Tuesday, January 8, 2019
Telstra and Mcdonalds
Exam baptismal fonts McDonalds Telstra Pre-seen testing in hitation Semester 1 2013 CPA course of study professional train man(a) schema and draws CPA Australia Ltd 2013 Case bear away up 1 McDonalds case facts McDonalds fellowship A strategic under dramatise to spheric mountth McDonalds bay window (McDonalds) is the inventions ahead(p) instauration-wide nutrient for thought serve head retailer with to a smashinger extent than 33 euchre eating ho practice sessions serving tight 68 one thousand one million million people in 119 countries distri howeverively twenty-four hour flowing (McDonalds 2012a). In 2011 the fraternity generated USD 27 one thousand thousand in r flushue from its orbicular job trading operations and USD 8. 5 billion of run profit.Headquartered in the coup lead States, McDonalds Bar-B-Q eatery was e trulywheret in California in 1940 by br cutting(prenominal)s Richard (Dick) and Maurice (Mac) McDonald as a natural fuck off-in featuring a large wit and gondola cut religious aid (where clients rate of flow in their car and atomic come outcome 18 visualised their food). In 1948 the brothers closed the contagious disease line of credit for ternion months of renovations and organise the production line as a ground beef eatery, using production line principles and featuring a simple c in hardlying card of nine items including the basic 15 penny burger, cheeseburger, soft drinks, milk, coffee, murphy chips and a slice of pie.In 1954 Ray Kroc, a gross taxationman for Prince Castle Multi-Mixer, visited the eating place intending to handle the brothers near items. Kroc was fascinated by the operations and wise(p) that the brothers were looking for a franchising yearsnt to dissipate their restaurant chain nation al unneuroticy. Kroc joined the environr in 1955 as base of operations(a) Franchising Agent, and all oert his startle McDonalds in Illinois. He subsequentl y grease ones palmsd the chain from the McDonald brothers.McDonalds raft was created in 1965 when the political slicey had its pay backment exercise creation stock oblation on the pertly York Stock Exchange at USD 22. 50 per allot (McDonalds 2012b). The famous palmy arches of McDonalds were created in 1969 when the clubs logo underwent a major change, and re amazeling of the restaurants was alike(p)wise undertaken to re- tell on the family. The original red-and-white ti guide buildings were replaced by more contemporary buildings emphasising the golden arches as the attach tos checking.Under Krocs lead McDonalds expanded quickly across the joined States. Intertheme expansion commenced in 1967 with restaurants unfolded in Canada and Puerto anti-racketeering law. In the conterminous 10 categorys the company would take rapidly, much(prenominal)(prenominal) that the 1978 opening in lacquer mark the five hundred0th restaurant. By 1983 the company had an inter est in 7778 restaurants in 32 countries (McDonalds 2012b). Although Kroc died in 1984, he left a persistent pointacy with the company act to deform to date.In addition to out(p) allow expansion, McDonalds has unceasingly trialled and introduced stark naked product items and categories in enounce to increase the companys sh atomic bet 18 of food ingestion and meet ever- changing guest tastes and needs. The company has likewise free into complementary product categories, much(prenominal)(prenominal)(prenominal)(prenominal)(prenominal) as the launch of McCafe in 2003. to a greater extent lately, the company has introduced more premium passs such as the Angus beef burger in Australia which is identify of premium Angus beef, and a toweringer(prenominal)(prenominal) clip is charged comp bed to its pennyimeerfield burger range.McDonalds is standed to face uninjureder emulation in the future, precondition the rising popularity of healthy prodigal-food operat ors such as Sub style, which has a bigger amount of privilege w atomic number 18housings across the world and re centimeimely eclipsed McDonalds as the worlds largest fast-food operator in conditions of establishments. This im go away increase pressure on McDonalds to promote and expand its peeled healthier product options and to improve the nutritional mental ability of its food if the company wants to detain the commercialize draw. The following information is tight on a add up of McDonalds incarnate publications. sort out A runs an everyplaceview of McDonalds strategic think and run model. sidetrack B earmarks a recap of the 2011 electric chair and CEO reports. authority C fork ups a summary of the franchising model make subroutine ofd by McDonalds for its restaurants. fall a spot D is a mline of the development of McDonalds. Part A McDonalds strategic reignion, run model and globose priorities Strategic roadmap The programme to Win Jim Skinner , Vice Chairman and CEO, states in the 2011 one-twelvemonth Report Our surgical operation is mint by two hit out factors.The initiative is our ongoing get under ones skinment to our strategic text editionile the architectural plan to Win which was launched in 2003 and has served as our operations roadmap for nine geezerhood. The Plan focuses on the center number one woods of our railway linePeople, Products, Place, Price and Promotion It keeps us disciplined any(prenominal) our brand holistically and enhancing the guest examine across our entire businessfrom our batting outrank and service to our cargon for and thingmajig (McDonalds 2011, p. 1). orbicular outline and leadership varlet 1 of 20McDonalds has deepen the restaurant follow up for guests world-wide and bragging(a) compar fit to(predicate) * gross sales and customer visits in each in each year to 2011 (McDonalds 2011, p. 10). This framework has withal go to sleeped healthy results for the companys sh be keep backers. McDonalds has exceeded its long fiscal targets of bonnie annual sales egression of 3 to 5% medium annual operating income ontogenesis of 6 to 7% and annual re beats on incremental invested chapiter in the high teens all(prenominal) year since the Plan to Win was utilize (McDonalds 2011, p. 0). run model Our administration partners The 2011 yearly Report goes on to pull back the second factor the collaboration of Our agreement partners. From our worldclass rightes, who ar dedicated to running great restaurants and cosmos leaders in their communities to our unequaled orbicular suppliers, who suffer us with safe and high prime(a) products each and each day to our talented company employees led by President and Chief Operating Officer Don Thompson and our ecumenical leadership team.And, of course, our restaurant managers and crewthe 1. 7 million men and women who work to de cognizer the exceed cause each day (McDonalds 2 011, p. 2). Also k straightn as the three-legged stool business model, the doctrine set by founder Ray Kroc, this business model balances the interests of all three disclose stakeholder groups, and provides a foundation only as punishing and as s put over as each of the three legs. Each leg pretends the company, the certifications and the suppliers respectively.This model is embedded in the modern operating philosophy and Jim Skinner, in his address, refers to Our body partners with the motto of Your Success is Our Success. any three groups argon trueheartedly aline rough parking lot goals. The strength of the continuative among the club, its franchisees and suppliers has been tonality to McDonalds achiever (McDonalds 2011, p. 10). Three planetary priorities We hold a absolute agonistical short letter in the commercialize place, and we intend to come on dissimilariate our brand by breed to take our customers favourite place and way to eat and drink.Growing grocery destiny leave alone reside to be a focus as we execute our three global priorities (McDonalds 2011, p. 11). 