Lines of communication are a company specialized in providing solutions as their products. The company has various types of solutions which fits different types of business especially we have contracts with business where they tailor make a solution for that specific business. Some of these services offered by this company include VoIP internet fire wall services IP services wireless and data networks, video conferencing across the word and maintenance of communication technology in organizations. The organization in cooperated in the US also give leases of their services to various organizations. They assist organization to manage their communication project leading to cost selling on resources.
The organization mission is to stay a head of competitors proving proven services, to the American population and remain competitive. To produce and offer technology solutions and service to the customer through Consumer electronics, Wireless communication and improve the technology.
The company’s objectives
The organization’s objectives and objectives include:
· Assisting businesses in managing their communication n project with the aim of reducing wastage of time and resources.
· To provide solutions which are to the business interest.
· To be the best service providers in communication technology and help in U-commerce.
· To offer customers services on 24 hour basis to the customers.
· To ensure that the customers systems does not multifunction.
· Help the world in communication through the provision of cabling IPM and video conferencing.
Create ‘platform’ solutions though molding of chips in the communications.
Introduce brands to the for personal and office communications which will generate power from the living room to the emergency room.
Establish of set data networking and solutions for communications.
Lowering of prices of solutions for communications
To have a steady market growth.
Explore the prospects of developing a software chip which would be energy-efficient chips so as to conserve and preserve consumption of energy for companies fro example Google etc.
To win the lion share in telecommunication and technological solutions
To achieve a growth rate of 10% in the next five years.
The strategic choices
These include the market areas in which the company can target so as to include them in its customer lists.
Buyer Power:- The company faces the threat of buyers shifting their loyalty to other rival companies. This phenomenon according to porter is referred to as backward integration. To curb this threat, Lines of communication has come up with three generic strategies to counter this threat.
a) Cost leadership: – It has reduced the price of some its solutions including the cost of offering services such as for maintenance contracts.
b) Differentiation strategy: – The Company has come up with solutions that are differentiated from the rival firms. These products should be economical and are user friendly in terms adaptability.
Among the customers of the industry include; manufacturing firms, communication industry, homes and almost all sectors of the economy.
Supplier Power:- Lines of communication is faced with the threat of the suppliers being able to control the price of some of the equipment they use. The manufacturer of phones, computers and accessories, cables and related equipment and softwares may come up with stringent price control measures. The labor laws are also stringent and the workers are so unionized that treating of employees in a fair and equitable manner is inevitable. To counter this force, the company extends its supplier chain making the prices of for instance of equipments to come down.
The generic strategies adopted by the company against supplier power are by increasing the price of their products. In essence, the extra prices charged for the raw materials are borne by the customers. This is the differentiation strategy. Another strategy to insulate itself from this force is that of focus. Because of the higher equipment prices, Lines of communication has taken on the differentiation-focused strategy. In this strategy, the methodology has been improving the quality of their solutions and services. By so doing, the prices can be increased without harm being made to the customers.
Barriers to Entry: – The other force challenging the industry is entry of new companies with similar solutions or even more substitutions. This would pose the threat of neutralizing the company’s profits as well as its market share. The generic position that the company has taken has been cost leadership. Through lowering its production costs and increasing operational efficiencies, the company has been able to lower its products prices while maintaining its profitability. This has deterred potential investors/ entrants into the industry. This kind of focus strategy that also encompasses the differentiation strategy makes entry difficult.
Rivalry: – This force emanates from other companies within the same industry. The threat here is that these companies capturing the market. However, the company’s framework/ strategy have been reducing prices whenever faced with such a threat. Prices are then reverted to normal after the exit of that company the specific market segment.
Consequently, new Lines of communication solutions have been adopted to reduce rivalry. Focus has also been used as the generic strategy to solve these problems- rival companies cannot effectively meet differentiated as well as focused needs of the customers. Still, so long as communications does not have 100% substitutes of one another, the problem of switching costs arises.
Lastly, the company is faced with the threat of rival companies accessing its premises and imitating their production methods. However, the company has made its headquarters, inaccessible to foreigners in order to safeguard its patents and copyrights. In addition, their employees are well compensated therefore; they do not have thoughts of leaving for rival companies.
