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Date Submitted: 05/01/2013 02:34 PM
Skype vs. AT&T Case Analysis Questions Management 4480 Fall 2012
1. What does a Porter (five forces) analysis reveal about the chances for profitability in the VoIP industry?
Threat of Substitues:
Substitute for VoIP is low – as it is a substitute for PSTN
Threat of New Entrants:
The threat of new entrants is high in this market. As a rule in economics, companies will enter this market until there is a profit to be earned. Companies like Microsoft, Google, and AOL are just a few that are planning to compete in the VoIP market.
Bargaining power of Buyers:
The bargaining power is moderate because of the ease of switching to other companies. Customers are “fought for” among competitors.
Bargaining Power of Suppliers:
Weak- Limited bargaining power – VoIP providers are widespread and infrastructure is readily available.
Net neutrality laws – suppliers could end up with power and control of internet
Rivalry Among Existing Firms:
High - Low switching costs and lack of differentiation -Skype and other services are challenging well-established telecommunication companies but they have the capacity to put up a fight.
2. What seems to be the key success factors for this industry?
• Ease of use
• Low cost for users
• Lower infrastructure costs because both voice and data communications can run on a single network
The want of consumers to have easier access to communicate via the internet is the driving force, which spurred the creation of Skype.
3. What is Skype’s current strategy and what type of corporate strategy do they seem to be employing?
Their current strategy is differentiation & they seem to be employing the low cost strategy.
4. Develop a “worry list” (p. 125 in the Text) for Skype.
Threat of competitors & threat of substitutes
5. What recommendations would you make to Skype management to enable them to be successful in the future?
To advertise more & continue to stay competitive in their pricing