Telecommunications: A theoretical model of market ...

14 downloads 130834 Views 249KB Size Report
of the business market, thereby providing value added network services (VANS) ... More demanding customers, in terms of requirements for an increasing ... that shaped thinking, as it increased competition in a number of areas, e.g. AT&T (US).
Key Determinants of Environmental Change in UK Telecommunications: Empirical Evidence

David Lal and Peter A. Strachan

Dr David Lal is lecturer in International Business and Corporate Strategy at The Robert Gordon University, Aberdeen Business School, Garthdee Road, Aberdeen AB10 7QE SCOTLAND, UK. Telephone (+44) (0)1224 263833. Email: [email protected] Dr Peter A Strachan is lecturer in Strategy and Environmental Management at The Robert Gordon University, Aberdeen Business School, Garthdee Road, Aberdeen AB10 7QE SCOTLAND, UK. Telephone (+44) 01224 263426. Email: [email protected]

Lal, D. and Strachan, P. A., (2004). “Key Determinants of Environmental Change in UK Telecommunications: Empirical Evidence”. Paper presented at the 15th Biennial International Telecommunications Society Conference, Berlin, Germany (4th - 8th September).

1

Key Determinants of Environmental Change in UK Telecommunications 1 : Empirical Evidence

Abstract The global telecommunications marketplace has witnessed considerable and unprecedented changes in the past thirty years, to the extent that comparative recognition of most telecommunications fixed-link network operators is impossible. Consequently, industry specific structures, market structures and the internal operations of incumbent firms have been transformed by visionary strategic directional changes. Demonstrably, the impacts of national strategic intentions have identified clear shifts away from predominantly monopolistic - highly bureaucratic, labour-intensive and government-run service providers, towards distinct deregulated markets - supporting increasingly competitive, innovative and market-led organisations. With this in mind, this study considers the key determinants of environmental change and its associated consequences on the UK incumbent BT, since UK telecommunications deregulation in 1982. A case study approach was adopted, with face-toface interviews being carried-out with senior executives, using semi-structured questionnaire checklists. Content analysis was applied to the data set and results alluded to the nature of the emerging European market structure and the nature of both strategic evolution and associated strategic focus occurring within BT. Search Keywords:

BT case study, telecommunications, deregulation, privatisation, determinants of environmental change, globalisation, strategy.

Introduction Within the plethora of literature discussing the various interpretations of organisational internationalisation, considerable evidence exists which leads towards both broadening and deepening understanding of business activities that transcend national boundaries (e.g., [1], [2], [3], [4], [5] and [6]). In a similar vein, with the drive towards worldwide standardisation of consumer tastes, the evolving concept of firm globalisation is now accepted as a reality, (e.g., (e.g., [7], [8], [9], [10], [11], [12], and [13]). Likewise, internationalisation processes have generated a vast array of models and approaches intimating that international activities tend to evolve in stages with organisations balancing risk, experience, commitment and control of foreign involvement, in terms of a variety of perceived benefits in both the establishment - and - expansion of foreign operations (e.g., [14], [15], [16], [17], and [18]). With this in mind, reflecting on the evolving global telecommunications industry, most countries have been extremely slow to embrace market liberalisation and privatisation programmes. Indeed, the USA has led European Nation-States with the implementation of extremely successful deregulation policies across a number of industries, e.g. telecommunications, gas, airline, electricity, water, rail, etc. Consequently, such policies have acted as key determinants in driving European Community (EC) telecommunications market liberalisation and subsequent country-specific privatisation programmes (e.g., [19], [20], [21], [22], [23], [24] and [25]). In terms of EC policy, the imposition of legal statutes on 1

It is not the intention of this study to criticise managerial behaviour or managerial decisions of BT or their employees and therefore the study should be viewed from the perspective of assisting in furthering understanding of the impact of UK telecommunications deregulation on the evolving nature of BT.

2

member states to liberalise their respective telecommunications market by 1998, has resulted in a shifting in stance from primarily monopolistic competition status, towards the more liberal position of regulated competition ([26], [27], [28], [29] and [30]). It is important to note that the impact of deregulation has brought with it, a definite will for strategic step change - in terms of transformational change ([31], [32] and [33]) with both - incumbents and new market entrants, striving to achieve success through strategic positioning and repositioning, within rapidly transforming markets. Against this backdrop, this paper forms part of a wider study concerning an examination, analysis and evaluation the strategic evolution of BT, the UK telecommunications incumbent network operator, since privatisation (formerly part of the General Post Office and now the firm British Telecommunications Plc (BT)). Contextually therefore, this particular paper seeks to identify and collate the key determinants of environmental change at BT, and thereafter, to examine the impact of these determinants on the re-positioning of BT's strategic business focus since privatisation in 1984. Empirical evidence was collected from a purposive sample frame, as identified by Kuzel [34] and consisted of a series of face-to-face interviews with corporate directors/managers at BT, using semi-structured questionnaire checklists. In terms of the collection of the data set, interviews lasted approximately three hours each and the sample-frame was capped at three participants, following saturation point being reached. The empirical data was collected from participants who were nominated by the BT Chairman and the duration of employment of interviewees (employment with BT) ranged from approximately twelve years to thirty-five years. Content analysis was applied during the analysis of data and results presented an historical examination, analysis, evaluation and collation of the evolving nature of the firm’s behaviour since privatisation. Reliability of data was - as far as possible - by the method of triangulation between: - the collected data set; a review of internal company documents; and a review of published data.

Key Determinants of Environmental Change: The UK Case The new order of competition in telecommunications has observed radical change at the heart of the industry. Indeed, in addition to a number of key determinants of strategic change (e.g., deregulation, privatisation, end-less market liberalisation, increasing consumer demand, cost drivers, globalisation, etc.) technology is seen as a critical feature in the integration of three predominant and evolving areas, i.e. information, communication and entertainment ([35], [36], [37] and [38]). Here, considerable advances in wireless technology have stimulated research and development laboratories - to the extent that there now exists - a rapidly evolving global information economy. In essence, the evolving nature of the European telecommunications industry has focused on the opening up of markets to competition from European Nation States, ([39], [40], [41], [42], [43] and [44]) with specific liberalisation policies bringing about a restructuring of the European marketplace. Hence, such progressive and discontinuous change has brought a revolutionising of global telecommunications network markets which have now clearly been accepted by governments, society and industrialists. Since UK telecommunications privatisation of the incumbent operator in 1984, BT2 has generally welcomed the opportunity to strategically position themselves as a European and indeed - a global player - in the delivery of a constantly increasing and diverse basket of services (e.g. fixed-link voice, simple resale, wholesale, data, bit transfer, mobile, billing services, number portability, wireless based products, etc). Prior to the introduction of 2

Formerly part of the General Post Office and now the firm British Telecommunications Plc (BT) they are frequently referred to as the UK telecommunications incumbent network operator and provider of telecommunications products and associated services.

