.

d) Bargaining Power of Supplier

The bargaining of supplier is high when the supplier has too many options for the supply of its product and services. But in the telecommunication industry as there are very few firms available in the market so the supplier has less influence on the company like BT Group. In this industry, the telecom service provider companies like BT group has high power in negotiation as they purchased the equipments in large quantity (Tesseras, 2014). But when the supplier of equipments is government or state owned companies then the bargaining power of supplier increased. This type of situations is generally seen in developing countries.

e) Rivalry among the existing firms

The companies who provide telecommunication services are generally operates in cut throat competition as each firm is providing the same services. In this industry, business entities primarily face high price competition and after that non-price competition prevails in the market. BT Group is facing high competition from the companies like AT&T, Cable & Wireless, Vodafone, Sky and many others (Lessard, Lucea, and Vives, 2013). In this industry firms make competition for obtaining maximum customer market share and development of the business in different geographical locations.

TASK TWO: VERTICAL INTEGRATION AND COMPETITIVENESS

(a) Critically assessment of the term strategic alliances in the context of BT

The term strategic alliance refers to the growth and expansion strategy of the companies which are made to establish business presence in the different geographical locations of the world. According to Thompson, Strickland & Gamble, "Strategic alliance is a formal agreement between two or more separate in which there is strategically relevant collaboration of some sort, joint contribution of resources, shared risk, shared control, and shared dependence (Thompson, Strickland & Gamble, 2007). Companies make strategic alliance to explore new opportunities and new insights in the existing or diversified market. It is to be considering that in strategic alliance firms doesn't establish separate entities but they put collaborative efforts to achieve the common objectives (Mockler, 2001). The purpose of strategic alliance is accomplished when the set goals are achieved. Strategic alliance strengthens the company position in the market and this strong point helps in the company in establishing competitive advantage over its competitors. BT's runs Alliance Partner Program to boost its presence in different geographical regions and market segments through the distribution of BT’s global networked IT services. Presently the BT has strategic alliance with HP, Avaya, EMEA, Nortel Enterprise solutions to enhance and enrich its business operation in UK and other parts of the world (Lynch, 2006). BT has received many recognition for its alliance program.

Merger and Acquisition are the corporate strategies which are used for the expansion and development of the business in diversified location or market. In this strategy business entities purchase or join hands with other companies to achieve the strategic objectives. In the words of Brian Coyle, "A merger is combination of two or more companies in which the assets and liabilities of the selling firm are absorbed by the buying firm". On the other hand, the author states, "Acquisition refers to the purchase of assets such as plant, a division, or event the entire business entity. The difference between the merger and acquisition is of ownership and control (Coyle, 2000).



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In merger, the businesses of each company are brought together as to form a new entity. In merger, the senior management of both the firms continues their position after the mergers. Whereas in acquisition the buying company overtakes the whole ownership and management is being acquired by the buyer. In acquisition the acquired company operates as a subsidiary firm of the parent organization (Johnson, Scholes, and Whittington, 2005). BT Group works on acquisition strategy as the company has expanded its business portfolio in diversified market through acquisition only. BT group acquired MCI, Infonet, Albacom, Dabs.com, PlusNet Plc, Comsat, Wire One communication, Ufindus, Ribbit and many more.

This acquisition helps the British Telecommunication to establish strong position in the industry with large product and service portfolio (Harris, 2002). This strong position is termed to be as competitive advantage over the competitors. The company earns £2.091 billion in the year ended 2013 which represents the strong market position of the firm over the industry. The company is also a constituent in FTSE 100 index because of its large market capitalization.

(b) BT's Global Venture with AT&T

The Global ventures between BT's and AT&T comes into an existence after the break up of relation between BT and MCI. This joint venture was recognized as Concert Communication services. The joint venture was made to provide multi-service global end-to-end telecommunication services (De Wit and Meyer, 2010). BT Group aim from this agreement was to provide best services to the multinational corporation customers. This agreement helps the BT to get speed of global service coverage by leasing bandwidth from national telecom companies. BT Group included various services related to Voice, Data (Internet), Conferencing voice services, high bandwidth data services, messaging, e-mail, electronic data interchange, and video conferencing etc in its portfolio from this agreement. The company also got the advantage to become global telecommunication company by offering services related to international carrier and internet service provider ( Berger, 2013). The concert agreement serves BT in expanding its multinational customer worldwide.

The company able to made more than 270 multinational clients besides this the company also able to explore more than 29000 customers worldwide. The biggest benefit the BT received from Concert is that it able to leverage the rigid regulatory issue that it was facing in its expansion strategy in US (Majocchi, Mayrhofer, and Camps, 2013). BT group able to expanded its operation in more than 52 countries and also extended and interlink its network with 130 countries. So it can be concluded that the company earned huge money from this joint venture but eventually in the year ended 2000, both the companies separated due to huge debt burden.

TASK THREE: ORGANIZATIONAL EXCELLENCE, STRUCTURE AND STRATEGY

Organizational excellence refers to delivering of best performance by the management for the successful achievements of the organizational need and with that stakeholders need. A company would able to achieve organizational excellence by adopting the integrated approach which helps in delivering of value based services to its customers, investors and other stakeholders who have active participation in the operation of the business activity (Coyle, 2000). Organizational excellence brings overall efficiency and effectiveness in the business. The management of business entity like BT Group would able to achieve organization excellence by ensuring underneath characteristics-

Perform excellence against a known external standard- The known external standard refers to the technological change in the business environment. As BT Group is in technology field it is very essential for the management to ensure that the company has all required resources, equipments and technology which is prevalent in the industry (Johnson, Scholes, and Whittington, 2005). In today's time, technological aspect is the most crucial element in any business organization and when the business entity is dealing in technological field then it becomes very peculiar for the firm. As this sector is depended on complete innovation and creativity.