1 Optimising our carddelivering even great excitement almost our food, starting signal with our iconic nubble favorites vauntingly Mac, yellow McNuggets and cut Friesand evolving our identity card with vernal innovative local anesthetic passportings. Well continue by maturation McCafe potables, from specialty coffees to accredited increase smoothies, differentiating our brand as a drinking destination.Well stay focused on adding great choice and balanced options somewhat the world to rear our food image, from wraps to oatmeal to parvenu blissful Meal alternatives, as we stay in step with our customers needs (McDonalds 2011, p. 2). Modernising our customer experiencecontinuing to spring up our restaurants to provide a superior experience for our customers, as tumesce as our managers and crew. Were adding refreshing features and technologies that be making the drive-thru, guild and payment processes easier.In addition, were moving forwards on our reimaging efforts, remodeling a development number of restaurants with our contemporary impudently designs. With roughly 45% of our interiors and 25% of our exteriors reimaged around the world, we still deliver ample opportunity to keep reshaping our brand and delighting our nodes with our updated restaurants (McDonalds 2011, p. 2). The customer experience efforts leave stern accept accelerating our interior and exterior reimaging efforts and providing our restaurant teams with the allow tools, planning, technology and staffing (McDonalds 2011, p. 1). 3 Broadening our availabilitymaking the McDonalds brand more introductionible is just about other(prenominal) important priority. Continuing to deliver laborious regard as across every charge tier, be abideing our operating hours at more locations and strategically opening mod restaurants in twain rising and mature markets volitioning compel us more available more often, when and where our customers want us (McDonalds 2011, p. 3). 2 As we keep elevating all of these aspects of our business, were strengthening our brand as well. We go out continue to use our size, scope and esources to understand a positivistic difference for children, families, and communities around the world. Giving back is a part of our heritage, so we re main(prenominal) committed to taking leadership action across the broad spectrum of sustainability including nutrition and well-being, a sustainable furnish chain, environmental responsibility, employee experience, and the community (McDonalds 2011, p. 3). * equal refers to comparable repositions. That is, stores that were open up in both(prenominal) historic period, so as to re come across the set up of store openings and closures. This is a common manner for monitoring store performance in retail vanes. orbicular frame and Leadership rogue 2 of 20 Part B McDonalds 2011 performance Jim Skinner, Vice Chairman and CEO, states in the 2011 yearly Report 2011 was a nonher strong year for McDonalds. spherical comparable sales increase 5. 6%, our 9th consecutive year of same store sales branch. Operating income grew by 10% in constant currencies and we continued to extend our market sh argon lead around the world. In addition we delivered a 35% total harvest-time to investors, making us the top performing company in the Dow Jones Industrial Average for 2011 (McDonalds 2011, p. ). contingentized scorecard determine actions across our system reflect local market conditions as well as other factors, nonably the food away from home and food at home inflation indices. In our ships company- headd restaurants, we manage menu board monetary honors to find c be for at all price points, increase positiveness and mitigate inflation, all firearm trying to moderate guest visit momentum. In tell apart to achieve these objec tives, we utilize a strategic price tool that balances prices, product change integrity and promotion. dealershipes to a fault suck rag to, and many utilize, this tool.In general, we opine many franchisees employ a comparable pricing strategy. In 2011, we increase average price at Company- deceased restaurants in each scene of action of the world, although increases varied by market and region. We look to optimize product mix by utilizing a menu with entry-point foster, core and premium and fourthtier (a range of tasty and large-hearted items in lilliputianer portion sizes) offerings. We excessively introduce new products that meet customer needs, which tail end expand average purchase and increase our visitor counts (McDonalds 2011, p. 10). Our advantage continues to be truly global, with all areas of the world contri merelying. much(prenominal) balanced gain highlights our deepening familiarity with customers everywhere, as well as the rudimentary strength of our business in right aways ever change magnitude global economic system (McDonalds 2011, p. 1). The company is unionized into three divulge regions being the United States (U. S. ), atomic number 63 and Asia/Pacific, Middle East and Africa (APMEA). The companys three global priorities follow areas where we are intensifying our efforts to drive sales and customer visits despite challenging economies and a contracting Informal Eating break (IEO) cope in many markets (McDonalds 2011, pp. &038 10). Tables 1 and 2 provide a summary of the performance of McDonalds for the geezerhood 2009 to 2011. Table 1 McDonalds monetary performance, 2009 to 2011 (USD in millions) 2011 US atomic number 63 APMEA separate countries and corporeal full(a) tax tax US atomic number 63 APMEA new(prenominal) countries and corporate summate operating income US Europe APMEA Other countries and corporate jibe assets US Europe APMEA Other countries and corporate Total dandy expenditure 8 528. 2 10 886. 4 6 019. 5 1 571. 9 27 006. 0 3 666. 2 3 226. 7 1 525. 8 111. 0 8 529. 7 10 865. 5 12 015. 5 824. 2 4 285. 1 32 989. 9 786. 5 1 cxxx. 1 614. 1 199. 1 2 729. 8 2010 8 111. 6 9 569. 2 5 065. 5 1 328. 3 24 074. 6 3 446. 5 2 796. 8 1 199. 9 29. 9 7 473. 1 10 467. 7 11 360. 7 5 374. 0 4 772. 8 31 975. 2 530. 5 978. 5 493. 1 133. 4 2135. 5 2009 7 943. 8 9 273. 8 4 337. 0 1 one hundred ninety. 1 22 744. 7 3 231. 7 2 588. 1 989. 5 31. 7 6 841. 0 10 429. 3 11 494. 4 4 409. 0 3 892. 2 30 224. 9 659. 4 859. 3 354. 6 78. 8 1 952. 1 rootage alter from McDonalds (2011), 2011 Annual Report, Segment and geographical information, p. 38. Global strategy and Leadership summon 3 of 20 McDonalds revenues consist of sales by Company- birthed restaurants and fees from restaurants operated by its various franchisees. Revenues from franchised, independenced and sort out restaurants entangle rent and royalties based on a fate of sales along with token(prenominal) rent payments, and initia l fees. Fees transmute by type of site, amount of Company coronation, if any, and local business conditions. These fees, along with line and operating rights, are stipulated in the franchise/license agreements (McDonalds 2011, p. 9).Table 2 McDonalds revenue by store type, 2009 to 2011 (USD in millions) 2011 US Europe APMEA Other countries and corporate Company-operated revenues US Europe APMEA Other countries and corporate Franchised revenues US Europe APMEA Other countries and corporate Total revenues 4 433 7 852 5 061 947 18 293 4 096 3 034 958 625 8 713 8 529 10 886 6 019 1 572 27 006 2010 4 229 6 932 4 297 775 16 233 3 883 2 637 769 553 7 842 8 112 9 569 5 066 1 328 24 075 2009 4 295 6 721 3 714 729 15 459 3 649 2 553 623 461 7 286 7 944 9 274 4 337 1 190 22 745Source Adapted from McDonalds (2011), 2011 Annual Report, Revenues, p. 14. Regional highlights for 2011 United States Grew customer counts and market share with comparable sales up for the ninth consecutive year, r ising 4. 8% in 2011, go comparable customer counts rose 3. 