3

legislature reform in July 2003, any company operating in the UK had to do so under an appropriate telecommunications licence. The process required most organisations to apply to the Department of Trade and Industry (DTI) for a licence prior to operating and supplying telecommunications services to consumers. This licensing regime has been replaced by a new EU framework for the regulation of electronic communications networks and service providers, which primarily consists of a general authorisation regime with the general conditions of entitlement (i.e., conditions which apply to all potential suppliers) and specific conditions which apply to individuals3 [45]. With this in mind, iterative liberalisation within the UK market has brought about an increase in the number of operators - from a handful in 1984 - to more than nine hundred service providers by the middle of 2004. Such a dramatic increase in competition in the UK has created a distinct requirement for constant strategic review at BT which has led to the incumbent repositioning themselves within the markets in which it competes and indeed, in those markets which offer opportunities for growth. In the light of the evolving UK market, little has been reported on the nature of corporate level strategic decision making at telecoms firms since the introduction of deregulation and privatisation. Based on this lack of available evidence, the authors acknowledged the importance of documenting empirically based strategic data from corporate level decisionmakers at BT, and welcomed the opportunity of reporting. With this in mind, the authors felt that it would be useful to identify the strategic decisions that were made at the firm since privatisation in 1984, particularly as these were both shaped and - shaped by - the evolving purpose and direction of the firm. Consequently, a summary of the empirical data is presented in Appendix 1 and Appendix 2. From these Appendices, we note that four key periods were identified by BT where strategic decisions at the firm brought about revised strategic foci and strategic goals (periods 1 - to - 4 respectively)4. Accordingly therefore, it is the intention of this paper to specifically report on the key determinants associated with the evolving vision, strategic goals and associated strategic focus of the firm throughout these periods, as opposed to the particular strategic decisions themselves, and therefore Appendices 1 and 2 are included in order to assist in understanding the evolving nature of the strategic directions at the firm. Figure 1 has been generated in order to identify, collate and understand - from BT's perspective - the evolving nature of the key determinants driving strategic change at BT since privatisation in 1984. As can be seen from Figure 1, a number of key determinants evolved since UK telecommunications privatisation in 1984 and in examining this empirical data, we find that a number of key events occurred prior to privatisation of British Telecommunications plc in 1984, and these are seen as important in understanding the nature of the firm's behaviour. However, it should be pointed out, that respondents stated - in no uncertain terms - that throughout this particular time of UK market liberalisation, the firm had no control over these key determinants. Observably, we find that the seven key events (which are surrounded by a solid line on Figure 1 - pre-1984) were identified by respondents as: 3

For communications networks and service providers, one of the most significant operational changes is the ending of the licensing regime and the withdrawal and revocation of Telecommunications Act licences in the UK during July 2003 (following the introduction of EC Legislation changes) see reference [45] for further details. 4 Further details of strategic decision making at BT since privatisation can be found in the unpublished PhD thesis: - Lal, D. (2001) Corporate level strategic decision-making: The case of BT, The University of Strathclyde, Glasgow, Scotland, UK.

4

Liberalisation Increasing in UK / European / Global Telecommunications Markets

Telecommunications Act 1981

Liberalisation of Equipment Supply

Competition from Mobile/Cable Operators Launched (1985)

Duopoly ends (1992) 5- UK Firms Issued With Operator Licenses 24-Licenses Issued to Cable Operators

Provision of Fixed Network Services > 150 Licenses Issued (1997)

> 900 firms competing in the UK telecoms industry - service provision (July 2004)

Increasing Intensity of Competition Cellnet & Vodafone

Technological Advancements Increasing Formation of Global Strategic Alliances

Licensed to Compete

Dissolution of Licensing Regime for Provision of Telecoms Services

Growth in Value Added Services

in Mobile

More Demanding Customers Mobile Growth

Supply of "Packaged Solutions"

Demand for Customised Solutions Call Centre Market Growth Demand for Packaged Solutions

International Simple Resale Internet Explosion Mercury Licensed as Rival PTO Falling Costs OFTEL Created

Globalisation

Privatisation of Incumbent - BT (1984)

Falling Prices

Period One

YEAR

1984

ISDN Developments

Period Two

1987

1988

Demand for Wholesale Bit Transport Licensing of International Facilities Demand for Retail Products/Services Multimedia 3G Licensing Convergence (I.C.E.) 85% UK Market Penetration by Europe Deregulates (1998) Mobile Comms. (July 2004)

Period Three

1993

1994

Period Four

1997

1998

2002

Increasing Intensity of Key Determinants Impacting on BT Key: Key determinants driving corporate level strategic change evolve from Period One - to - Period Four respectively, with the Arrowhead indicating an increasing intensity of each catalyst on BT.

Figure 1

Source: Author Generated from Data

Evolving Key Determinants Stimulating Corporate Level Strategic Change at BT since UK Telecommunications Deregulation in 1981

5

i.

The introduction of the telecommunications telecommunications from postal services;

act

of

1981,

separating

ii.

The breaking up of the network operator's monopoly of the supply of customer premises with equipment, which was one of the earliest measures in UK telecommunications market liberalisation by the government;

iii.

The companies of Cellnet and Vodaphone were licensed to compete in the provision of mobile communications services, opening up the UK mobile communications market;

iv.

Liberalisation of "packaged solutions" thereby increasing the use of outside suppliers to provide these to the business market;

v.

Limited competition was introduced into the UK fixed network services market, with Mercury Communications being elevated to the status of the 2nd national UK operator and the duopoly was created (duopoly guaranteed for seven years);

vi.

UK government creates a telecommunications regulatory body - OFTEL - with the Office of Telecommunications;

vii.

British Telecommunications plc was created with privatisation of the incumbent - 51% of the firm's shares being sold in the first of three traunches of the sell-off.

