Fundamentals of Management – BAD 201
Boom and Bust in Telecommunications
1- The strategic plan adopted by level 3, Global crossing and 360 networking failed due to several reasons. First, overvaluing the opportunity found in the market by wrong analyzing of the market and claiming that there is 1000% growth in the internet traffic in the year that was found to be 100% which is way less then what they thought. Second, the heavy competition between rivalries since they provide the same commodity (Fiber Optics) and all was using almost the same strategy (build massive networks, cut prices) that caused them to focus only on how to compete with each other.
Third and Mainly, Not expecting the Discontinuous change in technological field in the general environment, an entry of a powerful substitute that can satisfy the same need such as broadband and internet through satellite with a very low switching cost for the customer, that almost demolished the need of the fiber networks which was the backbone of the companies strategies and their main road to dominate the market, that appeared in 2002 when the usage diminished and reached 3% of fiber that have been built
2- Those managers suffered thinking myopia and a lack of prediction on the short term future because they focused their efforts and thinking skills on how to fulfill the imagined bulky demand in the market and not taking into consideration that radical discontinuous technological changes may occur and ruin their day dreams within a couple of months and that weakness created by those managers by not paying attention to the monitor role in the information roles which is collecting information’s about the market and the new inventions and projects that may enter and effect the market and those information’s are essential for every manager to know or at least informed about
Moreover, they analyzed the opportunity in the market by overvaluing it by depending on...
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