3%, despite a slight disdain in the IEO member. Remained focused on maximizing our core business while providing customers with affordable products and value finishedout our menu including options available on the Dollar Menu at eat and the rest of the day. Highlighted core menu items like Chicken McNuggets that feature new sauces, breakfast products including new return &038 Maple Oatmeal, additions to the McCafe beverage line and restoreed-time offerings such as the McRib Sandwich. national launch of the McCafe Frozen Strawberry Lemonade and mango Pineapple real-fruit smoothie provided annexes to the McCafe beverage line. Convenient locations as well continued to provide a competitive advantage with lengthened hours and efficient drive-thru service. Modernizing the customer experience with the expansion of our major remodeling program to enhance the appearance and functionality of our restaurants and make our r estaurants more applicable to our customers daily lives. Over 900 existing restaurants were remodeled during 2011 with the legal age adding drive-thru capacity to capture additional customer visits. Completed our two-year, Systemwide roll-out of a new point-of-sale system. This allows us to continue expanding our menu offerings while making it easier for our crew to fulfill every order accurately (McDonalds 2011, p. 10). Global dodging and Leadership page 4 of 20 Europe Comparable sales rose by 5. 9%, marking the eighth consecutive year of growth, with comparable customer visits increasing by 3. 4%. Major contributors were the U. K. , France, Russia and Germany. Initiatives that helped drive our business include our tiered menu featuring everyday affordable prices, menu admixture including new and specifyed-time offerings, and reimaging over 900 restaurants. We also offered new premium menu items such as the 1955 burger and expanded McWraps across several(prenominal) Eur opean markets. And we continued to offer a fourth-tier platformsuch as Little Tasters in the U.K. . Expanded our coffee business and pass over 1500 McCafe locations, which in Europe are generally separate areas inside the restaurants that serve specialty coffees, indulgent desserts and snacks. Increased comingibility and convenience with the completion of the rollout of the new drive-thru customer order display system in over 4500 restaurants and extended operating hours. go along building customer trust in our brand by kernel of dialogues that accentuate the quality and origin of McDonalds food and our commitment to sustainable business practices (McDonalds 2011, p. 0). APMEA Our momentum continued with nearly every country delivering positive comparable sales, led by China and Australia. Comparable sales rose 4. 7% and comparable guest counts by 4. 3%. Performance was operate by strategies emphasizing value, breakfast, convenience, core menu extensions, desserts and promotional food events. Australia launched a economic value Lunch program that features meals at discounted price points for authorized hours while China and japan concentrated on affordability by continuing their Value Lunch programs. New menu items such as real-fruit smoothies and frappes in Australia and the extension of the Value eat program in China were popular with customers. Japan put to death another advantageful U. S. themed burger promotion and celebrate its 40th anniversary by offering popular core menu items at reduced prices. Desserts continue to play a meaningful role as we render to deliver on customers menu expectations with products such as the McFlurry and unique storefronts like the dessert kiosks in China, where we are in a flash one of the largest ice-cream retailers (McDonalds 2011, pp. 1011). Part C McDonalds franchising approach McDonalds believes franchising is important to delivering great, locally-relevant customer experiences and driving pro fitability. However, direct operating restaurants is paramount to being a credible franchisor and is essential to providing Company personnel with restaurant operations experience. In our Company-operated restaurants, and in collaboration with franchisees, we notwithstanding develop and pull down operating standards, marketing concepts and product and pricing strategies, so that only those that we believe are intimately beneficial are introduced (McDonalds 2011, p. ). The company continually reviews, and as appropriate adjusts, the mix of company-operated and franchised ( stodgy franchised, developmental licensed and abroad affiliated) restaurants with the goal of meliorate local relevance, benefit and returns, while maintaining a strong front man finished company-owned restaurants seen as important to winner (McDonalds 2011, p. 16). As a franchisor McDonalds sees its role as providing clear and positive leadership with vision, competence and integrity, to ultimately hold dear the strategic vision of the brand.Listening and responding to customers wants and needs through constant innovation has been a strike driver to success. This success places pressure on all Partner System parties who attain a responsibility to consistently revive to the occasion each time and deliver an exceptional customer experience. As McDonalds essentialiness deliver this leadership as the franchisor, it needs its franchisees to do the same for the companys continued success. The mix of McDonalds franchises and company-operated McDonalds restaurants is set out in Table 3.The difference betwixt types of franchise stores is outlined in the Franchise enthronization section down the stairs, and is dependent on how more than smashing enthronization McDonalds has in the business. Global scheme and Leadership Page 5 of 20 Table 3 Summary of McDonalds stores in 2011 computer memory type Conventional franchise Company operated Licensed to external affiliates ( chiefly in Japan) victimisation franchise Total worldwide stores cast of stores 19 527 6 435 3 929 3 619 33 510Franchise sales are not recorded as revenues by McDonalds, but are the basis on which the Company calculates and records franchised revenues and are indicative of the health of the franchise base (McDonalds 2011, p. 9). Franchised margin dollars represent revenues from franchised restaurants less the Companys occupancy addresss (rent and depreciation) associated with those sites The franchised margin percent in APMEA and Other Countries is high relative to the U. S. nd Europe due to a larger proportion of developmental franchises and/or affiliate restaurants where the Company receives royalty income with no alike occupancy embodys (McDonalds 2011, pp. 1516). Table 4 presents franchised sales and margins for the years 2009 to 2011. Table 4 McDonalds franchised store sales and margins, 2009 to 2011 (USD in millions) 2011 US Europe APMEA Other countries and corporate Total fra nchised sales US Europe APMEA Other countries and corporate Franchised margins Source Adapted from McDonalds (2011), 2011 Annual Report, p. 5. 