What we can note from this historical data is that the UK Government in 1981 promulgated the Telecommunications Act which separated Post and Telecommunications with the Post Office retaining postal services and British Telecommunications operating the telecommunications services. In particular, British telecommunications operated the fixed link voice telephony network, and Mercury plc was licensed as a rival public telecommunications operator (PTO) as a first step towards the UK Government’s objective of introducing competition to the telecommunications industry, in the interests of the consumer. Against this backdrop, one of the earliest liberalisation measures of the UK telecommunications industry, was in the area of equipment, which resulted in a rapid increase in the presence of equipment suppliers and distributors and consequently, this early stage of evolution of the UK telecommunications market structure was also characterised by an increasing use of outside suppliers to provide “packages solutions” to this particular segment of the business market, thereby providing value added network services (VANS). In the provision of mobile services, relying on wireless technology (cellular radio networks) Cellnet and Vodaphone were licensed to compete in this segment of the UK market. Notwithstanding this, in 1984, a second Telecommunications Act guaranteed the duopoly of British Telecommunications and Mercury Communications, in the provision of fixed network services for seven years. Thus, Mercury was elevated to the status of second national operator and given a period of time to establish itself, without being hampered by further competition. Due to the domination of British Telecommunications and its control over the leasing of lines to Mercury Communications, there was a legitimate perception of potential problems and subsequently, the Office of Telecommunications (OFTEL) was created. The emerging role of OFTEL was to monitor the UK telecommunications market in terms of the provision of value for money products and services, to provide choice, to issue operator licenses, and to regulate the development of the industry.

6

Challengingly therefore, it would appear that these key determinants directly affected the behaviour of the incumbent firm and as the focus of this study relates to the time immediately following privatisation, the study now centres on the nature of the evolving key determinants which drove corporate level strategic change at the incumbent since privatisation in 1984. Figure 1 identifies the evolving key determinants as those events which are - enclosed within and surrounded by - the dashed-line in the diagram, and consequently, the four key time periods are addressed in turn.

Evolving Key Determinants: Time Period One On observing Figure 1, respondents reported a number of key determinants as key drivers of corporate level strategic change at BT during this period. These were identified as follows:•

Competition was launched by mobile network operators Vodaphone and Cellnet via their respective cellular radio networks.



Market liberalisation allowed cable television operators to offer fixed link telephony services but only agents for the duopoly players (British Telecommunications and Mercury Communications). Thus, “resale of capacity” i.e. the leasing of lines from BT continued to be the “modus operandi”.



Technological advancements - both internally (within British Telecommunications) and externally (industry - wide) were evolving, with new digital technology overtaking existing analogue technology products.



More demanding customers, in terms of requirements for an increasing range of products and services.

Hence, during Periods One and Two, British Telecommunications was progressively privatised from (1984-1991) with a further two traunches of share sales by the UK government and revenues were used to finance modernisation of the telephony network infrastructure, with the primary area for this investment being the conversion of the infrastructure from analogue to digital. Furthermore, throughout these two periods, the UK government imposed controls on borrowing in nationalised industries and the regulator implemented price controls at the rate equivalent to the Retail Price Index minus 3% (RPI 3%) played a significant role in holding back progress and advancement of the incumbent.

Evolving Key Determinants: Time Period Two Respondents reported that, during this period, apart from investment into technology, diversification and infrastructure, costs at British Telecommunications were beginning to fall and the effects of firm globalisation were becoming major key determinants for change. Indeed, the level of telecommunications revenue being generated from businesses operating across a number of continents was increasing, and this stimulated demand and had become a target for competitors (from around £3 billion to approximately £13 billion). Additionally, the duopoly ended in 1992, and full competition on fixed services was introduced. Applications for PTO's were allowed solely on merit and four further UK firms were given operator licenses (Scottish Telecommunication, British Rail Telecommunication, Energis and IonicaL3). Furthermore, market liberalisation expanded with the issuing of twenty-four licenses to cable television operators to offer fixed link services. Consequently, these

7

companies were also being allowed to interconnect their regional services for the first time. However, the existing duopoly of PTO's, continued to be restricted by OFTEL, in terms of holding cable television licenses, which in the opinion of some experts, impeded the development of the “information superhighway” in the UK. This position was not reviewed again until 2001, although this phase of liberalisation introduced further competition in all aspects of telecommunications, including the provision of international, national and local services. Meanwhile, the introduction of International Simple Resale (ISR) allowed licensed operators of international leased lines between designated countries, to interconnect with public networks at each end, in order to resell their capacity to both business and domestic customers. Respondents indicating that this represented a further move towards globalisation of telecommunications within the industry, and the UK regulator had implemented price controls at the rate equivalent to the Retail Price Index minus 4.5% (from 1989–1991), thereafter this rate restriction was subsequently increased to RPI - 6.25% until 1993. Against this backdrop, the increase in competition instigated significant falls in prices, which was seen as a major determinant at the incumbent, particularly as it directly impacted their investment behaviour - as profitability was being affected.

Evolving Key Determinants: Time Period Three During Period Three, respondents indicated that technological developments in relation to the application of Integrated Services Digital Networks (ISDN) were contributing to the increase in value-added services such as data transmission, email, internet, video conferencing, online information services, etc. Such applications opened up opportunities for the cross-fertilisation of inter-company technologies, and expertise that as a consequence, strategic alliances between telecommunications companies, equipment manufacturers, software developers and entertainment and media companies, were created. Furthermore, BT had acquired a stake in the US domestic market via an attempted acquisition/strategic alliance with MCI of the USA, and this alliance was to fail during the forthcoming period. Inward investment in the UK telecommunications services industry was seen by respondents as a further key determinant that shaped thinking, as it increased competition in a number of areas, e.g. AT&T (US) invested $500 million during this period which also had the effect of increasing the trend towards both globalisation in the industry and a rapid growth in demand for value-added services. Domestic competition was also intensifying in the UK telecommunications market, with a number of firms creating a price war in both the incumbents' domestic and international call charges. Respondents were quick to point out that the mobile communications sector had been steadily growing over the previous two key periods and during this third key period, this steady growth changed to rapid growth with increasing revenues being generated. Based on current predictions, British Telecommunications had forecast that by the year 2000, more than 38% of the UK populous would have a mobile telephone – and in hindsight - this was an under-estimation. Of further note from respondents, before the end of this period, the Internet sector was being seen as a global business opportunity for BT, as significant Internet growth was evident and future profits were predicted to come from this segment of the business. Consequently, the Internet was seen as bringing about a paradigm shift in terms of the Internet evolving from the fuelling of telecommunications growth to displacing telephone revenues. Respondents reported that this was driving strategic change both for the firm and indeed, within the industry. This was expected to occur in three phases:-

8

Phase 1: There would be a boom in 2nd lines and an increase in the requirement for bandwidth. Phase 2:

There would be a substitution of new Internet services for traditional services. Here, Internet Protocol Wide Area Network Services (IP WANS) would replace private circuits; Internet fax would replace phone; Web transactions would replace toll free services; and email would substitute for voice and fax.

Phase 3:

The pre-emption of Internet technologies over telecommunications technologies was being seen as the primary platform for service innovation. This was evolving in the areas of E-Commerce, Multimedia, and Networking.

