BT Current Business Strategy Coursework Example
BT’s current business strategy
BT is one of the world’s leading communications services companies based in the UK and it operates in more than 170 countries worldwide. In UK, BT commands a 61% share of the landline business in the telecom market and employs over 100,000 staff.This article identifies and analyzes BT’s current business strategy and how its environment has influenced, and shaped the strategy. It discusses some of the Company’s information needs and how the needs drive the design of its management and accounting system.
BT group strategy is to be a better business with a better future. In order to achieve this strategy, the company aims to address strategic priorities as follows:
- Being a responsible and sustainable business leader.
- Being a global leader in providing quality products and services.
- Driving broadband-based consumer services.
- Being the best network provider.
- Being the best brand for the UK SMEs.
- The wholesaler of choice.
BT’s business strategies can be analyzed using Ansoff’s Matrix which involves the use of four different approaches i.e. market development, market penetration, diversification and product development. To be a driving broadband-based consumer service provider, the company has embraced the use of diversification to come up with new products and services that meet consumer needs. For instance, BT has developed a range of new services such as video-on-demand services and home shopping. It offers a comprehensive broadband with more packages. BT focuses on reducing prices for wholesale internet and increase the sale of mobile services. The Company has embraced product development strategy in order to enhance quality. For example, there is a newly BT Totally Unlimited Broadband, free BT Home Hub and also the free BT Wi-ﬁ connectivity. This helps the Company keep existing customers and attract new consumers. Product development focuses on identifying the consumer needs and producing a product that matches those needs.
BT Company has also emphasized on market penetration which increases the market share of an existing product or by selling new products in new markets. For instance, the newly launched TV with 22 extra TV channels targets households currently subscribing to basic pay-TV channels from Sky or Virgin. Moreover, the company is currently launching another Sportchannel for customers who may want a wide choice of sports channels but at much better value.
Bowman’s strategy clock helps analyze a company's competitive position in comparison to the other competitors in the industry(Grant, 2008). It determines competitive advantage held in relation to differentiation advantage or cost advantage. The core strategic options in this case include low; price with low added value, low price, differentiation, hybrid, focused differentiation and low value with standard pricing. BT company occupies the position of hybrids in order to become the best network provider.BT offer products at a low affordable cost, but these products have a higher perceived value than those of competitors. Their network in the UK is a critical national asset and they have continued investing in it and by providing the best services. High levels of service availability and ﬂexibility, combined with nationwide coverage, make Ethernet services of the Company an attractive choice for customers (Frost, 1985)
BT Environmental Analysis
BT Business environment includes all the factors within or outside the business that may affect it positively or negatively. The internal business environment include factors such as management, workers, capital, products and services. The external business environment encompasses all factors that affect the business but cannot be controlled by the business. Such factors include political, social, economical and technological factors (Worthington and Britton2006). They are analyzed using the PESTEL model as follows:
BT External Environment
BT operates in a market that is prone to continuous substitution of technology. In order to survive in such an industry, BT is currently involved in technological investments such as the small cell innovation that is aimed at boosting the coverage of the operators. Technological advancement within the ICT sector is at the forefront in the development and implementation of technologies that will be crucial to the effective attainment of the product development strategy. The fundamental drive towards growth in the company's product development is linked to the speed in which new technology is implemented. The company plans to invent new technology in order to extend its broadband. It carries out technology research activities that aim at developing the efficient technology for quality product output(Kaplan & Norton, 2001).
The political factors involve the degree to which the government influences the business in terms of policies concerning tax, foreign trade, environmental and labor laws(Worthington & Britton 2006. BT being a pioneer of the clean revolution, has set its own goals to meet the country’s target by the year 2020.
Legal factors such as regulations imposed by the government affect BT’s strategic implementation. For instance, wholesale prices are regulated in the U.K. This regulation affects the ability of the company to effectively compete with its competitors in the market, and maximize revenue. Moreover, licencing requirements in foreign countries hinders the ability of the Company to expand its market. Besides, the Company has a legal obligation to comply with the International Financial Reporting Systems as prescribed by the European Union. Political and legal factor can be combined. They act to regulate strict competition and wholesale prices. For instance, BT has to maintain set standards and regulations that are required in the market to enable it operate smoothly.
Economic conditions especially in the UK have hindered growth of the company in the recent years. For example, there has been low business activity characterized by low disposable income among the consumers. This has led to a reduction in demand, thus affecting the sales of the company products. Campbell & Craig (2005) assert that other economic factors affecting a Company may include inflation. The level of inflation in a country may affect the price at which the products are sold. Therefore, an increase or decrease in the level of inflation within the U.K and other foreign countries that form the market of BT Company, affects the pricing of BT products. BT buying power is high whereas telecom product price are regulated.
Finally, the social factor and demographic factors comes into play. This implies that the Company should conduct a market research and determine the kind of products that would sell before venturing into different markets. For instance, People spend more time at home etc.
Michael Porter model tries to assess and analyze the competitive strength and position of an organization or a corporation or business organization within an industry(Stern & Stalk1998). The analysis has several classes which are discussed below in relation to BT Company.
Supplier power will assesses how suppliers drive prices. Supplier failure is likely to affect the operation of the Company. For instance, it may compromise the customer commitments, breach of contract or revenue loss. Therefore, there is need to analyze the power of supplier. BT has few suppliers who are trustworthy and who are more powerful than other suppliers. They choose suppliers using an established set of principles that makes sure both the company and the supplier act ethically and responsibly. BT checks that the goods and services they buy are made and delivered in an environmentally responsible way. There is also the strength of the distribution channel to help avert any possible supplier competition. For instance, if BT gets its raw materials from a firm and the firm exists as a monopoly, there would be no option but to buy from them.