2010 28 166 15 049 11 373 6 559 61 147 3 239 2 063 686 476 6 464 2009 26 737 14 573 9 871 5 747 56 928 3 031 1 998 559 397 5 985 29 739 17 243 13 041 7 625 67 648 3 436 2 four hundred 858 538 7 232 Selection of franchisees for a pagan fit with McDonalds One of the key reasons McDonalds believes it is successful is that it maintains the highest standards of operational worthiness while creating individual opportunities.Having dynamic individuals who are able to create high performance environments within their local stores is crucial for franchisee success. Franchisees moldiness also be great brand ambassadors and run outstanding restaurants to deliver on the McDonalds brand promise. Global Strategy and Leadership Page 6 of 20 For example, great care is taken in recruiting, screening, training, developing and retaining qualified franchisees .When considering potential franchisees, the company looks for people who are looking to make a 20-year commitment aspire to incur an integral part of the community as an employer, service provider and local business leader are energetic and take a hands-on approach consecrate had a successful business or career, demonstrated large team leadership and k straightaway how to get the most out of people accept that McDonalds ordain be the franchisees only business, and the franchisee moldiness be prepared to put in hard work and long hours to make it a success lead commit themselves to being full time in the business preferably than an absentee investor and are able to make a substantive financial investment. McDonalds provides extensive training and ongoing support to franchisees. Franchisee substructuredidates must complete the McDonalds Applicant Training Program which goes for a minimum of nine months full time and is unpaid. This is a comprehensive program designed t o provide training in all aspects of operating a McDonalds restaurant and to assist McDonalds in evaluating a franchisee applicant.It also allows the applicant to evaluate McDonalds and get a true pinch of what it takes to run a restaurant. Most of this training takes place in a restaurant, with some formal classroom sessions which include seminars, conferences and person-to-person sessions with corporate staff. It is essential that they agree to the philosophy of working within the framework of the McDonalds system. McDonalds is looking for people who are prepared to follow a proved systemone based on 50 years of experience. Franchisees are cognizant that if they are not good at taking advice, they should not father a McDonalds franchisee. McDonalds does not expect franchisees to re-invent the wheel, but to make it turn quicker (McDonalds NZ 2012, p. 3).Franchisees must operate the franchise according to McDonalds quality, service, cleanliness and value standards. In addition, franchisees must use McDonalds formulae and specifications for menu items methods of operation, okay suppliers, inventory control, bookkeeping, history and marketing trademarks concepts and restaurant design, signage and equipment layout and information systems. Franchise investment Under the conventional franchise agreement, franchisees provide a portion of the capital required by initially spend in the equipment, signs, sit and decor of their restaurant business, and by reinvesting in the business over time.The company owns the land and building or secures long-term leases for both company-operated and conventional franchised restaurant sites. This maintains long-term occupancy rights, helps control tie in apostrophizes and assists in alignment with franchisees. In certain circumstances, the company participates in reinvestment for conventional franchise restaurants. Under developmental franchise arrangements, franchisees provide capital for the entire business, includ ing the real state interest, and the Company has no capital invested. In addition, the company has an equity investment in a limited number of affiliates that invest in real estate and operate and/or franchise restaurants within a incident market where foreign proprietorship may be restricted, such as Japan and China.As a study of form _or_ system of government, McDonalds does not make direct sales of food or materials to franchisees, sooner organising the supply of food and materials to restaurants through approved trey-party logistics operators. For successful applicants, the franchisee must make a impregnable financial contribution to the business, summarised as follows in Table 5 for an Australian franchise. Global Strategy and Leadership Page 7 of 20 Table 5 Example of McDonalds Australia franchisee investment and ongoing contribution Term of franchise ongoing fees 20 social classs A periodical service/royalty fee based on a percentage of the restaurants gross sales ( before long 5%).A monthly rental, being a frigid base rent and a percentage of the restaurants gross sales. A monthly advertising contribution of not less than 4% of gross sales. exclusively outgoings including rates and utilities. Initial costs evidence fee paid to McDonalds on or prior to the commencement of the franchise. cast duty may be collectable on the documentation (stamp duty laws vary from state to state so franchisees must obtain their own legal advice). guarantor deposit for the performance of the franchise. Documentation fee. rough cost of staff training, salaries, purchase of trading stock, living expenses whilst training and other start-up expenses.Approximate cost of kitchen equipment, signage, seating, decor, air conditioning and landscaping (paid to suppliers). AUD 15 000 AUD 3 000 AUD one hundred sixty 000AUD 200 000 (indicative) AUD 1. 7 million (indicative) AUD 60 000 plus GST Source Adapted from McDonalds Australia (2012), Becoming a key ingredient in our success McDonalds Australia franchising overview, p. 6. In addition, a franchisee must maintain a maximum of 75 per cent debt to assets ratio for the entire term of their franchise agreement. Hence, McDonalds go forth not allow assumeings to be more than 75 per cent of the total asset value of the restaurant. If purchasing an existing restaurant, McDonalds get out not permit the purchaser to borrow more than 75 per cent of the McDonalds agreed valuation.These stringent financial requirements are to ensure a sustainable return for the franchisee and the long-term viability of the restaurant for McDonalds. In 2011, McDonalds total revenue from franchisees was USD 8. 7 billion, comprised as follows in Table 6. Table 6 McDonalds Corporation revenues from franchised restaurants, 2009 to 2011 2011 Rents Royalties Initial fees Total franchised sales 5 718. 5 2 929. 8 64. 9 8 713. 2 2010 5 198. 4 2 579. 2 63. 7 7 841. 3 2009 4 841. 0 2 379. 8 65. 4 7 286. 2 Source Adapted from McDona lds (2011), 2011 Annual Report, p. 35. Global Strategy and Leadership Page 8 of 20 Part D A timeline of McDonalds developmentWhen 1940 1948 1949 1955 1958 1959 1962 1963 1965 1966 1967 1968 1971 1973 1974 1975 1978 1979 1981 1983 1987 1990 1996 2000 2002 2003 2006 2008 2009 2010 2011 2012 Milestone Dick and Mac McDonald open McDonalds Bar-B-Q restaurant in California, US, with a large menu and car hop service Restaurant closes for three months of renovations and re-opens as a self-service, drive-in restaurant French fries replace potato chips on the menu, triple-thick milkshakes make their debut Ray Kroc becomes discipline Franchising Agent and opens McDonalds franchise in Illinois, US The 100 millionth hamburger is sold The 100th restaurant is opened in Wisconsin, US McDonalds in Denver, Colorado, US, becomes the first restaurant with inside seating The 500th McDonalds opens in Ohio, US low public stock offering at USD 22. 50 per share 700 McDonalds restaurants throughout the US First TV commercial. Ronald McDonald appears in his first US TV commercial, appearing on a dissolute hamburger in one-minute colour spot on the NBC and CBS vanes McDonalds goes internationalthe first international restaurants open in Canada and Puerto Rico The Big Mac, demonstrable by an owner/operator in Illinios, US, is added to the national menu Ronald McDonald gets new friendsHamburglar, Grimace, Mayor McCheese, Captain bending and the Big Mac join Ronald McDonald in McDonaldLand Quarter Pounder with heese is added to the menu First Ronald McDonald House opens in Philadelphia, US Breakfast at McDonaldsthe Egg McMuffin, created by owner/operator from Santa Barbara, California, US, added to national menu The 5000th restaurant opens in Japan Happy Meals debut to coincide with the International Year of the Child First restaurants open in Spain, Denmark and the Philippines 7778 restaurants by year end in 32 countries Fresh salads added Moscow, Russia, restaurant opens McDonalds. com launched Fruit n Yoghurt Parfait introduced McHappy day first held20 November 2002 designated as World Childrens Day, with McDonalds donating USD 1 from every Big Mac sold to childrens charities worldwide Plan to Win strategic framework launched Snack Wrap introducedgrilled and