Advanced Strategy Analysis (SMM331): BT Group Case Study Homework

This document presents a comprehensive analysis of BT Group's strategic decisions, addressing key aspects of its operations within the telecommunications industry. The analysis begins with an examination of BT's approach to open innovation, emphasizing the integration of external resources and the use of collaborative communities to foster innovation. The document then delves into BT's digital strategy, highlighting the company's response to the changing telecommunications landscape and its focus on leveraging digital resources to create customer value. Furthermore, the assignment explores BT's use of mergers and acquisitions as a tool for business expansion, providing examples of its acquisition history and the impact of these strategies on its market position. Finally, the analysis examines the shift from products to platforms in the modern business world, using Airbnb as an example to illustrate the challenges and opportunities associated with platform-based business models. The document draws upon relevant theoretical frameworks and concepts to provide a well-structured and insightful analysis of BT Group's strategic decisions and their implications.

Answer to Question 1:
British Telecom is one of the largest telecommunication company in the world even after 170 years of its
business. The company has focused mainly on the internal resources to reach the success till now. But the
increasing market competition and technological changes has made the company think of the open innovation
aspects for the company development. Open innovation advocates the integration of external resources in the
firm operations, mainly in external knowledge sources form (Lecture 5, slide 17). The Managing Director
Product and Services Research and Open Innovation, Jean-Marc Frangos thinks that integration of external
resources are necessary in the age of technology and internet of things, so that their firm does not miss out the
trends.
The first step in open innovation is to consider whether the internal resources are enough for the firm
development. The firms have to examine the limitations of internal dynamics so that they can evaluate the
extent of external knowledge requirements. This can be done using the resource based VRIN analysis of the
Firm (lecture 5, slide 6). BT has used both their internal and external ideas to go forward in the path of
innovation. The firms needs cumulative knowledge for their innovations and therefore they have chosen the
collaborative communities approach for open innovation (Lecture 5, slide 31). In this process, the BT group has
collaborated with external knowledge resources like High-tech start-ups, universities, customers, R&D labs and
other corporates. In order to integrate the external resources with that of the in-house researches, Frangos has
developed integration technology for the firm. The capabilities in integration of external and internal innovation
are increased in the sections like cloud technologies, virtual realities, TV-over-IP and IoT.

Answer to question 2:
Using the digital resources in order to create value for the customers and capturing the market value through
unique approach is the main strategy in telecommunication business (Lecture 8, slide 15). The BT group has
realised the context of huge changes in the telecommunication industry. The emergence of new technology has
increased the speed of connectivity and competition of the market at the same time. Since the discovery of the
dot.com bubble, the Telco industry has changed in co text of its consumption patterns. The customers the access
to the smart phones that have increased the data consumption and changed the traditional calls or SMS systems.
The VoIP is increasing while the mobile and fixed voices are declining. The nature of the market has become
more concentrated. The companies those were in the top five in the business segments used to have one-third of
the whole business profits. But in the modern business contexts, these big names do not even earn the half of
the share they earn back then.
BT has to design their digital strategies on the basis of four key themes- scale, scope of digital business, the
speed in decision making and source of value capture and creation (Lecture 8, slide 16). This strategy would
help the company to assess the opportunities they can have in the competitive Telco industry. The new
companies are capturing the market scopes. In spite of that fact, the BT group can exercise the opportunities in
the digital transformation in their five customer facing units. Digitalisation of commercial offerings,
collaborations with external knowledge sources and SDN, NFV technologies can actually help the company to
stand the competitive markets and adopt to the new changes in market trends. The BT group can also consider
to join other forces in the market so that they can extend their offerings in the Telco industry.

Answer to Question 3:
Merger and acquisitions are the process to expand the company boundaries in the industry. According to the
definition of acquisition, it is a strategy through which a company buys or controls another company with the
objective of making the acquired company a part of its portfolio (Lecture 6, slide 4). On the other hand, the
merger is the co-equal partnership of two companies where they agrees to integrate their operations (Lecture 6,
slide 4). The strategy of Merger and acquisition is prevalent in the industries like Telecommunication and the
BT group has used this technique for their business expansion. Merger and acquisitions can have huge impact
on the profit marks of the company. This can generate free cash flow, decrease survival risks, be helpful in
managing agency problems and can be used as a tool of diversification.
As a telecommunication firm, BT has a series of acquisition in its journey. In 1846, the name of the company
was Electric Telegraph Company and it was a part of government subsidiaries. Later it was privatised and since
then it has used acquisition as a strategy of business expansion. The company bought Infonet in order to
improve its capability to supply more networked IT services in global multisite organisations. The acquisition
of Radianz has given it the scope to add value services in financial markets. The merger with some of its
competitors resulted into the new company Open reach that helped to establish BT at the same platforms with
its competitors and also managed the telecommunication system of UK. The list of acquisition continues as in
2016, the BT group acquired EE. This made the company largest provider of Telco in the UK. In 2016, the
company led the fixed broad market of UK putting behind all its competitors at once. All these success in
acquisition strategies shows the potential impact of the integration process for the company operations.

Answer to Question 4:
The modern business world can see the shifts from products to platforms. Most of the business big names are
dealing with the platform structure instead of offering any kind of product all by themselves. Through the
platforms, value is created between the consumers and external producers. The platforms facilitate the exchange
of derives or goods and consummates the user matches (Lecture 3, slide 12). Airbnb is one such platforms
services that provides accommodations to the people who are looking for it and let the local people rent their
homes for income. As the platform services, the companies can face various challenges in their operations. The
first challenge can be the negative network impact. If the accommodation market has larger pool in a definite
side, it is difficult to make all the options available for the customers (Lecture 3, slide 20). Other than that
resource allocation can be another challenge for the platform management plan. As the Airbnb do not have
direct access to the properties, there can be miscommunication and lack of resources for their customers.
Choice of the governance style can also be a challenge for Airbnb as the market trends are not the same in all
parts of the world. In the platform system, sight lack of the managerial skills of the managers can cast a huge
loss for the company. Therefore, companies like Airbnb has to take extra cautions to make their business
effective. Other than that, the new companies are regularly entering the platform industries. The customers are
getting more options and they spent little time for their research work. Therefore, they can easily shift to other
party which can be problematic for the business purpose of Airbnb. All these challenges are to be managed by
Airbnb to get market leadership.