Threat of Substitutes: – From the economist point of view, threat of substitutes arises when the demand of that good is likely to be affected when the price of the substitute changes. This elasticity of price has formed a real force that the company has to fight if it has to be sustained in the near future. Communication products and solutions from other companies may be an option to the customers, if Lines of communication increases the prices. This bars the company from effectively increasing the price of its solutions whenever need arises.
To reduce the strength and danger of this force, the company has strengthened its differentiation generic strategy as its framework. Customers would then be loyal to the uniqueness of their solutions even when Lines of communication’s increase in price.
PESTLE ANALYSIS OF THE INDUSTRY
Pestle analysis will provide tools for identifying opportunities and threats to the organization within the industry.
Interest and exchange rate affects the consumer spending and this could affect profitability of the firm. Once the purchasing power of the citizens comes down then the company in operation will reduce profitability. The interest rate and inflation rate prevailing in the economy affects also the purchasing power of citizens. On average income distribution and disposable income available among American citizens is fair as compared to other parts of the world. The U.S is a multicultural country which has stable balance of payment and low foreign exchange rate thus any business operating in the U.S will be stable business. With such environment, investment in online booking will be of great concept and viable in the long run.
ICT is the hallmark in today’s economic competitiveness where the ability to transform vast quantities of information into usable knowledge and to use it with efficacy cutting across organizations, markets, and economies. The key identifier of ICT projects across the world id the World Bank. The positive effects on the economy by using computer-based operations to turnaround the economy are in the forms of a multiplier effect in helping improve to economy of the industry. The other leveraging factor is the reduction in overall transaction costs thereby improving the bottom line and the creation of wealth. A major finding in ICT helping the economy was evinced by the following “ICT also impacts the economy in other ways. For instance, a 2002 U.S. Department of Commerce study found that industries using ICT more intensively than average contribute less than half as much to the annual inflation rate than those industries that are less ICT-intensive than average.” (Mundie and Haynes, 2006) They further found that “The ICT industry itself also has a significant impact on growth—one that far outweighs other industry sectors. A 2005 paper found that, from 2001 to 2004, the U.S. ICT industry increased its contribution to GDP three times faster than other goods- and service-producing industries. In 2004, for example, those goods- and service-producing industries raised their real value-added by 3.1% and 5.1% respectively, while the ICT group saw a 14.7% increase.” (Mundie and Haynes, 2006)
The company operates in over 70 countries and they must know or update themselves regarding the rules and regulations of the country they are operating in. these regulations ranges from taxation, competition regulations, licensing regulation and other political risks. Apart from the mentioned factors there are many other factors that affect the business they are operating operation. Therefore the directors of this company have adjusted and made the company fit into the political situation of the countries where they are operating. As mentioned political environment is inclusive of tax laws, government laws, government agencies, leisure groups which forms barriers for businesses operations.
The Middle East wars are affecting the industry at large. This has been complicated by the terrorism crisis that affects the industry in that they can acquire of vital information from the company and use it to commit crimes.
Social cultural threats emerging today are the issue of terrorism. Terrorism has changed the life pattern and styles of many people. Unfortunately issues like ethnocentricity is contributing greatly to the marketing of some tools and services in the various parts of the world. Some cultures may prohibit men from sharing anything with women including buses, aero planes. Just imagine the Taliban of Afghanistan who banned men from wearing short trousers and women from exposing their legs and faces . Such a culture or social setting has great impact on Booking of facilities like restaurants. Therefore before the company understands where they are going to operate in they must know the culture of the people. You may book a lady in the U.S for a restaurant in Afghanistan but on arrival she finds the culture does not permit her to sleep in that hotel (McTaggart D Finlay C & Parkin M ; 2003);
Technology’s contributions have indeed increased dramatically over these years. We all have heard about the wonders of technology in communications. This is the masterpiece in the world of technological innovation. There are softwares designed to support activities.
Every individual in the U.S at the moment is having or hoping to have broadband connections. This has made online booking an easy sight. You need to know the credit card number and the facility that person is booking. This can be online. Therefore for MTO solutions to stay up to date with technological factors they must embrace the ideas of new technology. Also it is important for the company that will be set up to have up to date encryption technology that will assist in setting up and reducing theft of revenue and data by hackers (McTaggart D Finlay C & Parkin M ; 2003);
The company is operating all over the world. Each country have the own laws to complied with. The head finds it difficult to for example convert financial statements prepared in different accounting standards and procedures. These is one of legal constrain facing this company, although accounting standards board are solving this problem though convergence of accounting standards.