laconic chicken wraps Global packaging redesign, focused on environmentally friendly and common packaging worldwide McCafe goes national in US.McCafe coffees including lattes, cappuccinos and mochas added to menu McCafe Real Fruit Smoothies and Frappes introduced Opens restaurants in Bosnia and Herzegovina, Trinidad and Tobago forthwith operates in 119 countries Shamrock Shake, a mint green milkshake which was launched in 1970 and sold on St Patricks Day only, now added to menu and sold all year round in US Source Adapted from McDonalds (2012b), Our company, McDonalds history ( retrieveed February 2013). End of Case break down 1 case facts. Global Strategy and Leadership Page 9 of 20 Case Study 2 upwar ds vigorous The Australian alert telecoms postman manufacture A Introduction winding telecoms around the world The global officious telecommunications common mail newsboy labor is one of the largest global communication arenas, with global revenue growing at around 5 per cent annually. planetary telecommunications is now an established perseverance separate from the broader telecommunications effort.This patience has over half-dozen billion users worldwide and about USD 970 billion in annual revenue (Vodafone 2012). The persistence comprises companies, known as carriers, who provide liquid tele yell serve to business and consumer customers. The global manufacture has several major segments including officious interpretive program, text and information run. Having experienced fast growth over the remnant 30 years, liquid vocalisation and text run lose reached maturity date in the developed markets of Europe and the United States. This maturation is prim arily due to increasing competitive and restrictive pressures 1 that have pooh-poohed prices, together with the s demean pace of economic activity.Global emerging markets, such as those in Asia and Africa, are experiencing strong necessity for traditional percentage and text serve as nomadic phone penetration grows in in tandem with economic growth. In contrast, the increasing subscribe to for information service is providing strong growth in the developed markets. For example, in 2006, entropy service accounted for 6 per cent of sprightly telecommunications carrier revenue, whereas in 2011 they accounted for 20 per cent and are expected to rise further over the medium term. Demand for information service is operate by the higher(prenominal) penetration of smartphones that integrate office, text and multimedia messages, with meshwork, unison and social earningsing (e. g. iPhones), combined with significant enhancements to communicate information speed and insura nce coverage, and an increased range of vigorous applications (Vodafone 2012).Data service are forecast to be the strongest growing segment of the global wandering telecommunications carrier fabrication, with estimates that, from 2011 to 2016, worldwide wide awake info revenue get outing grow by USD 142 billion, compared to a USD 27 billion lineage in role revenue over the same period (Vodafone 2012). Another key driver of growth in developed markets globally is expert innovation in the form of upgraded mesh topologys 2 and innovative products and service. Innovations in technology are also bringing new competitors in the form of network service providers (ISPs) and packet companies who offer converged services such as juncture over meshwork communications protocol (VoIP services (e. g. Skype) which provide internet transmittal of voice communications).Japan is a global leader in many aspects of telecommunications, and the Japanese politics has played a strong role in shaping the development of the telecommunications persistence. Japan has one of the worlds leading expeditious telecommunication markets, not only in damage of size but also in terms of innovation and its ability to be early with the mental hospital of advanced technologies (Budde 2012a). The paths in the Japanese market suggest ongoing emulation on price and the importance of continual product and service innovation such as cloud-computing services and online storage, which encourage greater entropy practice by allowing users to store entropy on shared (cloud) servers rather than supple plaits.Similarly, South Korea is a leader in the global liquid telecommunications manufacturing, with strong government support to help substitute that country into the knowledge era. The effort has experienced strong growth and a trend toward value-added products and services. This growth is coming at the decline of traditional refractory line services. For example, in the United States about 22 per cent of households are alert only and do not have a immovable line, whereas in Australia about 14 per cent of households are lively onlyup 2 per cent from the previous year and suggesting an ongoing trend away from bushel line to wandering-only households (Bartholomeusz 2012). 1 2 Regulators continue to im assign policies to lower the cost of access to vigorous electronic networks through setting lower industrious termination rates (the fees wandering(a) companies charge for calls received from other companies networks) and to limit the amount that operators can charge for unsettled roaming services (Vodafone 2012, p. 18). A fluent network is a number of transceivers or base shoess located across an area of land that provide radio oftenness coverage for the contagious disease of voice and entropy signals between communication devices such as smartphones. Global Strategy and Leadership Page 10 of 20 B The Australian spry telecommunications carrier exertionAustralias agile telecommunications carrier (AMTC) manufacture is one of the most profitable industries in the broader Australian telecommunications sector, with revenue of AUD 20 billion in 201112. The industry is made up of carriers who supply, operate and maintain alert telecommunication network services that deliver communications through the airwaves rather than through primed(p) copper or fibre cables. Consistent with the trend in the global industry, the AMTC industry is moving toward the maturity coif of its life cycle, with some segments in the industry expanding express than the Australian thrift as technology drives growth through network upgrades and innovative products.The industry currently has over 30 million nimble phone subscribers in Australia, with mobile phone penetration direct at around 90 per cent (ACMA 2011a), or 130 per cent when customers with multiple SIM and mobile wideband cards 3 are included (Shulman 2012b, p. 7). 1 AMTC industry produ cts and services harvest-festival in the industry has shifted from mobile voice communications to info transmission system services, such as multimedia messaging service (MMS), mobile TV and internet, music streaming, synergistic gaming and global positioning system (GPS) mapping. Smartphones have changed the intersection of the industry with this growing range of products and services functional on the one device. Revenue for the major segments is set out in Table 1, with key segments discussed.Table 1 AMTC industry revenue by segment (AUD in millions) Year 200506 (a) 200607 (a) 200708 (a) 200809 (a) 200910 (a) 201011 (a) 201112 (a) 201213 (f) 201314 (f) 201415 (f) 201516 (f) 201617 (f) Equipment 990 1 190 1 330 1 650 1 990 2 090 2 603 2 750 2 810 2 900 3 100 3 300 Voice 10 010 9 790 9 490 9 150 8 800 8 450 7 210 6 one hundred twenty 5 450 4 690 4 010 3 450 Messaging 1 090 1 450 1 862 2 060 2 450 2 940 3 405 3 450 4 040 4 600 4 900 5 450 Non-messaging information 320 650 1 290 2 100 3 020 4 050 5 608 6 420 7 300 8 200 8 990 10 032 busy transaction 310 390 560 760 900 1 010 1 204 2 270 2 550 3 800 4 280 5 349 Total industry 12 720 13 470 14 532 15 720 17 160 18 540 20 030 21 010 22 150 24 190 25 280 27 581 Note (a) = actual, (f) = forecast. The figures provided in this table are simulated. aEquipment The sale