Here, the Internet was expected to be just as significant for telephony as the personal computer was for the mainframe computer. Furthermore, the impact of the Internet would mean that traditional telecommunications operators would be relegated to emerging economies and carrying Internet traffic. Hence, the Local Loop would be the main gateway to the Internet, as wireless technology would not be able to offer the required capacity. A further determinant was seen to emanate from the large growth in the "Call Centre" market, where the UK already accounted for half of Europe’s call centres. This was due in the main, to the low cost of labour and the relatively flexible employment contracts. Throughout this period, the regulator implemented price controls at the rate equivalent to the Retail Price Index minus 7.5%. This level was the highest price restriction placed on the incumbent, to – date, and was significantly impacting on revenue growth within the home market. A point to note here, by 1995 Mercury Communications had only acquired 8.5% of the UK fixed link voice telephony market, in terms of revenue, and most of the market share had come from the business sector. Moreover, cellular network operators had accrued an eleven percent share of the UK telecommunications market, while British Telecommunications had approximately 78%. Midway through this key period, there were twenty-six licensed national and regional PTO's and due to strategic alliances and acquisitions there were only fifteen cable companies with regional franchises. The cable operators were rationalising within the industry and as a consequence, they were beginning to gain in critical mass – in terms of both their size and customer bases. Industry restructuring was therefore directly impacting the UK and European telecommunication industry. Against this backdrop, the incumbent, quite clearly continued to dominate the UK telecommunications market, and in particular, greater than 95% of revenue was being generated from the domestic sector. By the end of this period, Mercury Communications had merged with three cable franchisees, thereby by-passing the BT network, and as a consequence, domestic customers were seen to have had little benefit from the introduction of competition. This situation was exacerbated by BT being allowed to “rebalance tariffs” on the grounds that the incumbent was responsible to the regulator for the maintenance of the network infrastructure. This was primarily for the provision of “universal” service at a controlled price, and for the national provision of “unprofitable” services e.g. emergency services and rural services. British Telecommunications argued that the cost to other companies of leasing their lines was small and therefore too cheap in view of these burdens. In this vein, in assessing these “rebalanced tariffs”, it can be concluded that domestic customers were being asked to foot the bill in favour of business customers. By the end of this period, the rate of market liberalisation was increasing with a number of licensed operators offering international telephony from the UK. Indeed, competition in this market segment was intensifying, with forty-five new licences

9

being issued by December 1996 for international facilities based services (IFBS) and in reflection, these can be viewed in terms of four classes of international operator: - BT and Cable and Wireless Communications; International Facilities Based Service providers; International Simple Resale (ISR) licence holders; and Call-back operators.

Evolving Key Determinants: Time Period Four In terms of Figure 1, respondents indicated that during the early part of Period Four further liberalisation of the UK telecommunications market was stimulated by with the licensing of international facilities. This form of market liberalisation was seen as a major determinant driving strategic change at the incumbent. The regulator was allowing telecommunications distributors who were competing within the customer premises market segment (business customers) to have similar capabilities to any national or public telecommunications operator. In addition, the granting of a Conditional Access Licence allowed customers in the UK to stipulate a non-BT long distance carrier without special access codes. Hence, the licensing of international facilities was seen as being of major concern to the incumbent and consequently, instigated further strategic change at the incumbent. Respondents noted that by this time, more than one hundred and fifty licenses had been issued for the provision of a variety of network services, which included six key categories :1. 2. 3. 4. 5.

Long-distance carriers; Cable operators; Regional operators; Cellular operators; Metropolitan area network operators; - and 6. Fixed - radio access companies. Notably, the evolution and integration of technologies was becoming an intense area for investment by the incumbent. This was particularly evident in the form of achieving the capability to deliver combined services in the areas of information, communication and entertainment (I.C.E.). Technological developments within the industry were at an advanced stage and the incumbent was strategically positioning themselves for liberalisation in the entertainment sector. Tests in this area were already underway and the market for the provision of such multimedia services was seen as a tremendous growth opportunity for the incumbent. During this period, the regulator implemented price controls at the rate equivalent to the Retail Price Index minus 4.5%, until 2001. On this note, as predicted by Boult and Kamman [46] full deregulation of telecommunications services in Europe would indeed occur, and this was fully implemented, with few exceptions or restrictions in 1998. Consequently, competition was intensifying in all areas of the telecommunications market and with the unstoppable trend towards globalisation and a number of experts were predicting that regulation of the domestic market would cease to be relevant or valid ([47], [48], [49]). In this vein, there were suggestions that the future telecommunications market tendency would be towards simplification of competition through consolidation and aggregation and through strategic alliancing. Hence by 2004, the introduction of revised EC regulatory structures permitting competition in telecoms without licences meant that more than nine hundred firms were registered to compete within the UK telecoms market – primarily in the areas of: ¾ Provision of public access mobile radio services; ¾ Provision of international simple voice resale services;

10

¾ ¾ ¾ ¾ ¾ ¾

Provision of international facilities based services; Provision of fixed link public telecom operator services; Provision of value added services; Provision of regional/national radio paging services Provision of mobile public telecommunications operator services (cellular); Provision of radio data services (including baggage tracking and reconciliation services); and ¾ Broadband cable public telecommunications operator. In summarising therefore, respondents reported that the key determinants that would primarily lead the industry would occur in the areas of: •

Wireless technology, where it will increasingly become the primary access technology for voice;



Telecommunications becoming increasingly about carrying data, although voice will be the major money spinner for many years to come;



Newcomers displacing the traditional telecommunications operators;



Strategic alliancing and acquisitions playing a major role in the evolving structure of the UK, European and Global telecommunications markets.



Demand will be led by customised solutions; packaged solutions; wholesale bit transport and retail products/services (including through mobile products/services).

From governmental perspectives, the main objectives in telecommunications liberalisation and deregulation were the offerings of greater competition and choice. What we can learn from the BT perspective of key determinants driving change in the evolving UK, European and indeed global telecommunications industries, is that there appears to have been a distinct failure in introducing real competition in fixed link voice telephony. Accordingly, failure can be attributed to several factors:i.

The inherent contradictions in BT’s role: it is both the owner and maintainer of the infrastructure - as well as - a competitor in the delivery of services.

ii.

Continuing reliance on BT as the “owner” of the infrastructure, and the difficulty of making BT competitive when its licence conditions include service “obligations”.

iii.

The large capital investment and disruption to the environment required to lay new cables, and new technology in communications through computers is “by-passing” the regulatory problems of traditional telecommunications and proving to be cheaper.

iv.

The pursuit of the cable route and partial neglect of the potential of wireless technology which would resolve the issue and by-pass the infrastructure problems.

11

v.

The reliance which OFCOM is forced to make on the incumbent for its “information,” and therefore the regulatory difficulties placed in the path of potential “entrees” to the market, based on the fact that they are placed in direct competition to the huge clout of British Telecommunications.

vi.

