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Global Communications Benchmarking

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Global Communications Benchmarking -Team A Research

The traditional telecommunications industry has fallen on some hard times. The industry has lost market share and financial value. Global Communications has not been spared in this downturn. It has lost market share to the cable television industry and other telecommunications companies, and it now faces low revenues and high labor expenses. To combat these, Global must make some hard decisions about its future. Some of the options include offering new products and services, outsourcing to reduce labor cost, re-negotiating and forming a partnership with the union, and employee incentives to remain with the company.

After evaluating Global’s main issues, it has become apparent that it must transform itself to survive in the marketplace. Telecommunications giant AT&T faced similar issues in the late 1990’s. An article written by James Arndorfer in Advertising Age (Arndorfer, 1999) gave the path that AT&T took to blunt competition as one of acquisitions. AT&T purchased the second largest cable television provider in the US, Tele-Communications Inc (TCI). This acquisition provided immediate dividends to AT&T. Overnight it got into the cable television business and a steady stream of revenue from over eight million subscribers. This revenue provided the resources for research and development, resulting in fiber optic cabling directly to the home; which in turn enabled more products and services to be offered to the subscriber. To go along with the additional products and services, AT&T was able to offer bundled billing to the public. A customer could get one bill for all products (cable, phone, and internet).

Global, then, could use the AT&T example of acquisitions to blunt competition and get increased revenues. Another approach that Global could possibly take was also chronicled in the article by James Arndorfer (Arndorfer, 1999). He summarized that Ameritech “has snagged 200,000 subscribers in the Chicago, Cleveland, Columbus, Ohio, and Detroit metropolitan areas with its Americast cable TV product”. Americast, which was a joint venture between Walt Disney Co., Ameritech, BellSouth Corp., GTE Corp. and SNET, decided to “overbuild” the cable television companies’ locations with their own cable lines. Arndorfer summarized that the strategy was “to capitalize on consumer dissatisfaction with their current cable providers and find people willing to try the Americast service”. In an article written by Karen Bannan in Inter@ctive Week (Bannan, 1998) Americast announced that it was awarded a license for 15 years to provide cable TV “services in Shaker Heights, Ohio, a wealthy suburb of Cleveland”. Americast, then, decided to go after the high value customers who were dissatisfied with their current cable TV provider. Richard Linnett, in an article written in Advertising Age (Linnett, 2000) stated that “Americast is

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