of handsets and other mobile devices provides a significant and growing share of industry revenue, driven by innovations in high-value smartphones and tablets (mobile computers such as iPads and Kindles that are operated primarily by touchscreen). b Voice Voice services, made up of call charges and access fees, generated the largest source of revenue in the industry in 201112. This segment has benefited from the migration of consumers from fixed services (landlines) to mobile services as borrowing of mobile technology has become astray accepted. However, the segment has become saturated and commoditised, 4 and is now in the decline stage of i ts product life cycle. In order to reduce customer churn (loss of customers to adversary carriers), there has been a trend to offer lie plans with free call proceeding and message services.This trend has resulted in fall average revenue per user (ARPU) and and then voice revenue as a 3 4 SIM (subscriber identity module) and mobile broadband cards store and curse the identity of the mobile phone user. Commoditised subject matter the price of a product or service falls as it become widely available and standardised. Global Strategy and Leadership Page 11 of 20 proportion of total mobile revenue has fallen during the last five years. This light is expected to continue as competition in the voice segment continues to intensify, and as consumers continue to switch to mobile VoIP and the world(a) Interoperability for Microwave Access (WiMax 5) mobile broadband system. Messaging The increasing aim for text/SMS (short message service) and MMS has provided major growth for the ind ustry over the last five years, as consumers switch from voice calls to these types of communications. As well as individual use, businesses are more and more using SMS as a form of customer communication. d Non-messaging info proficient innovations in the form of new times networks and integrated handset products have driven strong growth in the demand for, and use of, non-messaging data (ACMA 2011b). Non-messaging data includes mobile internet, media updates, music streaming, mobile TV, gaming and GPS mapping (Shulman 2012b, p. 15). This growth is expected to continue through to 201617, boosted by the proliferation of high data habitude devices such as smartphones and tablets (Shulman 2012b, p. 15).Mobile carriers have enabled the growth of non-messaging data through the provision of mobile broadband that has enabled high-speed internet access to mobile devices, increased data practice allowances, and access to a variety of content. e Mobile commerce Mobile commerce (M-comm erce) refers to commercial legal proceeding, typically payment services, between customers and merchants that are operated on mobile devices such as smartphones or tablets. M-commerce provides customers with a well-provided and accessible service for making transactions. Applications include mobile banking services, buying goods and services, and paying for car parking, flights and concert tickets (Shulman 2012b, pp. 1516).M-commerce is predicted to provide a source of revenue growth in the AMTC industry, as consumers increasingly make these transactions using their mobile devices rather than backdrop or laptop computers. 2 AMTC industry trends Australia is an advanced country in terms of mobile telecommunications. About 90 per cent of adults own a mobile phone, with a high level of smartphone penetration with about 37 per cent of mobile phone subscribers using a smartphone (ACMA 2011b). Following in the steps of the global industry, the AMTC industry is transforming into a digit al era of new genesis networks, increasing data usage, and innovative mobile devices such as smartphones and tablets.Industry growth is underpinned by the fact that mobile phones, and in particular smartphones, have become the primary election means of communication in Australia. This growth has also been driven by lower prices that have commoditised voice services and tightened business margins. a Network upgrades Mobile network technologies and infrastructures provide a set of standards for mobile devices and telecommunication services that comply with international standards. sporadically these network technologies are upgraded to a new generation. Each new generation of mobile technology is typically characterised by different frequency bands, wider bandwidth and change data transmission rates. The alter availability and coverage of upgraded carrier networks has driven increased demand in the industry.The progression from second generation (2G) to trine generation (3G) net works, and the rollout of fourth generation (4G) from 2011, continues to invigorate industry growth with superior functionality and lower data transmission prices, leading to increased demand. 6 The rollout of 4G technology volition enable a variety of data services, such that revenue from data is forecast to exceed revenue from voice over the years to 201617 (Shulman 2012a, p. 4). 5 6 WiMax is a fourth generation mobile broadband system that provides data speeds of up to 1 gigabyte per second, and data exchanges across greater distances. WiMax applications include mobile broadband connectivity between cities and countries, and are an alternative to cable and digital subscriber line (DSL) for last international nautical mile broadband access to customers. G, introduced in Australia in 1987, was an analogue network that was superseded by the 2G digital network from 1993. 2G offered data services (e. g. texting), and better network capacity and data security. 3G commenced in 2005, with enhanced speed and services, including internet connectivity, MMS and music/video downloads. (Next G is a Telstra 3G network. ) 4G commenced rollout in 2011 and is designed especially for data transmission, with faster speeds and reduced network congestion that let users access fast internet connection, high definition TV and video conferencing from their mobile devices. GSM is one of the early, very basic, networks. Global Strategy and Leadership Page 12 of 20Wireless networks now cover 99 per cent of the Australian population. Telstra was the first telecommunications company in the world to build a nationwide 3G network. More broadly, the rollout of 4G, combined with the implementation of the Australian governments AUD 43 billion National Broadband Network (NBN), 7 exit speed the entry of the Australian economy into the digital era. This in turn go forth embed the importance of telecommunication services in the activities of consumers and businesses. b Data consumption Imp rovements in mobile and smartphone technologies have underscored a shift in demand from voice traffic to data traffic, 8 including messaging, non-messaging data and M-commerce.The development and widespread uptake of applications for mobile devices, in particular smartphones, has generated large revenue gains in non-messaging data. Australia has the third highest penetration of 3G handsets, behind only Japan and South Korea (ACMA 2011a). Online banking, internet browsing and video streaming from sites such as YouTube and live sports websites have contributed significantly. jibe to Shulman (2012a, p. 4), this trend will continue to 201617, with data becoming the primary source of industry revenue. A second key driver of this trend to data traffic is improved network capacity and functionality and cheaper data prices, which are helping to drive strong growth in data consumption.Faster speeds and lower data prices are supporting new value added features for mobile phones and will impr ove the functionality of Internet connectivity via a receiving set data card. This will further increase bandwidth usage as internet browsing, mobile applications (apps software that allows users direct access to content or websites such as as banking, shopping, entertainment, and social networking), mobile TV and