The tendency of new entrants to the market to concentrate on the provision of value-added services because of the difficulty and risk involved in entering the fixed link voice telephony market – setup costs being small and therefore attractive to potential market entrants.

In conclusion, in interpreting the significance of these evolving key determinants, it is clear BT had some control over a number of these key determinants, while having little or no control over others. Some theorists have categorised these key determinants into "internal factors" and "external factors," e.g. [50]; [51]; [2]; [52]; [53]; [54] and [55]. Evidence from this study suggests that a number of these key determinants were triggered by: i.

internal events - e.g. falling costs, efficiency levels, effectiveness of policies and procedures, etc.

ii.

external events - e.g. governmental policy, globalisation, competitor behaviour, etc.

iii.

and others which were simultaneously triggered by both internal and external events e.g. technological advancements into ISDN, regulator behaviour, etc.

In this genre, from the perspective of the incumbent, there is a serious distinction here that cannot be overlooked in terms of a firm's strategic behaviour, and consequently the importance of the evolving nature of these three forms of key determinants should not be underestimated. However, the important factor which requires further investigation is the impact of these key determinants on the strategic decision making of BT, in terms of their perception of a monopolistic environment as it evolves towards a more competitive environment. In this vein, distinct key determinants would appear to have been continually shaping the UK, European and global telecommunications industries, whether they were generated internally, externally or simultaneously acting together. From the evidence presented here, the findings would contend that to categorise the key determinants for the UK telecommunications industry, into distinct internal and external key determinants, would indeed be exaggerated, unrealistic and indeed, inappropriate. Hence, extant research should take cognisance of the dynamic and complex nature of these key determinants as they evolve over time. Contextually therefore, Figure 1 can be seen to be an appropriate form of pictorial representation when considering the issue of why BT developed corporate level strategies during the four key periods, since the firm was privatised. This study now turns towards examining the impact of these key determinants on the evolving telecommunications market structure.

Conceptual Issues Associated with the Evolving Telecommunications Industry Following the US lead in telecommunications market liberalisation, privatisation and the eventual break-up of the Baby-Bells in the early eighties, a large number of both developed and developing nations have been adapting their respective telecommunications markets by

12

adopted similar liberal attitudes in the delivery of telecommunications services and facilities ([56]; [57]; [58] and [59]). Indeed in particular, the European Nation States have clearly shifted their respective stances from primarily monopolistic competition status, towards more liberal regulated competition [26] and to some extent, open competition ([60] and [61]). Arguably, the European telecommunications industry has been extremely slow to adopt change, with many of the Post, Telegraph and Telephone service monopolies tending to drag their feet with liberalisation, until European legislation imposition in 1998 ([62]; [63] and [64]). In effect, the UK has become a leader in European telecommunications liberalisation and has therefore led nation states in the transformation of telecommunications market structures. Consequently, this section of the paper is designed to examine a number of important conceptual issues from scholarly literature sources on the evolving European telecommunications industry. Theoretical analysis is used to identify the nature and effects of the dynamic determinants driving changes to telecommunications market liberalisation. The world-wide telecommunications industry has been liberalising for three decades with deregulation in particular, driving forward changes in the reshaping and restructuring of markets. Indeed, with the integration of wireless technologies, voice, computers and broadcasting systems, a rapidly evolving global information economy has been created. Consequently, regulatory activity in the developing area of telecommunications has both stimulated - and - been stimulated by - the redefinition of these fundamentally important areas. In essence the evolving nature of the European telecommunications industry vis-à-vis increasing liberalisation, deregulation and privatisation programmes has led to the opening up of markets to foreign competition and such is the importance of market liberalisation in terms of both conceptual and contextual frameworks that the area has attracted significant growth in the interest and attention of many researchers. Initially, the formulation and implementation of liberalisation policies existed mainly around periphery areas of telecommunications monopolies, in areas such as equipment, cellular telephony and value added services, however, the EC Directive on Open Network Provision identified principles for harmonisation of technical standards and proposed harmonised tariff principles, which reflected a solid push and drive towards the single market in EC telecommunications. Within the Global telecommunications market, individual market size, trends, growth and business opportunities vary from country to country, with expansions in global alliances ([65]; [66]; [67]; [68] and [69]). From a political perspective, the liberalisation of an economy’s telecommunications industry through such privatisation programmes encourages popular capitalism through widespread public share ownership, reflecting a bias towards a market economy orientation. Based on the success of the UK’s privatisation programme, the impact of performance exposure to the scrutiny of private investors has clearly stimulated BT to improve its efficiency from market forces, rather than from the direction of central government. Furthermore, the opening up of European and global telecommunication's markets has allowed a transfer of technology from prospective market entrants, which has resulted in a growth of international strategic alliances with other service providers. Insofar as assessing industry structure is concerned, discussions on the application of the product life cycle model, e.g. Levitt [70]; Cox [71]; Polli and Cook [72] and Kotler [73] have come under scrutiny, with significant debate surrounding it's relevance for examining industries. Porter [2] has progressed the debate on industry structure towards identifying the forces which underpin an industry for attractiveness and competitiveness. In this vein, the five-forces model outlined by Porter, has withstood the test of time and has some relevance for the telecommunications industry. However, Porter's model does show a lack of usefulness when addressing the impact

13

of market liberalisation. Buzzell [74] on the other hand, addresses the issue of "natural market structures," and throws some light on the topic. Unfortunately, extant research shows that scant attention has been paid to evolving market structures. Challengingly therefore, an examination is conducted of the liberalisation process of current privatised network services in order to develop an appropriate model of the impact of change on the liberalisation process within the European Community. In this case, a more flexible approach has been adopted and identifies an evolving European telecommunications market structure - which as yet, remains unclassified.

