Kingston university |
Three Firms: Changes in Their Business Environment. |
Business Economics |
Bienia, Patrycja |
Table of Contents
1. Introduction 2
2. European Telecoms: Going mobile Again- The Economist Dec 20th 2014 2
2.1. Ryanair Warns Plunging Oil Price Will Hurt Profits–The Guardian Feb 02nd 2015 3
2.2 Aldi and Lidl set to win holiday season again as shoppers shy away from Asda, Tesco, Morrison and Sainsburys- The Guardian Dec 16th 2014. 5
3. Conclusion 6
4. References 8
This report aims to recognize key economic factors that are affecting three different firms and provides a clear link between the discipline of economy ...view middle of the document...
2. European Telecoms: Going mobile Again- The Economist Dec 20th 2014
BT Group plc, trading as BT is one of the biggest telecommunications services company, supplying consumers in the UK and over 170 countries worldwide. In late 2014 the company has attempted to purchase EE, the biggest mobile phones provider with over 22.5 million customers (The Economist, 2014). Transaction with EE could give the communication provider a chance to achieve further economies of scale. Economies of scale are the cost advantages that firms gain due to output of operation, cost per unit output decreases while production units increase. In relation to BT, by merging company will become the UK's biggest fixed and mobile operator as the finalisation of the purchase would bring the biggest cohort of 4G clients over to BT (Trusted Reviews, 2015). That would allow the firm to cross sale broadband to customers what will result in economies of scope- cost advantages that result when firms provide a variety of products rather than specializing in the production or delivery of a single product or service (Inc, 2015).
In 2001 BT stakeholders approved tactics to spin off the company mobile telephony component-O2. BT sold O2 in order to pay down debts. Also, back in 2001 separation of O2 from BT was beneficial for mobile phones provider as company was held back by the stodgy brand. Nowadays, marriage of EE and BT would create a communication super group that could offer everything from Premier League football rights to internet on the go. From the economic perspective, merger is beneficial as it allow the company to deal with the threat of multinational firms and compete on a global scale.
By merging with EE, BT Group is making a step closer to achieve a monopoly. Monopoly is a single provider in the market. BT Group would be the first company in the UK that would provide “quad play” (one contract for TV, broadband, mobile, home phone). Merge between two parties causes other companies to think about strategies that would help them keep their positions in the market. For example: Vodafone is warning that if BT purchases EE their company will go into broadband as well, O2 is announcing that they may go into an exclusive agreement with Three. The result of more telecom companies merging together can results in drastically lowering the prices in order to attract customer. It can be beneficial for clienteles; however it can hurt organisations profits. From the other hand, “quad-play” may put some people off due to lack of freedom-customer may be happy with broadband but unhappy with TV. In that case changing for different provider can be tricky.
2.1. Ryanair Warns Plunging Oil Price Will Hurt Profits–The Guardian Feb 02nd 2015
In 20th century air travel was exceptional and expensive; travel was restricted for wealthy individuals that tend to travel for special occasions. After the II World War improved design has modernised the industry and allowed to carry more...