BT Group Bringing External Innovation Inside

Document Type:Case Study

Subject Area:Business

Document 1

The company which has the largest market share in the most countries it operates has been doing well in terms of generating revenues. However, with deregulation and coming up together of all other competing firms, competition became stiff and the company top officials were to come up with a way out of this competition which threatened its revenues. Members of the top management concluded that for the competition to be fixed, then, the company should seek to come up with new products (innovate) which are not specifically made by the organization internally. Thus, the company was to outsource innovation and incorporate it into the organization to ensure its continued market dominance. The following report will seek to critically analyze the strategies adopted by BT Group in reference to global or international corporates. The company deals in mobile services, information technology, broadband as well as Television services. This report will base its analysis from the study of the case, “BT: Group: Bringing external innovation inside” by Felipe Monteiro and Donald N. Sull, cited in De Wit and Meyer (2010: 837-861). The analysis will be done by providing answers to the following questions: external innovation and competitiveness, vertical integration and competitiveness, organizational culture and innovative disruptive innovation while making reflection at the conclusion. Table of Contents Executive Summary 1 External innovation and competitiveness 1 Forces Developed by Porter as Applicable in BT Company 2 New Entrants 2 The Power of Buyers 2 The Power of Suppliers 3 Vertical Integration and competitiveness 3 How BT Company made use of vertical integration and diversification to maximize profitability 4 Competitiveness of BT 5 Critical Analysis of the ability of the BT’s Top Management on Brining in External Technologies in core areas for the company future 5 Personal Reflections 6 Conclusion and Recommendations 7 References 8 Question 1 External innovation and competitiveness In this part, I will focus on the impact or effect of regulation and deregulation, combination or convergence of products as well as the competitive intensity.

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On a different note, converge refers to a combination of a wide range of goods or services (products) to form one comprehensive product aimed at increasing competitiveness and also which will provide the user with more satisfaction. In the context of telecommunication, convergence means putting together the video, texts, voice as well as data in improved applications or devices. Such a convergence rose in the UK when the industry of telecommunication switched from the analog type of services and adopted the digital services (Monteiro & Sull 2010, p. The competition intensity, on the other hand, concerned how many companies were distributing or offering telecommunication services. The transition in the industry of telecommunication in the UK created an opportunity for new entrants into the industry who brought in more competition to the existing firms.

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The current state of competition may not see other players enter the market. The entry into the industry necessitates the government to approve as well as regulations. However, the dominance of BT Company from the year 1999 and the unavailability of government in the market have attracted interest from new providers of service with more innovated products and therefore it would be prudent to conclude that the threat of fresh players into industry is low. The Power of Buyers The power of bargaining of the buyers in BT is very high in the UK. The company has a base of customers of more than 5 million in the UK market while its closest competitor Virgin has customers approximating to 8m. BT Company contracts several different suppliers for the production materials so as to choose the best from the list so as to provide products of high quality.

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The company is not therefore obliged to one particular supplier. Moreover, BT only selects those suppliers who will be able to supply competitive materials in quality which will allow delivery of standard products to its consumers too. Thus, the power of the suppliers in the case of BT is low. Question 2(a) Vertical Integration and competitiveness In this question, I will seek to discuss in details how BT Company has used diversification of products and integration to achieve its status as one of the most highly rated providers of telecommunication services. Some of the joint companies and mergers used by the BT firm to ensure integration of the market include AT & T which helped to reduce the competition BT would have faced in the United States would it have been operating autonomously.

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Such an alliance also helped create a great base for customers in the US. Such a strategy helped to ensure that BT firm dominated the market and did not give an opportunity to the rivals (Monteiro & Sull 2010, p. While understanding the needs of the consumer, BT Group ensured that the products offered are of high quality which allowed the company to make high revenue. Diversification, on the other hand, refers to a strategy whereby a global entity comes up with a new product or ventures into new business markets for its existing products with the aim lowering the level of risk in its investments. Product differentiation, on the other hand, refers to a strategy in marketing which is used to reveal differences in products. It shows how products from diverse manufacturers or sellers serving the same purpose are unique from each other.

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To establish itself as the leading provider of services in the industry of telecommunication, BT has used varied strategies raging from differentiating its products to being a leader in terms of cost. The company has established itself as a leader in branding of its product which important in differentiating products from the rivals’. The ability of a customer to differentiate a product from those of the competitors give the company an advantage in terms of competition which BT has enjoyed as it has sought to ensure its products are always unique. Competitiveness of BT The competitiveness of a company is measured using the base of customers (Porter 1985, p. In contrast, in the industry of telecommunication, joint companies and mergers are used to increase the competitiveness of a company. Diverse alliances formed in the telecommunication market are just an explanation of why they are important to ensure an edge in competition.

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They help establish a base of customers in the foreign markets thus lowering competition from the other local companies. Alliances are also important since they have an experience and the knowledge of the local market which is used by the merger other than starting an entirely new company in that new market. The management of BT group chose the companies which possessed the right abilities to carry out innovation including Siemens, Huawei just to mention but a few. The criteria for choosing these companies were based on their capacity to partner with those companies in small in size in order to bring solutions to the BT Company. The approach by the top management was to ensure continued success and innovation in their current operational market by making use of their core competencies while utilizing the alliances with the small companies in order to attain a concrete solution to its customers.

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In addition, the company management made use of the internet in order to negotiate for alliances so as to deliver services for cable as well as services of TV to increase the experience of the customer while bringing innovation in the company processes. The company has developed into broadband technology making a significant advancement from the narrowband. For instance, the company has developed products which have made a landmark all over the world with the example of the services of its network which is diverse and has reached very many customers. The IT structure of the company has also helped it to cut costs by a large margin thus offering affordable products. Personal Reflections The company’s approach of making use of its core competencies to deliver services to its customers such as offering solutions which are real-time through partnering with the smaller companies as well as the services of self-service has been crucial to the success of the company success.

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Moreover, implementing innovation has been also a success factor to the organizational operation since it helped lower the costs incurred thus offering the products to the customers at affordable costs which in turn increased sales and thus high-profit margins. BT Company also has effectively made use of mergers and joint companies in gaining foreign market experience and understanding new unknown technologies in such markets. BT Company has also overcome great challenges such as the regulation setback to clinch to the top of the industry. Innovation is central to the success of the company as it has helped in cutting costs. It has also helped the company to command a significant share of the market through improved delivery of services leading to customer satisfaction. I would recommend that the company to expand its operations beyond the 170 nations it is operating in and reach every nation (195) to offer wireless connections (hotspot) at affordable prices.

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The other recommendation is that the company to increase in the number of personnel in the company to ensure full time (24 hours) services to the customer while meeting the expectations of the growing base of customers. Kramer, R. and NíShúilleabháin, Á. Investment drivers for global telecommunications: Investment structure and structural trends in multinational services.  Globalism and localism in telecommunications, pp. Monteiro, F. Y.  Building the network as a platform for integrated solutions and service innovations in the transition to the next generation of telecommunications: the case of BT(Doctoral dissertation, University of Sussex).

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