Evolving Dynamics of the Global Telecommunications Industry In considering the dynamic characteristics of the evolving Global Telecommunications Industry, a model (Figure 2) has been generated. The elements of this model are considered in terms of their respective causes, identified at arrow-tails, and their direct or indirect effects on issues identified at the arrowheads. The (+) signs at the arrowheads imply a direct (non-linear) relationship effect, in terms of the respective issue at the arrow-tail. Similarly, the (-) signs at the arrowheads imply an indirect (not necessarily-linear) relationship effect, in terms of the respective issue at the arrow-tail. Figure 2 therefore begins by identifying a positive drive by governments towards increasing market liberalisation, with increasing deregulation of telecommunications network operations. As this broad telecommunications network market experiences further liberalisation with markets opening up, the level of competition increases. This in turn has the following two major effects. Firstly, as the number of players in the respective market increase (affects competition (A)) there appears to be a greater demand for a wider choice and higher level of service quality (demand for integrated services (B(2)) which causes a requirement for further industry investment (industry investment (D)) as competing players focus on their respective strategies of product and service development. Consequently, opportunities arise for the raising of finance from joint ventures, acquisitions, mergers, etc., and for further market expansions by both current players and new market entrants (opportunity for joint ventures, expansions, etc., (E)). These investment opportunities have the effect of introducing regulation to bring about stability in the liberalisation process thereby controlling further market entry and by placing restrictions on further market liberalisation (G1). Insofar as these opportunities will allow, restructuring takes place within the respective market, causing shakeout in the industry (industrial restructuring and shakeout (F)). This shakeout causes niche markets to open (niche markets open up) as players reposition themselves to supply customer and application specific services. The effects of niche market opportunities openingup will also be a direct result of the symptoms created by the demand for a broader menu and greater degree of integration of services (demand for integrated services (B(2))). Accordingly, further market liberalisation is influenced by the development of regulatory policies to control both the speed and the effects of the shock waves, which are ensued by this process (G1). Secondly, as the number of players in the respective market has increased (affects competition (A)), prices began to fall within the industry, which has induced price restructuring for the European market as a whole, (affects industry pricing (B(1a))). Thus, overall demand within the industry has tended to rise (industry demand) as the price of calls and access were reduced by incumbents - which had the significant effect of reducing spare capacity (affects spare industry capacity (B(1b))). Consequently technological driving forces (Demand for technology) presses ahead in order to satisfy demand through innovative

14

_

_

Calls for market regulation

Calls for market regulation

Market liberalisation

+

+ +

Affects spare industry capacity _

_

Affects competition

Affects industry pricing

_

_

Demand for technology

Industry demand

+

+

+

Demand for integrated services

Standardized networks

+

+

Industry investment

+

Opportunities for joint ventures, mergers, acquisitions, alliances, etc., for both existing firms and new market entrants

+

Industrial restructuring and " shakeout "

+

Niche markets open up (e.g. wholesale; value added services; mobile; international simple resale; internet; convergence (ICE); multimedia; call centers; etc.)

+

Source: Author generated from data Key:

The (+) signs at the arrowheads imply a direct relationship effect, in terms of the respective issue at the tail. Similarly, the (-) signs at the arrowheads imply an indirect relationship effect, in terms of the respective issue at the tail.

Figure 2 Evolving Dynamics of the Global Telecommunications Industry

15

methods network and substitute products (Standardised European networks (C)). These determinants of industry demand, spare capacity and technological demand, create a resultant drive in leading towards further industry investment, thereby shaping the market by creating opportunities for vast expansion programmes (Industry investment (D)). As the impact of this requirement for substantial financial investment evolves, many competitive players find that they are unable to venture into such large projects alone and this has led to a greater number of joint ventures, mergers, acquisitions and alliances etc, (E). Thus, there is a greater call in the immediate term for regulatory policies to control further liberalisation (G2) and with this form of industrial restructuring, where in the short term further shakeout (F) occurs, there are a greater number of niche markets created. From this model, it is difficult to look towards the longer term, as depending on the innovative and integrative effects of computers, telecommunications, and video over the next decade of this millennium, there is a strong possibility that some smaller players in the European market will be squeezed out by both large autonomous organisations and conglomerate multinational enterprises.

Conclusions Deregulation and privatisation of telecommunications network operators are key driving forces towards sharpening network operator focus towards organisational growth and financial accountability. Consequently, telecommunications firms are reconsidering their respective service offerings, in order to address the growing global demands of business and consumer needs. In this sense, to become a leading global telecommunications firm, incumbent operators such as BT, are becoming involved in organisational growth through acquisitions, and indeed, actively seek suitable joint venture, merger and strategic alliancing partnering opportunities - on a global scale. The empirical data identifies the evolving nature of BT’s strategic focus in their desire to realise a developing BT vision incorporating both global success, and the desire to gain critical organisational mass in the process. For the telecommunications industry, these pioneering modes of expansion are seen as revolutionary for the industry, and therefore highlight the intensifying nature of the competitive environment confronting telecom firms. Thus, the evolving determinants stimulating BT’s strategic focus allude to a greater requirement for closer customer interaction, combined with the development of more sophisticated and tailored products. The consequence here is that network technologies and research & development programmes are becoming increasingly important in both achieving competitive advantage and in the attainment of corporate strategy objectives. Challengingly, this customer-driven approach towards stimulating and creating customer demand has been recognised and allows network operators such as BT, to strategically reposition themselves within the UK, European and indeed global marketplaces. As one of the global pioneers of telecommunications privatisation, the evolving competitive nature of the UK market has brought with it, much of the unknown, in terms of the particular barriers and competitive opportunities that lay ahead for BT. Hence, the realisation of the firm's competitive position following privatisation in 1984, required a radical shift in strategic thinking. Notably, the inner sanctum of the organisation had foresight to tackle the problems associated with a large, highly bureaucratic, inefficient, and procedure-driven organisation, which had a long history of slow change. With such a strong will for change, BT has developed a number of distinctly creative and organisation revolutionising strategies, in order to prepare themselves for the competitive environmental challenges required for sustaining a leading position in the evolving and restructuring market. Such a vast step change in strategic thinking is rapidly becoming a prerequisite for the future success of competing operators in the telecommunications industry as a whole and consequently, further research is required in this important area. Additionally, to become a leading global telecommunications enterprise,

16

former monopoly network operators are sharpening their focus on growth, by concentrating on both their respective home markets and on their cross-border activities, thereby restructuring their respective communications services groups, in order to address business customers and public consumers, on a global basis. In particular, as telecommunications markets continue to liberalise and evolve, the competitive environment confronting firms is shifting towards a greater requirement for closer customer interaction and more tailored products. Hence, the evolving natures of market structures are directly and significantly affecting the bases of competition in the information, telecommunications and entertainment markets. The consequences of this are that network technologies become increasingly important towards the attainment of firm-specific competitive advantage, and indeed in the achievement of corporate strategy objectives. To this end, if markets become too deregulated and move largely towards open competition status, then the franchise value of the incumbent service provider will be reduced. This in time will threaten the success of liberalisation and its associated policies. Demonstrably, this framework identifies the dynamic nature of the evolving global telecommunications market and conceptually depicts those determinants directly impacting industry change.

