Boom and Bust in Telecommunications Essay Example
Boom and Bust in Telecommunications Essay Example

Boom and Bust in Telecommunications Essay Example

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  • Pages: 2 (326 words)
  • Published: August 18, 2018
  • Type: Essay
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The strategic plan that was implemented by Level 3, Global Crossing, and 360 Networking did not succeed due to a number of factors. One of the main reasons was that they overestimated the potential of the market by incorrectly analyzing it and asserting that there would be a 1000% increase in internet traffic, whereas it turned out to be only 100% - far less than what they had predicted.The heavy competition between rivalries, who all provided the same commodity of Fiber Optics and utilized similar strategies such as building massive networks and cutting prices, caused them to focus solely on outcompeting each other. However, they did not anticipate the discontinuous change in technology that introduced a powerful substitute, such as broadband and internet through satellite, with a low switching cost for customers. This substitute almost demolished the need for their previously successful fiber networks, which

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was the backbone of their strategies. Managers suffered from myopia and a lack of prediction for the short-term future, focusing only on fulfilling imagined demand instead of considering the possibility of radical discontinuous technological changes. By overvaluing market opportunities and overestimating growth, they failed to take into consideration new inventions and projects that could disrupt the market. Prior hypothesis bias led to managers over-committing to their plans, even when they were not viable or profitable. These managers could have had different outcomes if they had analyzed market opportunities correctly and been entrepreneurial by building innovative technology that could compete in the long run, instead of focusing solely on competing with each other.

One approach to improving the company's competitiveness is to make strategic resource adjustments. This could involve reducing funding for

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new network construction, since the current networks can handle the current demand. Instead, resources could be directed towards supporting and financing the development and innovation department to improve short-term competitiveness and foster long-term innovation. Additionally, advertising and promotion efforts could be focused on positioning the company as unique, differentiated, and superior to competitors.

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