Performance excellence in the present condition from the past- The senior management of the BT Group should always compare the business performance and activities as to previous performance (Lynch, 2006). When they realized that the work of business entity is improvised in the recent time as compared in comparison to past then it indicates a sign of performance Excellency in the organization management.

Optimality use of scarce resource- The excellence in the organization can be seen when the company is able to use its scarce resource in the best optimum manner which will help in reduction of cost, time, and efforts (Hitt and Pisano, 2003). The key elements which helps in attainment of excellence in the organization excellence.

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The senior management of the British Telecommunication will able to enhance its organization excellence with the help of following elements-

Operational Efficiency- A business entity will able to achieve long term prospective growth of its business activities when it able to establish efficient and effective working environment with optimization (Heidtmann, 2011). This can be done by implementing Total Quality Management in the organization activities. It helps in assessing the loopholes which are creating hindrance in the business activities.
Significant Human Resource Management- Excellence in human resource management comes from the initial phase only i.e. planning of human resource requirement and then it follows recruitment, selection, developing, retaining, and managing and controlling.

Consumer Centric Approach- This element is related to identifying and satisfying the need of customer by offering innovative product and services (Mennen, 2010). As BT Group is dealing in oligopoly market, it is true that one organization strategy affects the move of other business entities. BT group can overcome from this shortfall by concentrating the customer needs and requirements.

Exploring of New Markets- BT Group has always made efforts to explore new markets and products from its corporate strategy (Kluyver, 2010).The company able to get command over Broadband, Mobility, Information Technology, Process Innovation in its area of business operation.

Restructuring of Business and activities- This element is also considered to be key element in the achievement of organization excellence. The senior management of the BT Group should review the company structure the way it is formulated. The organizational structure should be prepared on the basis of standardization or on the basis of division in which the business entity is dealing

Corporate Image Building- It is the most crucial aspect in presenting the organizational excellence. To establish reputations in the minds of consumer the company must put significant efforts in its functioning and service providence which will helps in establishing brand image of the firm.

BT Group has adopted combined organization structure which includes line structure geographical location and functional area (Tesseras, 2014). This organizational structure is usually adopted in the organization has presence in large number of areas. BT group follows an organizational structure in which a hierarchy of communication channel is followed. In 4 major countries, company has positioned VP who looks after the overall functioning of the Corporate. They communicate the functioning of the business entity to senior vice president of technology and Innovation and he further gives information to the Chief Technology officer of the BT Group.

Disruptive innovation refers to an innovation which assists in developing new market and value network and after certain period of time it break up the exiting market and value network. In other words, disruptive innovation means creation of new market and opportunities and simultaneously disrupting the existing technology (Lessard, Lucea, and Vives, 2013). BT Group is already providing services related to Broadband, Mobility, Information Technology but this are the areas which are still not explored in the market. The company management should discover more insights of this market to enhance its business operation. The Silicon Valley team has identified some technologies areas which BT group can targeted to expand its business activities and product and services portfolio (Coyle, 2000). This would come when the company makes corporate strategy related to disruptive innovation. The company identified following technology areas which can be focused to achieve disruptive innovation-

Broadband

  • Consumer application form
  • Personal content management
  • Home monitoring
  • Well Being
  • Global IP Protocol

Mobility

  • Consumer VOIP Services
  • Converged Messaging
  • In-car Services
  • E- Directories
  • Mobile TV

Information Technology

  • Hosted Application Services
  • Business Communications Dashboards
  • Network APIs for Application
  • Managed Service Outsourcing
  • Data Center Visualization
  • XML Switching

Next Generation Consumer Experience

  • Digital Home Support
  • Service Agent Technology
  • Knowledge Management

Process Innovation

  • Field Force Optimization
  • Massive Logs Exploitation
  • Data Integrity Validation

Network Technologies

  • Winmax And WiBro
  • Ethernet
  • Home Gateways
  • Deep Pocket Inspection
  • Mobility Session Management

CONCLUSION

This report was conducted to analyze the global corporate strategy of British Telecommunication Group Plc. The report was made to explain what knowledge and skill are applied by the management in framing corporate strategies. The report explained the business environment of telecommunication industry in the context of BT Group. In the study it was found that BT Group has 5 divisions in which it operates namely, BT Global Services, BT Retail, BT Wholesale, Openreach, BT Technology, Services and Operations. From the research, it was found that BT Group has made enough profit from its joint venture with AT&T and MCI (Kluyver, 2010).Lastly, the aspects related to organization excellence, structure, and strategy was discussed.

REFERENCES

Amiryany, N. and et.al., 2012. Acquisition reconfiguration capability. European Journal of Innovation Management.

Berger, A., 2013. Global Corporate Strategy - Honda Case Study. GRIN Verlag.

Coyle, B., 2000. Mergers and Acquisitions. Global Professional Publishing.

De Wit, B. and Meyer, R., 2010. Strategy Process, Content, and Context International Perspective, 4th Edition, Cengage Learning.

Gopinath, C., 2003. When acquisitions go awry: pitfalls in executing corporate strategy. Journal of Business Strategy.

Harris, R. P., 2002. European challenge: developing global organizations. European Business Review.

Heidtmann, D., 2011. International strategic alliances and cultural diversity - German companies getting involved in Iran, India and China. Diplomica Verlag.

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