Lines of communication operates worldwide with products ranges from solutions to applications and consultancy.
Continual technological updates – Develop programs on HD and avoid fraudsters
Focus on customer needs
Promotions e.g. home visits by specialists.
Highly skilled technicians to keep it running effectively
Investments in key products such as eBean, cabling, data networking and many products
Lines of communication’s integrates horizontally if for example they launch new products or just updates existing products when it has to sell the product to different markets. It is marketed internally. Horizontal integration saves money for the organization as well as provides revenue for the organization. It is contrasted with vertical integration which focuses on cost, differentiation and strategic issues in consideration with corporate strategy and helps organization to be competitive.
Overall Lines of communication operations operated in a very efficient manner but still debts, fraud and licensing problems is still a major issue in their business.
Lines of communication financial information:
ROCE have been consistent in 2005 and 2006 which increases shareholders and lenders confidence however the confidence built when it reached 5.1%.
Operating margin have gone up by 1.9% from 45.5% in 2005 to 47.4%
Revenue a growth has been consistent moving up and down but have dramatically increased by 3% in 2006.
Price Earning ratio has gone up from 19.58 to 29.67 which indicate higher returns for shareholders.
Revenues have been growing at considerable rate even though it has dropped in growth which could be due to increasing competition. Despite of falling revenue the operating margin have gone up significantly but at the same time ROCE have increased dramatically this is because increasing revenue as well as investments in acquiring new businesses without injecting more cash.
Lines of communication exceptional growth have been determined to its well known brand which has been created by using different marketing strategies, targeting all groups and serving all communities with its products and services.
Product – IP phones, internet firewall services, voice services, data networking, dat video solutions, eBeam solutions and support.
Price – solutions can be leased at a cheapest lease amount through licensing when bought together as a package or Competitive reduced the price of its fastest selling solutions.
Promotion – Promoting through their own media e.g. website, a media and other methods.
Place – Multi National, World Wide Web Based in America .
Parity – in top 3 communications in the in America, high market share and growing due to diversification in their products.
People – Talented staff and high skilled and experienced management
Lines of communication’s extensive success are due marketing techniques such as price skimming, penetration pricing and offering multiple products at one price and mostly promoting in its own website. Their success depends on appealing their products to diverse range of users.
The success of Lines of communication is due to intelligent, talented and highly qualified staff and management teams. There are employees with a 7.5 % growth compare to previous year. It’s also building new solution to attract the brightest and effective new employees, and retaining old staff by offering shares, promotion and bonus options.
His management style is more like autocratic and to some extent controllable as management is required to report their performances on a weekly basis for evaluation in terms of organization commitments.
Distinctive competency & comparative advantage
The company distinctive competency is due to their high technology and the options they are giving the customers whether to buy or lease.
The financial position of the company is one of the comparative advantages over competitors. Lines of communication can enter the Asian market in the shortest time possible and precede the European companies in getting the reigns of the Asian companies. A strategic alliance with Asian companies is necessary in order to secure local support and benefit from the infrastructure that is in place while modernizing and improving the industry. This forms part of comparative advantage over industry players and is due to financial resources.
Corporate social responsibility (environment ethics)
As part of environmental codes they have adopted Corporate social responsibility/sustainability Reporting which is one of the means to achieve the goal of sustainable development. Sustainability Report communicates company’s economic, environmental and social performance to its stakeholders such as communities, customers, employees, regulators as well as shareholders. It demonstrates the impact of company performance on society and that of social trends on the company and also the initiative of the company to improve its performance. Sustainability Reporting is publicly accessible and is mandatory in some countries (Government of Canada, 2003)
Economic Performance focuses on the organizational impact on the economic circumstances of its stakeholders. This report emphasizes on:
profit, earning and income of the organization,
investment in intellectual capital such as research and development, employee training, educational initiatives,
community development in terms of purchase of goods at different regional levels, donation to the communities, etc.,
Environmental Performance focuses on the impact of organizational processes and behavior on living and non-living environment. It includes energy inputs, water inputs, material inputs, waste and effluent emissions, air emissions, greenhouse gas emissions, transportation issues, land and ecosystem use, incidents of non-compliances, etc. Any significant environmental issues or incidents faced by the company also make parts of required information
Social Performance mainly focuses on the impacts of organizational policies on its stakeholders, the society and also on the reputation of the organization itself. It involves, health and safety measures practiced, workplace diversity, human resource management and employee relations, labor rights, human rights, business ethics, indigenous people, etc.
