AT&T, founded in 1983 has been one of the pioneering telecommunication multinational corporations with a diverse customer base. The company ventured into vertical integration in order to obtain the benefits of expansion and escalated its product offerings by manufacturing phones, launching satellites, devising switchable equipments and providing an range of customers numerous services. However, the integration led to an plethora of problems leading towards an ultimate failure. Vertical integration is essentially described as a process which enables the company to get a competitive advantage by means of differentiation. However, the process irrespective of its inumberable benefits is flawed because it sometimes creates unfair competition. In order to defend the interest of the competition, the government has set in place antitrust laws. According to antitrust laws put in place by the government,the unfair competition and the act of setting premium prices without considering the buying power of the suppliers is condemned. Antitrust laws discourages monopolistic competition which elimi...
Apart from Antitrust laws, there are several other laws that promote fair business practices. The Robinson-Patman Act prohibits price discrimination. This act ...
Horizontal integration brings organizations under one organization, and system. Vertical integration brings together all or part of a production procedure under one management, the fundamental principle of vertical integration is supplying a set of health care services to satisfy the needs of individuals in a specific group.
This organization belongs to the oligopoly market structure. The oligopoly market structure involves a few sellers of a standardized or differentiated product, a homogenous oligopoly or a differentiated oligopoly (McConnell, 2004, p. 467). In an oligopolistic market each firm is affected by the decisions of the other firms in the industry in determining their price and output (McConnell, 2005, P.413). Another factor of an oligopolistic market is the conditions of entry. In an oligopoly, there are significant barriers to entry into the market. These barriers exist because in these industries, three or four firms may have sufficient sales to achieve economies of scale, making the smaller firms would not be able to survive against the larger companies that control the industry (McConnell, 2005, p.
Vertical integration is when an organisation own companies on two or more levels of the buying chain. Examples of this can be found within “The Big 4,” all of them own an airline, travel agent and a tour operator. The companies have until recently used different names for their travel agency, airlines and tour operators, but now they are power branding their companies so that customers can see whom they are booking with. An example of this is TUI UK, which has rebranded its companies using the Thomson name.
Horizontal integration consists of expanding a service through buying the competence or joining them to create a stronger company that provides the same service. Vertical integration is when a company creates or manages its own providers or created or manages the distribution services. When we think, how a healthcare facility works, we can easily imagine the concept of a human body, going from head to the toes. In the same ways, healthcare facilities need a network of providers in almost every healthcare service. The way that organization deals with providers and distributors to assure the outcome of a service or a produce for a population, it is called integration and integrated organization is also called Integrated Delivery Systems (IDS).
The oligopoly market is a few relatively large firms that have adequate to significant market power and that they recognize their interdependence. Each firm know that their choice of actions or changes in their outputs will have an effect on other firms and in response to the change, other firms will take actions accordingly to adjust therefore will affect its sales and revenue. (Thomas 428) To closely define, the oligopoly characteristics consist of (a) a few large dominant firms; (b) a product or services either standardized or differentiated; (c) firm’s decision on price and output affect the demand and marginal revenue of other firms in the market and vice versa; and (d) the entry barriers to become a dominant firm consist of substantial involvement of technology and economical terms. With these characteristics, there are usually as few as two and as many as ten firms that make up large market shares in any one particular industry.
In the horizontal integration, the company product range is from a wide clientele. That is they sell product either clothing or luxurious foods from different manufacturers. These give them the edge since the products they offer a variety for the customers to choose from, and hence they can shop less than one roof (Cole, 1997). In the vertical integration strategy, the firm will deal substantial with products from a single supplier and M&S gets the exclusive rights to deal with the product and its supply to the market. This is necessary when the company aim is to serve an identified target market which is exclusive and has the potential to sustain and grow the company substantively. These employ a tar...
It is a well-known fact that every firm wants to be successful in its business. Sometimes it is difficult to decide what kind of actions to take in order to achieve it. Especially, it is hard on oligopoly market because this is one of the most complicated market structures. Oligopoly includes many models and theories such as duopoly where are just two producers and which pricing decisions remind monopoly, kinked demand curve, which decreases economic profit, and cartel, which brings economic profit just for the short-run. However, to be a successful oligopolistic firm in the long run, managers should include in the planning process such economic theories and models as producer interdependence, the prisoner’s dilemma, price leadership, nonprice adjustments, and correct using of barriers to entry.
AT&T had developed a reputation for providing high-quality long distance telephone services. It moved rapidly to exploit this reputation in the newly competitive long distance market by aggressively marketing its services against MCI, Sprint, and other carriers. Also, AT&T had traditional strengths in research and development with its Bell Labs subsidiary. To exploit these strengths in its new global competitive context, AT&T shifted Bell Labs' mission from basic research to applied research, and then leveraged those skills by forming numerous joint ventures, acquiring NCR, and other actions. Through this process, AT&T has been able to use some of its historically important capabilities to try to position itself as a major actor in the global telecommunications and computing industry.
Topic A (oligopoly) - "The ' An oligopoly is defined as "a market structure in which only a few sellers offer similar or identical products" (Gans, King and Mankiw 1999, pp.-334). Since there are only a few sellers, the actions of any one firm in an oligopolistic market can have a large impact on the profits of all the other firms. Due to this, all the firms in an oligopolistic market are interdependent on one another. This relationship between the few sellers is what differentiates oligopolies from perfect competition and monopolies.
Vertical integration can decrease transportation expenses and reduce turnaround time, thus help companies take costs advantage and improve efficiency. However, the key reason for a company to vertically integrate is the market default risk and unreliability.
Predatory pricing “is alleged to occur when a firm sets a price for its product that is below some measure of cost and forfeits revenues in the short run to put competitors out of business” (Sheffet p.163-164). The reason firms take the short term loss is because they hope to drive out competitors and raise prices to monopolistic levels. By doing this, they covered their short term loss to make even greater profits in the long term than they would have by not using predatory tactics (Sheffert). Predatory pricing became illegal under Section 2 of the Sherman Act. It has remained one of the more difficult allegations for prosecutors to prove, due to the complexity of determining the company’s actual intent and whether or not it the strategy is competitive pricing. According to Areeda and Turner, there are three ways to determine if a firm is implementing predatory pricing. First, a price above marginal cost is presumed lawful; second, a price below marginal cost is considered unlawful, except when there is strong demand; and third, average variable cost is considered a good proxy for marginal cost. This is a reason predatory pricing is still important today. The courts must decide whether or not companies are engaging in competitive prices for the good of the consumers or are using predatory tactics for the good of their own company. The purpose of this paper is to focus on the current legislation regarding predatory pricing, determining when there is predation in an industry and the cause and effect relationship it has on an industry.
In order to achieve the goals which is being most successful in the telecommunication industry, AT&T have concern about their external environment. The external environment can influence their guideline while running their business because it can be the bench mark for the company to gain more profit and becoming better than the others. Consequently, the AT&T company had analyze and focusing on the external environment to understanding their market and condition of the company. Therefore, the six segment such as technological, global, sociocultural, economic, demographic and political/legal are the segment that help the company to have better understanding about their general environment.
If competitors offer equally attractive products and services, then one will most likely have little power in the situation, because suppliers and buyers will...
Nokia focused on building and sustaining its current competency in the early 1990s. NMP created valuable alliances across the industry and made key acquisitions to increase economies of scale, market share, and access to R&D resources. The management believed in the growing acceptance of digital technology as the uniform communication standard in the future. Nokia formed partnerships with AT&T, Alcatel, and AEG to further the development of a digital telephone and network.