Two distinctions of communication strategists Telecommunications industry the most difficult in which to design, monitor, measure and manage strategy Pace of technological change in telecommunications is reordering change in every other sector of the economy –Need to make serious effort to forecast impact of own strategy on business policies adopted elsewhere

Criteria of strategic management effectiveness Sales Profitability Productivity Customer satisfaction Market share Sales growth Competitive performance

Market valuation Market valuation defined –Outstanding shares x stock price Strengths as measure of strategic management success? Weaknesses as measure of strategic management success?

Contours of telecom competition Proliferation of domestic and global competition Increase in business formations Improvements in new technologies leading to substitution for older product lines Business reengineering Customer fastidiousness

Attributes of effective telecom strategic management Successful firms –Embrace change –Negotiate affiliations and alliances –Exploit the Internet –Reinforce brand image –Exploit scale economies –Develop proprietary technologies or products where feasible –Are either first to market or first to market acceptance and make it clear which they are –Obsolete own products –Realize the most important lesson of telecom economics is reach x loyalty –Exploit synergies by cooperating with any firm that enhances value and growth rates

Concerns regarding market response to product Empirical evidence suggests that when a product or service gets 10% or more of a market, competitions develops Tertiary forces results when a product succeeds in securing major new market share (unintended consequences caused by interactions of producers and consumers) Emergence of successful new firms invites established enterprises to absorb them

Strategy questions If new product captures market share how will competition respond? Can the product be quickly replicated? When can an invasive competitive response be anticipated? Will opportunities emerge from the success of the product and should resources to diverted to pursue these secondary market alternatives? When and how will the predatory instincts of the competition be activated? Will the competition seek to usurp our market through competitive pricing, manipulation of distribution channels, etc.?

Telecom Business Opportunity Paradigm—James Shaw Market research shows shifts in habits, etc. Production, promotion, pricing, service Focus on new communication tools to create, manage, or distribute information Business opportunities emerge from need to create, manage, distribute information Integrating old tools with emerging tools, customers learn to define their information needs relative to price, service, quality Consumer feedback

Tertiary analysis Study of externalities associated with new product development –Tries to estimate the type, size, and role of new products that unfold in response to new technologies

More on tertiary analysis Emerging technology has primary impact on its market and causes a pattern of consumption Secondary consequence is maintenance of the product once purchases Third-, fourth, and fifth-ordered tertiary consequences of product are unleashed

Strategic implications of tertiary analysis Originating firm has limited influence on tertiary products it provokes. Pattern of ‘creative destruction’ emerges in which business reconfigures its strategy in response to product innovation.

The Rule of Three Oligopolical forces emerge in capital- intensive industries Applied to telecommunications market, the forecast is: –Three firms acquire 80% or more market share, offer a full array of bundled services, and concentrate on industry volume (scale economies) to sustain market positions –Smaller firms left to seek out niche markets