M-commerce are all forecast to grow concurrently with accelerating network speeds (Shulman 2012b, p. 9). The rollout of 4G is expected to provide a further boost to data consumption from mobile and data cards, with the sexual climax of demand for super-fast mobile services. c lap Advances in technology have upset down industry barriers in the telecommunication sector.The bundling of products and services is now an industry standard. Voice, video, transaction, media and information services are box together on mobile devices. Smartphones in particular have driven the carrefour of communication products and services in the AMTC industry. afield trends suggest that indu stry convergence will continue as the importance of data increases and the distinction between ISPs and mobile telecommunication carriers dissolves. The global trend is for companies that previously operated in non-telecommunication industries, such as cable operators, mobile-TV technology providers, content owners and search providers, to look to move into the telecommunications sector.To gain greater control over the supply chain major market, participants will want to fully integrate and operate across key statistical distribution channels. This will necessitate that the wired and mobile markets coexist within the media, IT and communications sectors (Shulman 2012a, p. 10). While convergence will drive growth in the AMTC industry, it will also increase the level of competition and hence have a neutral impact on profitability. d Consumer behaviour As the segment piece of the industry has changed over time, so has customer behaviour towards carriers. Mobile communication consumers necessitate a carrier to provide their mobile telecommunication needs.Portability of mobile phone numbers pool means that a consumer can take their number with them if they change from one carrier to another. Consumers can sign up with a carrier with either a postpaid or postpaid plan. 9 With the proliferation of higher functionality smartphones, there is a trend from pay to postpaid subscription by consumers. This shift will increase ARPU, which is currently AUD 61 for postpaid subscribers versus AUD 18 for prepaid subscribers. The extension Y demographic (1835 year olds) will produce increasing ARPU over the years to 201617 as they take up postpaid contracts for access to high cost and high value 3G- and 4G-enabled smartphones and use significant data services.Growing consumer understanding and acceptance of mobile devices, and the variety of mobile data services available, will support greater demand in the industry. Smartphone penetration and turnover is higher in the Gen eration X and Y demographics (people born between 1966 and 1994), as these groups look for new features and products. These trends are significant, given that the Generation X and Y demographics are the largest in Australia, making up over trinity of the population. 7 8 9 The NBN involves the rollout of fibre-to-the-home (FTTH), or high-speed fixed-wire broadband, to 93 per cent of exposit in Australia. Data traffic is a term used to describe the transmission and flow of data. This includes messaging, non-messaging data and mobile commerce. pay plans have a contract period (e. g. 4 months) and the consumer pays in advance per month for a set amount of value for calls, SMS and mobile internet data. When the limit is reached, usage is restricted or charged at substantially higher rates. Postpaid plans are usually monthly contracts that provide a set amount of value which can be exceeded and charged at the same rate and which the customer pays in arrears. Global Strategy and Leaders hip Page 13 of 20 An increasing proportion of Australians now have a range of communication devices and options, with a shift from fixed to mobile voice and data. Young Australians in particular are choosing to communicate using mobile devices or social networking via their computers or laptops, smartphones and VoIP.According to ACMA, gender, age and location appear to be primary drivers of the shift towards mobile phone-only living, with males, those aged 2534 years, and people residing in metropolitan areas of Australia most probable to not have a fixed-line telephone in the home (ACMA 2011a, p. 17). With the growing range of voice and data communication devices comes a greater dependency of households and businesses as they subscribe to these mobile services The all-encompassing product range is allowing a growing number of consumers, sole proprietors and small businesses to rely solely on wireless services for delivering all their communication needs. Such dependency is facili tating a dilate in mobile usage (Shulman 2012a, p. 7). government perplexity Historically, the Australian telecommunications sector was subject to strong government controls and monopoly structures protected by polity in the form of Telstra (formerly Telecom Australia, renamed Telstra Corporation Ltd in 1993), the previously government-controlled telecommunications company (Shulman 2012). Since 1989, the sector has been progressively de correct and opened to competition. The Telecommunications Act 1991 (Cwlth) issued two additional mobile network licences, given to Optus and Vodafone Hutchison Australia (VHA), which has set up a multilateral market. Legislation in 1997 established a regulative framework and industry codes and standards, and provided greater scope for industry self-regulation.Pricing, spectrum licensing and access are the three main areas of regulatory control, as described below. The Australian Consumer and Competition heraldic bearing (ACCC) has the ply to set the pricing that carriers can charge for access to their networks. This pricing power encourages competition in the industry and acts to limit the power and profitability of the three main carriers. Telstra notes that we are required to provide certain services to our competitors using our networks based on the ACCC calculation of the efficient costs of providing these services. In many cases we believe that the ACCC proposes prices that are below our efficient cost of supply there is no right to a merits review of ACCC decisions (Telstra 2012a, p. 16).The Australian Government controls the availability of the spectrum licences that delineate the specific airspace on which mobile signals are transmitted and which operators require to provide mobile services within geographic areas and frequencies. 10 According to Shulman (2012b, p. 27), government policy decisions are required to reissue spectrum licences, and print new spectrum licences. Access to spectrum is a key factor in supporting the rollout of new mobile devices and services. The regulation of access to mobile network services is a third critical factor in the AMTC industry Under the Trade Practices Amendment (Telecommunications) Act 1997, network services can be say whereupon carriers supplying network services are under an obligation to supply the services to requesting service providers.Thus, once a service has been declared, it is essentially under the control of the regulatory framework (Shulman 2012, p. 39). Global System for Mobile Communications (GSM) and Code Division five-fold Access (CDMA) 11 services are declared services subject to regulated access pricing, while the 3G network is not subject to regulation. The potential for the government to mandatory the opening up of a carriers mobile network to rivals is likely to increase competition and reduce the profitability of one or other of the three main carriers. thither is speculation, for example, that the Australian Government may make the 4G network a declared service. 