Change in the organization
This approach is important to ensure that the focus is on the objectives to be achieved. The ‘how’ can be modified to respond to the particular circumstances. This ensures flexibility in the management of change. In answering the above questions, it is important to understand that change means: (i) moving from a solid present state to a new solid desired state through a period of transition (ii) managing the politics involved in the change process. Change involves crisis and opportunity (iii) managing not only the planning, organizing, directing and controlling an organization but also the power struggles, strategic maneuvering and “cut throat” actions.
The key strategy to facilitating adaptation to change is communication. This should be clear, timely, two-way and must have information and meaning. Management skills required to successfully manage change are:
a) Analysis and identification of issues requiring solution through the change process. Determine the objectives and resultant changes;
b) Formulation of strategies for achieving these objectives;
c) Development and implementation of ways for gaining acceptance of the objectives and the means of achieving them. It is important that those involved in the change process and those affected by change are part of the change process. Successful management of change depends primarily on people management skills.
The following should be noted in implementing change: (i) change must be led and managed from the top. This is leadership role; (ii) Gradually, responsibility and accountability is transferred to staff to increase ownership of and participation in the change process; (iii) a ‘core’ of committed managers who are seen to represent change must be created at an early time.
Management of change is best accomplished through a well developed and coordinated ‘management of change’ program involving directors, management and all employees in the organization.
Specific implementation action plans are:
Announce the change as far as advance as possible
Do not hesitate. Once the change process has started, avoid being de-railed or slowed down unnecessarily.
Keep people focused on the change through newsletters, briefings, announcements, etc. engage in ‘information overkill’.
Be open about change, as far as practicable. Avoid being unnecessary secretive and being seen t have a hidden agenda.
Give people an opportunity to talk and ask questions. Create discussion activities.
Identify and develop people/groups who will manage and support the change.
Give special attention to people who will be affected by change, either positively or negatively.
Involve people in implementing change.
Involve and consult staff unions, etc.
Assume that more may go wrong with the change that originally thought possible.
All of these strategic efforts and collaborations of Lines of communication proved to be successful. Since the prices were so low the bargaining power of this group was not an issue since everything had already been provided by the companies. Many incentives were offered to the buyers so they felt they were getting a good deal for their money.
These efforts show that Lines of communication were successful in creating a cost conscious effort in releasing the new products. Even though they spent capital on launching the product, they kept the price of the solutions low thereby increasing sales. The incentives they offered increased the buyer’s interest. Also, it was standardized to where many suppliers would want to carry the solutions.
Brand loyalty for the solutions was produced from the marketing effort. The company was able to reach an untapped market. This helped to increase unit sales. The superior service that Lines of communication offered through the extended warranty program helped to incite future interest of the buyer.
It’s clear that Lines of communication established itself successfully as a competitor in a foreign market. The company successfully became a trusted name throughout Europe and North America. They built a bridge with its collaborative effort. This in turn helped Lines of communication to project a more professional image and increase sales. Also, new markets of people were gained in the release of the solutions targeting businesses.
Lines of communication took the time necessary to get to know the foreign market it was branching into in Europe. Careful study was used to learn the cultures and lifestyles of customers. Collaboration with an established European company gave them the competitive edge they needed to prove themselves as a leader in foreign markets.
Also, Lines of communication was able to glean overwhelming success in the European market in less than two decades. Their production and sales have drastically increased in recent years. Visible increases in supply and demand are evident in as few as five year spans of time.
Lines of communication have projected future plans to keep expanding. They keep strategic goals for production and sales in place in order to meet their goals. Also, they continue to stay up to date by targeting new markets that were once untapped through their innovations. Lines of communication use several successful business strategies to warrant being a world leader in the industry.
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