Business Case Study Seminar A
Mid-American Christian University
ABC Communications Corporation was established in 1982, this was the year AT&T was “broken up” by the government and thus created open competition among the telecommunication industry. ABC Communications Inc. began a start up regional business company servicing customers in the Phoenix, Arizona area. Five years ago, senior management made the decision to operate nationally. The business model they chose was multi level marketing, synonymous with network marketing. The best way to understand ABC Communications is to realize that they are not a national carrier; ABC is a customer of the national carriers and pays the national carriers for the long distance services to ABC customers. Similar successful multi level network companies such as Amway, Mary Kay, Avon and Arbonne utilize the multi level marketing compensation method. The performance data for ABC during the past five years is represented in Exhibit 1. The customer base has expanded rapidly, especially over the past twelve months and now represents a powerful force in the long distance telephone industry. Despite the positive sales, ABC has many concerns heading into next year. Many questions plagued the upper management, such as how to keep the momentum going in recruiting independent distributors, while avoiding the inevitable fallout of distributors over time. The author has quoted a rate of 80-90% burnout rate among the distributors of this company. This is partially due to the slow amount of time it takes to obtain a substantial income. Many of the distributors become disinterested and move on to other avenues or other multi level marketing opportunities.
ABC Communications Financial and Marketing Performance
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