Buyer Power is a major driving force to BT. Buyers are powerful in the market since they have a range of products to choose from. For instance, BT faces completion from around 114 Companies offering TV and other related services. According to the BT Annual report released in the year 2013, the biggest competitors of BT in the market include SCC, Phoenix IT ,Computacenter, Dimension Data, Kelway, and Logicalis.
There is threat of Substitute products due to the presence of more competitors that produce substitutes. BT is obliged to put in place measures and policies that aid in pricing policy of broadband internet. For example, it has come up with a unique software product that is cheap and affordable to all people in the UK. This is aimed increasing quality and reducing chances of consumers shifting to other products
Threat of New Entry has been controlled by the licencing requirements that require every company to adhere to rules and regulations in the market. This has affected the ability of other firms to enter the market. Hence, the competition might be high but the rate at which new firms enter the industry is controlled by factors such as licencing requirements and availability of capital.
One of the essential internal factors is the customer service. An improvement in customer service enables BT to reduce the number of faulty services and products. For example, the Company uses ‘Right First Time’ as their key measure and measures how frequently they keep promises they make to their customers. Effective customer service enables BT Company to acquire a larger market share in the U.K and other European countries. This is an economical benefit since the Company is able to generate more revenue to the loyal customers (Chartered Institute of Management Accountants, 1999).
The positive performance of BT Company has been attributed to the skills and hard work released from its employees. The company is currently investing more on its employees and giving them adequate skills in order to enhance high economic benefit in form of productivity. Employees make connections and create possibilities of value delivery. BT provides benefits such as the pension scheme to its employees as a motivating factor. The company also improves the engagement of its employees by conducting annual survey on employee attitude. This is a great motivating factor that eventually increases quality of output.The company also engages in actively incorporating new skills and roles to their staff. Since April the year 2005, more than 20,000 BT staff has gone through new training. (Robinson, 2007)
Information Need Analysis
Information need is the desire for a group or individual to search for information that satisfies their conscious or unconscious need (Prasad 2000). Management accounting involves the preparation of periodic and timely statistical and financial information to business managers to be used in making day-to-day and short-term managerial decisions (Grimsley, 1980). In this section of the paper, BT’s information needs are discussed, and they include:
Technological information is very essential and helps the company to keep up with the increasing technological advancements. For instance, after the innovation of lead lighting, the company studied the technology and implemented it in lighting to reduce their energy consumption. The management need to be aware of the emerging technology so as compete with the other companies in the sector. The emerging technology has helped the company in achieving its goal of product development. Moreover, an advanced technology enables the organization to operate in an efficient internal structure by employing the best management information system (Burns & Stalker 1961).
Legal information need involves having good knowledge about the law governing the operations of companies and may be global, regional or local. For instance, laws that involve price controls and liberalization have caused the management of BT to plan on how to devise mechanisms of developing high quality products at low costs. The company also needs to develop effective competitive moves against its competitors in the market. Liberalization has resulted into more competitors in the industry(Robinson 2007). The managers are the pillar of an organization, they influence business both directly and indirectly. Therefore, they should be concerned about the policies of the business, objectives of the business, production methods and capacity, managerial attitude etc. The changing environment influences the customers, public, competitors, marketing intermediaries and suppliers. Different customers influences the organization since they are directly involved with the product. Therefore existing changes should conform to their needs. For instance, there is rapid growth in technological use, this calls for BT to adopt strategies to avert any possible competition. Focus must be on customer needs that keeps on changing, level of marketing and the competitor.
Information about the competitors is used by the company in determining the developments of their competitors to avoid being wiped out of the sector. The management should analyze the new method and technological advancements employed by the competitors and how the impact to the consumer. The management should also check on the threats caused by new entries in the market. This is aimed at maintaining and increasing the customer base(BT Group 2013).
Proper management of an organization is assured when different management systems are properly maintained. These systems may include, Information Systems, IT Management Systems, Manufacturing Systems, Retail Systems, Accounting Management Systems, and Financial Service Systems (Grimsley, 1980). Organizational structure consists of all activities within the organization that shape the progress of the organization. The organizational culture is the norms and the establishing ways of doing things within the organization(Frost, 1985). The structure of an organization is dependent on its objectives. It determines the modes of operation of the organization and allows division of labor and responsibilities. The structure may divide the business into branches, workgroups and departments. BT employs several organizational structures to achieve the objectives of its strategy. These include; Functional structure of the Company determines the division of employees according to their area of expertise. For instance, software engineers have their own department and would not be staffed together with sales people. This leads to efficiency within the department. However the work of each department is dependent, and there is a need for proper interdepartmental cooperation(Schein, 1985).
Organizational structure where there is division into different branches with each branch having all the required resources is known as Divisional structure (product structure).For instance, BT has many branches worldwide based on geographical location and each branch has the resources to carry out their functions(BT Group 2013). This increases efficiency and productivity. BT has a list of healthy industrial relations and an effective relationship with the recognized unions in the UK like the Communication Workers Union (CWU), and other works councils in Europe.
BT has several branches located in different geographical locations, and has a different function. The examples here include; media houses for television broadcasting, technology centers for production and innovation of new technology like production of solar panels, and windmills among others. This explains Matrix structure which is a combination of functional and division structure where the organization is divided into different branches, but each branch specializes on a different role. This structure enables BT Company to employ specialization skills of production and ensures proper channels of communication, thus efficiency is increased (BT Group, 2013).
In conclusion, it is evident that in order for BT Company to achieve its strategy, it must properly implement the laid down procedures and organizational management to achieve its overall strategy. It has given priority to sub strategies such as: being a responsible and sustainable business leader; being a global leader in providing quality products and being a broadband-based consumer service provider. The management needs the right information to enable them assess the environment around it to ensure growth and success in achieving its strategies.
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