References [1]. N. Hood and S. Young, The Economics of Multinational Enterprise. Longman: London, (1979). [2]. M. E. Porter, Competitive Strategy: Techniques for Analyzing Industries and Competitors, The Free Press: New York, (1980). [3]. A. Parkhe, “Interfirm diversity, organisational learning and longevity in global strategic alliances”, Journal of International Business Studies, Vol. 22, pp. 579-601, (1991). [4]. A. Yan and M. Zeng, “International joint venture and instability: a critique of previous research, a reconceptualization and directions for future research”, Journal of International Business Studies, Vol. 30, pp. 395-414, (1999). [5]. J. Reuer and M. P. Koza, “Asymmetric information and joint venture performance: theory and evidence for domestic and international joint ventures”, Strategic Management Journal, Vol. 21, pp. 81-88, (2000). [6]. S. Hanvanich and S. T. Cavusgil, “Stock market reactions to international joint venture announcement: an event analysis”, International Business Review, Vol. 10, pp. 139-154, (2002). [7]. S. H. Hymer, The Multinational Corporation: A radical Approach, Cambridge University Press, (1979). [8]. K. Ohmae, Triad Power: The Shape of Global Competition, The Free Press: New York, (1985). [9]. P. J. Buckley and M. Casson, Multinational enterprises in less developed countries: Cultural and economic interactions. In: Buckley, P. J., (ed.) Studies in International Business. St Martin’s Press: New York, PP. 30-57, (1992). [10]. D. Rodrik, “Has Globalization Gone Too Far?” California Management Review, Vol. 39/3 (Spring), pp. 29-53, (1997). [11]. C. P. Rao, Globalisation and its managerial implications (Eds., Quorum: London, (2001). [12]. T. Clark and L. L. Knowles, “Global myopia: globalization theory in International Business”, Journal of International Management, Vol. 9(4), pp. 361-372, (2003). [13]. M. Ricciardelli, S. Urban and K. Nanopoulos, Globalisation and multicultural societies; some views from Europe (Eds.), University of Notre Dame Press, (2003).

17

[14]. M. R. Czinkota and G. Tesar, Export Development Strategies: US Promotion Policy, Praeger: New York, (1982). [15]. R. E. White and T. A. Poynter, “Strategies for Foreign Owned Subsidiaries in Canada”, Business Quarterly, Summer, pp. 59-69, (1984). [16]. J. Johanson and L. G. Mattson, “Inter-organisational relations in industrial systems: a network approach compared with the transaction-cost approach”, International Studies in Management and Organisation, Vol. 17, pp. 34-48, (1987). [17]. N. Hood, S. Young and D. Lal, “Strategic Evolution Within Japanese Manufacturing Plants in Europe: UK Evidence”, International Business Review, Vol. 3(2), pp. 97-122, (1994). [18]. J. Hohenthal, J. Johanson and M. Johanson, “Market discovery and the international expansion of the firm”, International Business Review, Vol. 12, pp. 659-672, (2003). [19]. K. Bradley, Phone Wars: The story of Mercury Communications, Century Business Books: London, (1992). [20]. C.E.C., Review of the situation in the telecommunications services sector, Communication by the Commission, Brussels, 21st October, (1992). [21]. B. Wellenius and P.A. Stern, Implementing Reforms in the Telecommunications Sector: Lessons from Experience, The World Bank: Washington D.C., pp. 152-156, (1994). [22]. G. Majone, Regulating Europe, (ed.), Routledge: London, (1996). [23]. M. E. Beesley, Regulating utilities: Broadening the debate, (ed.), Institute of Economic Affairs: London, (1997). [24]. M. Armstrong, “Competition in Telecommunications: United Kingdom, Industry Overview”, Oxford Review of Economic Policy, Vol. 13(1), pp. 64-73, (1997). [25]. N. Levine, D. C. Pitt and D. Lal, “BT corporate experience and visions 1990 - 2000” In: Madden, G. and Savage, S., The International Handbook of Telecommunications Economics, (Volume III), J. Wiley and Sons, (2003). [26]. N. Hood, S. Young and D. Lal, “Internationalisation in European telecommunications utilities: trends, prospects and the UK case”, European International Business Association 19th Annual Conference, (December) Lisbon, Portugal, (1993). [27]. J. Edwards, “Telecommunications: An International Legal Guide”, United Kingdom. International Financial Law Review, Supplement Issue, pp.63-67, (August, 1997). [28]. D. Brierly, “Telekom’s New Year Headache”, The European, (December 4, 1997). [29]. M. Bangemann, “The Information Society - The EU Framework”, Business Strategy Review, (December, 1997). [30]. D. Lal, D. C. Pitt and P. A. Strachan, “Strategic Change in UK Telecommunications Empirical Evidence”. European Management Journal, 22.1 (February, 2004). [31]. J. B. Quinn, “Strategic Change: Logic Incrementalism”, Sloan Management Review, Summer, pp. 45-60, (1989). [32]. G. Hamel and C. K. Prahalad, Competing for the future, Harvard Business School Press, (1994) [33]. H. Mintzberg, B. Ahlstrand and J. Lampel, Strategy Safari, Prentice Hall: Europe, (1998). [34]. A. L. Kuzel, “Sampling in qualitative inquiry. In: B. F. Crabtree and W. L. Miller (Eds.) Doing qualitative research”, (Research Methods For Primary Care Series, Vol. 3), Sage: Newbury Park, CA, pp. 31-44, (1992). [35]. M. U. Porat, “The emergence and nature of the information economy”, The Information Economy, Vol. 9, US Dept of Commerce: Washington D.C, (1977). [36]. M. Dowling, R. Boulton and S. Elliot, “Strategies for change in the service sector: The global telecommunications industry”, California Management Review, Vol. 36 (3), pp. 57-88, (1994).

