Essay Instructions: Building on the paper below provide research for the following questions:
1. Create an argument for diversification of your business that will be presented to the board of directors or business investors.
2. Develop a strategy for diversification indicating the products and industries for the diversification and how synergies may be gained from the diversified activity.
3. Identify and discuss the foreign market that the company should enter and discuss the strategy it should use to enter the market.
4. Discuss the challenges that company may face in the foreign market, and how it might respond strategically to minimize the impact of these challenges.
5. Create a scenario when it would not make sense for the company to diversify or expand into a foreign market. Provide support for your rationale.
6. Assess how the company will create a business environment conducive to ethical behavior.
Current papers to build upon:
Paper #1
A company’s success or failure can be directly associated with its ability to develop a strategic plan for the business. As important as this plan is to the birth of company, it is even more important for the leadership to identify its successes and failures, and implement changes to the plan as needed or as the market dictates. Strategic planning is an organizational management activity that is used to set priorities, focus energy and resources, strengthen operations, ensure that employees and other stakeholders are working toward common goals, establish agreement around intended outcomes/results, and assess and adjust the organization's direction in response to a changing environment. It is a disciplined effort that produces fundamental decisions and actions that shape and guide what an organization is, who it serves, what it does, and why it does it, with a focus on the future. Effective strategic planning articulates not only where an organization is going and the actions needed to make progress, but also how it will know if it is successful. (Balanced, 2013)
There are many different frameworks and methodologies for strategic planning and management. While there is no absolute rules regarding the right framework, most follow a similar pattern and have common attributes. Many frameworks cycle through some variation on some very basic phases: 1) analysis or assessment, where an understanding of the current internal and external environments is developed, 2) strategy formulation, where high level strategy is developed and a basic organization level strategic plan is documented 3) strategy execution, where the high level plan is translated into more operational planning and action items, and 4) evaluation or sustainment / management phase, where ongoing refinement and evaluation of performance, culture, communications, data reporting, and other strategic management issues occurs. (Balanced, 2013)
Mission Statement:
Provide our customers, partners, stakeholders, and shareholders with the most innovative products, best customer service, and a positive atmosphere for our employees.
Vision Statement:
To always be on the forefront in the technology industry. Deltacom Technologies is committed to providing the most innovative products, best customer service, and a positive workplace for our employees. At Deltacom we believe our employees are the basis for our business’ success. We are committed to providing our employees with the benefits and resources they need to make the business a success allowing the company to produce quality products that are both innovative and forward thinking. Through strategic partnering with other leaders in the industry we will be successful in our future.
Key Objectives:
Human resources; the procurement of talented, resourceful and innovative employees. The basic fundamental part of any organization is the people that formulate and make the business a success. The leadership at Deltacom believes that our employees from the bottom to the top are our most beneficial resource. We strive to provide these employees with benefits that make their lives easier to manage and to eliminate life concerns as much as possible. By taking this approach our employees are happier and more inclined to give back more to the business as needed. Our employees are also provided the best in computers, software and other resources to ensure they effectively execute daily tasks in the workplace.
Financial Aspects; At Deltacom we believe in fiscal responsibility from all aspects of the business. We are committed to moral and ethical practices as outlined in the Sarbanes-Oxley Act and other federal guidelines. Our employees will benefit from competitive pay, bonuses and incentives that meet or exceed industry standards. We will always strive for excellence in maintaining these principles.
Operational Aspects; Deltacom is committed to efficient operational functionality. Some of the cost-cutting measures is to be LEED certified as a green company. This will be executed via the capital investment in solar technologies and other reusable fuels. Our campus buildings have been built to ensure the most efficient use of cooling and heating techniques and efficient use of the space these buildings provide. It is our belief with continued financial responsibility we can eliminate the need to downsize headcount in the future unlike most businesses that experience growth and contractions in the marketplace. Again showing the importance of our employees.
Innovative, quality products; as a technology industry leader our products are what make Deltacom standout from our competition. After employing the best minds in the business we are able to focus on developing the best, most innovative products in the marketplace.
Strategic Partnering; Deltacom leadership is committed to strategic partnering with companies that have similar missions and visions as ours. We believe these partners are critical to our success and growth in the technology sector. Other stakeholders include manufacturing partners, product resellers, and parts suppliers. Teamwork is key ours and our partner’s success.
Marketing Strategies; As with the other objectives discussed earlier Deltacom will pursue and maintain marketing campaigns that will best benefit the company today and in the future. We will use different media to portray our marketing campaigns to include but not limit to television, social networking, active sales models, and strategic partnering.
Public Relations; Maintaining positive public relations is directly tied to marketing and developing strategic partners. Our focus for this objective will be to chair industry standards committees, engage local, state and federal governments to be active in the development of these standards for our business.
As you have read our business objectives are tied directly with the company’s mission and vision statements as they should. Taking a different approach to the business Deltacom will achieve success as outlined in these statements versus focusing solely on revenues and profits. We seek to establish and grow the company based on our employees, partners and products.
Paper #2
Environmental Scan
The environmental scan is focused on identifying and analyzing the threats in the external environment. There are factors outside of the company that can reduce revenue or profits for the future. These can be obstacles, externally-driven changes or just competition (MindTools, 2013). Deltacom faces a number of such threats. The main threats in the external environment are competitors, regulators, and economic threats. Competitors are a significant threat. Deltacom operates in eight southern states, competing against other national and regional players. Deltacom has been purchased by Earthlink and renamed Earthlink Business, indicating that it competes for business with corporate customers (Deltacom.com, 2013). The competition includes some major companies, like AT&T, Verizon and many others, in addition to smaller, more regional players. Competitors will use all manners of enticements to attract consumers potentially affecting Deltacom’s profit margins.