3 AMTC industry competitionStrong industry growth, combined with industry deregulation, contributed to the globalisation of the AMTC industry with the entrance of competitors, most notably Optus and Vodafone Hutchison Australia (VHA). a Industry competitors As at 2012, the AMTC industry is highly concentrated with the three major competitorsTelstra, Optus and VHA accounting for about 90 per cent of industry revenue (Shulman 2012b, p. 22). Over the last seven years the market shares of these competitors have not changed significantly, with Telstra at about 40 per cent, Optus 30 per cent, and VHA 25 per cent. Competition is penetrating among these carriers, each of which has its own full-coverage mobile networks.VHA and Optus introduced strong price competition to the market with capped plans (prepaid and postpaid) and handset subsidies that give consumers low-price handsets as part of their contract. Shulman (2012b, p. 24) estimates that prices have fallen by around 5 per cent per annum over the away five years. 10 11 This airspace is becoming scarce due to the boom in mobile data transmission. CDMA is a transmission method that allows multiple users to use the same channel. Global Strategy and Leadership Page 14 of 20 The level of competition in the AMTC industry is high, given the regulated access to networks and the commoditised nature of voice and messaging services in which competition based on price is very strong.The three major carriers compete against telecommunication resellers who buy capacity on their network services then resell it to consumers, and they also compete against mobile virtual network operators (MVNOs) such as Virgin Mobile. MVNOs use an existing mobile network to sell a service linked to other branded services. For example, Woolworths, an Australian listed company with a significant presence in the retail sector, established an MVNO with Optus (Shulman 2012b, p. 26). Telstra The largest i ndustry competitor, Telstra, is discussed in breaker point in Section C of this case study. Optus Optus is an integrated communications company that provides mobile, national and international services, local telephony and internet services to 9. 5 million customers in Australia. It is the second largest competitor in the AMTC industry.Optus is now a 100 per-cent-owned subsidiary of capital of Singapore Telecommunications Ltd (SingTel), the biggest Asian-based communications group, with operations in over 20 countries and about 470 million mobile customers. SingTel is restructuring Optus following a drop in sales and revenue in 2012. SingTel reduced the workforce at Optus in Australia by about 10 per cent and is changing how it sells to consumers Customers will see more Optusbranded distribution channels Optus is cutting licensing to other retailers and adding its own stores to compete with its rival Telstra, which has rolled out faster mobile-phone networks to expand market sha re (Chen 2012).Optus was the second carrier in Australia to commence the rollout of a 4G network in some of Australias metropolitan areas in kinfolk 2012 Optus has revealed prices that are cheaper, with larger download limits, than Telstras plans However Optus cannot extend its 4G network into regional areas for several years because it does not yet have suitable low-frequency spectrum available (Battersby 2012). With the slowdown in customer growth in the Australian market, Optus is now focusing on improving the customer experience in order to achieve more profitable growth. VHA VHA is a mutual venture between the Vodafone root and Hutchison Whampoa.The Vodafone Group is one of the worlds largest mobile companies with a well-known brand, operations in over 70 countries and over 400 million customers. The large plate of the Vodafone Group provides strong economies of scale in purchasing and the rationalisation of operations, as well as off-shoring shared services to lower-cost l ocations such as India and Hungary. A key part of the Vodafone Group strategy is to achieve growth in mobile data services, curiously in the developed markets. The Vodafone Group aims to grow revenue from data services by upgrading and improving its networks to lead the market. This entails providing a faster and more reliable service, greater network coverage and capacity, and enhanced customer service.To enable this growth, the Vodafone Group plans to stimulate demand by informing and encouraging customers to take up the range of data services that are available now and that are being developed as networks are upgraded and new mobile devices released Vodafone, together with a number of other leading operators, has developed the next wave in personal mobile communications known as luxuriant communication services which will enable data services such as instant messaging or live chat, live video sharing and level transfer across any device and on any network Vodafone is also dev eloping a range of new services to generate additional revenue and enhance the customer experience such as mobile commerce, machine-to-machine and operator armorial bearing (Vodafone 2012, p. 19).Hutchison Whampoa, the other partner in the VHA joint venture, is also a leading global operator of mobile telecommunications and data services, with over 60 million customers and a strong focus on innovative mobile technology. VHA operates the Vodafone, 3, and Crazy Johns brands, and has nearly seven million customers. VHA provides 3G coverage to 94 per cent of Australians. VHA has performed poorly in new-fashioned times due to network coverage difficulties, delays to network upgrades, and poor customer service that has resulted in the loss of one million customers in the two years to July 2012. In the first half of 2012 Bill Morrow was official as the new chief executive officer (CEO), with a focus on improving network coverage, capacity, speed and reliability, and improving customer e xperience.VHA has invested AUD 1 billion in upgrading its network with the rollout of a new 3G network, and in 2013 plans to commence the rollout of 4G in an effort to match Telstra and Optus For Vodafone customers, this is translating into better coverage, better call quality and an improved mobile data experience on smartphones, tablets and mobile broadband devices (Hutchison Telecoms 2012). Global Strategy and Leadership Page 15 of 20 b Alternative products and services The relatively high pricing of 3G and 4G network use has enabled competition from alternative services that operate on lower cost bases. This is offset by the carriers substantial investment to improve the availability and coverage of their networks. 1 2 rooted(p) telecommunications.This product has been in strong decline as consumers have terminated their fixed line phones and switched to mobiles as their first means of communication. Mobile and fixed VoIP. With the growth of the data services segment it is expe cted that internet service providers that offer mobile connectivity via fixed networks will become direct competitive curses For example, Skype allows users located in hotspots sites (e. g. cafes and libraries) with wireless internet access for customers to make free calls and displace text messages via their mobile phone while completely bypassing traditional mobile networks (Shulman 2012b, p. 11). Wi-Fi 12 and WiMax. These fixed wireless networks provide data services at cheaper prices than the mobile networks.The use of these services is growing and they are predicted to become a profitable niche, particularly as the mobile networks are likely to dispute to cope with increased demands on their capacity. As the importance and usage of data transmission increases, ISPs offering WiMax technologies are forecast to pose a greater competitive threat to the AMTC industry. 3 c Barriers to entry There is a range of barriers to entry to the industry. The AMTC industry is capital inten sive. According to Shulman (2012b, p. 27) Upfront investment costs involved in the rollout of a network can be substantial for example each GSM network station can cost up to $500 000 on top o
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