18

[37]. M. Cave and P. Williamson, Entry, “Competition and Regulation in UK Telecommunications”, Oxford review of Economic Policy, Vol. 12 (4), pp. 100-121, (1996). [38]. J. Shillingford, Towards the Brave New World of Free Phone Calls. Financial Times Survey, FT Telcoms (March 15, 2000). [39]. S. Van Der Merwe, “Deregulation in services and the marketing challenge”, Service Industries Journal, Vol. 7 (1), pp. 24-34, (1987). [40]. H. M. Sapolsky, R. J. Crane, W. R. Neuman and E. M. Noam, The Telecommunications Revolution: Past, Present and Future, (eds.), Routledge: London, (1992). [41]. R. Kramer, “Facing the Customer: How European Telecommunications Operators Deal With International Ventures, Financing and Corporate Culture”, Communications International, Vol. 20 (1), pp. 16-24, (1993). [42]. OFTEL, Beyond the Telephone, the Television and the PC: Consultative Document. Office of Telecommunications, London (August, 1995). [43]. N. Higham and A. Lee, “Broadband regulation; the OFTEL Consultative Document; beyond the telephone, the television and the PC”, Telecommunications Policy Vol. 20 (2), pp. 131-139, (1996). [44]. OFTEL, Fair-trading in Mobile Service Provision: Consultative Document. Office of Telecommunications, London (May, 1996). And OFTEL, “Market Information: Mobile Update”, Office of Telecommunication, Q2/ 2003/04, (December, 2003). [45]. OFCOM Website, see web address at http://www.ofcom.org.uk/licensing_numbering/tele_gen_auth/telec_contacts_index/telec_con tact?a=87101, (14th July 2004). [46]. R. Boult, and A. Kamman, ‘Hello, Europe, are you there?’ Computerworld, Vol. 23 (44), pp. 91–94, (1989). [47]. M. J. Dowling, W. R. Boulton, and S. W. Elliott, “Strategies for change in the service sector: the global telecommunications industry”, California Management Review, Vol. 36 (3), pp. 57-88, (1994). [48]. O. August, “Telecoms pact signals end of monopolies”, The Times (London) February 17th, (1997). [49]. Anon (The Economist), “Disconnected”, The Economist, pp. 59–60, October, (1996). [50]. J. D. Thompson, Organizations in Action, McGraw-Hill: New York, (1967). [51]. J. Pfeffer and G. R. Salancik, The External Control of Organizations: A Resource Dependency Perspective. Harper and Row: New York, (1978). [52]. R. E. Linneman and H. E. Klein, “The Use of Multiple Scenarios by U.S. Industrial Companies: A Comparison Study, 1977–1981”, Long Range Planning, Vol. 16 (6), pp. 94101, (1983). [53]. J. M. Bryson, Strategic Planning for Public and Non-Profit Organizations: A Guide to Strengthening and Sustaining Organizational Achievement, Jossey Bass, (1988). [54]. G. Johnson and K. Scholes, Exploring Corporate Strategy: Text and Cases, (5th ed.), Prentice Hall Europe: London, (1999). [55]. R. Lynch, Corporate Strategy, Pitman Publishing: London, (2002). [56]. J. A. Kay, C. Mayer and D. Thompson, Privatisation and Regulation: The UK Experience, (eds.), Oxford University Press, (1986). [57]. A. E. Kahn, The economics of regulation, MIT Press: Massachusetts, (1988). [58]. K. Bradley, Phone Wars: The story of Mercury Communications, Century Business: London, (1992). [59]. M. E. Beesley, Regulating Utilities: Broadening the Debate. Institute of Economic Affairs: London, (1997). [60]. D. Brierly, “Telekom’s New Year Headache”, The European, December 4, (1997).

19

[61]. M. Bangemann, “The Information Society - The EU Framework”, Business Strategy Review, December, (1997). [62]. C.E.C., Review of the situation in the telecommunications services sector, Communication by the Commission, Brussels, 21st October, (1992). [63]. G. Majone, Regulating Europe (Ed.), Routledge: London, (1996). [64]. D. Lal, P. A. Strachan and D. C. Pitt, “Strategic Change in UK Telecommunications Empirical Evidence”, European Management Journal, Vol. 22, February, (2004). [65]. D. Ioannidis, “National Champions as Network Actors: The Internationalisation of Telephone Companies”, Paper presented at the European Regional Conference of the International Telecommunications Society, June, (1993). [66]. F. Keenan, “Dialling for Dollars: Opening markets drive global telephone alliances”, Far Eastern Economic Review, June 6, (1996). [67]. Anon., “A Survey of Telecommunications: The world in your pocket”, The Economist, October 9, (1999). [68]. P. Curwen, “Formation and Development of International Alliances”, In: G. Madden, and S. Savage, “The International Handbook of Telecommunications Economics”, (Volume III), J. Wiley and Sons, April, (2003). [69]. W. H. Melody, “Preparing the Information Infrastructure for the Network Economy”, In: G. Madden and S. Savage, “The International Handbook of Telecommunications Economics”, (Volume III), J. Wiley and Sons, April, (2003). [70]. T. Levitt, “Exploit the Product Life Cycle”, Harvard Business Review, November/December, pp. 81-94, (1965). [71]. W. E. Jr. Cox, “Product Life Cycles as Marketing Models”, Journal of Business, October, pp. 375-384, (1967). [72]. R. Polli and V. Cook, “Validity of the Product Life Cycle”, Journal of Business, October, pp. 385-400, (1969). [73]. P. Kotler, Marketing Management, (2nd ed.) Prentice-Hall, (1972). [74]. R. D. Buzzell, “Are There Natural Market Structures?” Journal of Marketing, Vol. 45 (1), pp. 42-51, (1981).

20

Vision

Vision

Vision

Vision

To develop British Telecom into a top class information technology business

To provide world class telecommunications and information products and services

To be the most successful worldwide telecommunications group

To be the most successful worldwide communications group

Key Strategic Goals

Key Strategic Goals

Key Strategic Goals

Key Strategic Goals

Financial Growth

Core Competencies

Strategic Alliance Focus

Reposition in UK Market

International Focus

Shareholder Value

Stimulate Demand

Financial Focus

Multimedia Focus

Branding Focus

Global Focus

Data Focus

Mobile Focus

Mobile Focus

Business Systems

Cultural Reform

Internet Focus

Wireless Technology

International Positioning

Culture Focus

Synergistic Focus

UK Growth Customer Focus Quality Focus Efficiency Focus Culture Focus Focus on Mobile

Cultural Reform

Internet Focus Pre - 1984 (BT Monopoly)

Period One

1987

1984

YEAR

Period Three

Period Two

1988

1993

1994

Period Four

1996

1997

Post - 2002 (Regulated Competition)

Increasing UK Telecommunications Market Liberalisation Key : Company Vision and Key Strategic Goals evolve from Period One - to Period Four respectively

Appendix 1

2002

Source: Author Generated from empirical data

Evolution of Company Vision and Key Strategic Goals at BT since Privatisation in 1984

22

Strategic Focus

Strategic Focus

Strategic Focus

Strategic Focus

Broad-Based Low Cost

Hybrid Strategy

Differentiation

Hybrid Strategy

Market Penetration

Market Penetration

Market Penetration

Market Penetration

Product Development

Product Development

Product Development

Product Development

Market Development

Market Development (Inside/Outside UK)

International Alliancing

Global Alliancing/Integration

Vertical Integration

Branding Focus

Technological Innovation

Technological Innovation

Technological Innovation

Technological Innovation

Period One

Period Two

Period Three

Period Four

YEAR 1984

1987

Pre - 1984 (BT Monopoly)

1993

1994

1996

1997

Increasing UK Telecommunications Market Liberalisation

Key : Strategic Focus of BT evolves from Period One - to - Period Four respectively

Appendix 2

1988

2002 Post - 2002 (Regulated Competition)

Source: Author Generated from empirical data

Evolving Strategic Focus of Corporate Level Decision Making at BT since Privatisation in 1984

23