The second major environmental threat is regulatory. While all businesses face basic regulatory burdens in the form of human resources and environmental laws, the telecommunications industry is one of the most heavily-regulated industries. The industry is governed by the Federal Communications Commission (FCC), a body that among other things investigates the conduct of telecommunications firms and auctions off wireless bandwidth. Because most of Deltacom's business is landline-based, the company is not as heavily-impacted by regulatory burden as many other firms in the industry.
The third major environmental threat is economic. When the economy is struggling, firms will often reduce their expenditures on items, including communication services. It could be argued that a sluggish economy represents an opportunity to grow telecommunications businesses as a substitute for travel, but when businesses are contracting and closing, the net effect is at best a wash, and more likely a revenue downturn for firms that service these other businesses.
Strengths
Deltacom does not have many strengths. The company was bought by Earthlink, giving it two main sources of strength. First, the Earthlink brand is more widely-known as this was one of the tech companies that rose to prominence in the late 1990s. Second, Deltacom has a presence in eight states, and has built up a network of customers in that region ??" this geographic base is a source of strength should the company seek to improve its share, building on its established reputation. The company has a group of talented, dedicated employees who can help recover operations after a difficult period surrounding the Earthlink acquisition.
However, the challenge for Deltacom is that many of its competitors possess the same strengths, and in some cases more strengths. Larger firms have greater capacity to invest in technology upgrades, for example. Earthlink itself is struggling after the purchase. It lost money in the last fiscal year, and with the debt it assumed from Deltacom, Earthlink has seen the book value of its equity decline in the past couple of years. It does not look like there is much financial strength at present for the company, but compared to pre-acquisition, Deltacom is in a much better place financially.
It will be difficult for Deltacom/Earthlink Business to leverage these strengths in the marketplace. Their competitive position as a smaller, regional firm is such that they need to leverage the familiarity of the Earthlink name in one of two ways. They need to either be a low cost provider or a high-end provider. They should not seek the middle ground, taking on the major competitors head-to-head (QuickMBA, 2010). Earthlink does not really have the money to invest in technology to be a high end player, so management should focus on developing a low cost strategy that sees them undercut the major players in order to build the business. They should still provide strong services, but must keep costs lower than the national competitors.
Significant Competitor
The industry leader in the telecommunications business is AT&T. This company is much larger than Deltacom, and therefore has more capital to invest in superior technology. AT&T is a national telecommunications company, which can be viewed as a strength or weakness. AT&T offers a wide range of business services and unlike Deltacom has a strong presence in wireless and even handheld devices making AT&T a tough competitor. From a human resources perspective, AT&T has more capital to attract top industry talent, which challenges firms like Deltacom, as well.
The best strategy for Deltacom is to avoid a head-to-head competition with AT&T and other larger national providers on their company's strengths. Due to AT&T’s large size, there is a strong risk that a customer may feel like just another number therefore they might not be able to provide to personal touch and outstanding customer service as a smaller company may. With Deltacom, that need not be the case. Deltacom can offer something that AT&T cannot ??" customer service. Being a southern company operating in the south Deltacom can focus on providing its customers with excellent customer service in a southern hospitality fashion. This is important as smaller companies like Deltacom, can offer the type of service that southerners expect, in contrast to the impersonal service offering of a major competitor like AT&T. This is a source of competitive advantage for Deltacom, especially if it can undercut AT&T on price on certain key products. This strategy allows Deltacom to win customers who are dissatisfied with the major firms, while carving out a niche as a low-cost player with great customer service.
Recession Strategy
The last recession nearly wiped-out Deltacom, leaving it vulnerable to takeover, one that perhaps was so bad for shareholders that legal action is being investigated (Korsinky LLP, 2010). A recession will have the following consequences for Deltacom ??" reduced revenues, tighter margins and an increasingly hostile competitive environment. Deltacom will need to take drastic measures to prevent a repeat of the last recession's devastation.
The first step to reducing expenses will be to cut staff. This is necessary because costs will need to be reduced in line with revenue as the company's margins are too tight to absorb any sharp revenue declines. Further, Earthlink is already losing money so the cuts might have to be fairly severe. The next step should be to contact customers in an attempt to explain how much their business is valued, to communicate a desire to work with customers who are also struggling in the economic downturn. This drastic step is necessary as larger companies are always looking for new customers, and they have the cash reserves to undercut Deltacom’s business. Thus, Deltacom needs to remind customers of the high quality of its service and the importance of partnering with a local company that understands their business. Further, Deltacom needs to prepare for a recession by paying down as much of its debt as possible. It needs to do this because firms with a high degree of leverage are most vulnerable in an economic downturn because of the need to divert cash flows to interest payments. Deltacom needs to pay down the debt during the good times so that it can reduce as much risk as possible for the harder times.
Global Competition
Global competition is an interesting issue in the telecommunications business. Usually for national security reasons, most governments have strict regulations in regards to telecom companies. However, there is a move to open up telecom and foreign players are interested in the US market. Likely, as the US pushes for access to foreign markets, it will have to reciprocate. That will only serve to bring more competition to the doorstep of Deltacom. This competition is likely to be just as strong as the domestic competition, but just as mainstream in its approach. This is a strategic factor for the Deltacom/Earthlink’s business future. Deltacom needs to influence its customers with its service-first southern charm strategy and leverage it. Global competitors will try to steal customers with attractive pricing and service offerings, but they will likely struggle in the customer service part of their business. There is little doubt that if the Deltacom strategy works against the likes of larger telecommunication’s providers like AT&T, it will work against British, German or Canadian companies as well.
In closing, Deltacom/Earthlink will need to develop a strong business strategy if it intends to continue providing communications products. This strategy will likely need to be revisited quite often in an attempt to keep pace with the competition.
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