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¶ … direct broadcast service provider as well as broadcaster, operating in the United States. The company launched its satellite service over two decades ago. Since then, the company has been able to transmit satellite television as well as audio to households across the United States, Latin America and the Caribbean markets. These services correspond to those rendered by several local TV stations, broadcast TV networks, subscription TV services, private video providers and satellite radio services. The consumers who subscribe to these services have access to several different channels. Therefore, DirecTV's rival companies include satellite-based services and cable television services. In the past year, AT&T acquired DirecTV making it a subsidiary at a price of $48.5 billion (Yu, 2014). The following paper will employ different tools to undertake a strategic analysis and selection of strategies encompassing DirecTV.
BCG Matrix Question Marks -- Small Market/High Growth
The main purpose of the BCG matrix is to pinpoint high-growth opportunities by classifying the company's products in relation to rate of growth and market share. By making the most of positive cash flows in products or services with high potential, a business can get the most out of market-share growth prospects (Arline, 2015). The BCG matrix splits product groupings into four segments centered on their market share and market growth. Considering that it was impossible to determine precise and current market share numbers for DirecTV's product groupings, the matrix was altered in relation to sales growth groupings representations and how commercial they are. As a result, classifications were apportioned under four distinctive portfolio sections:
1. Stars
Product grouping that exhibit high sales growth and has a significant contribution to total profits.
2. Question marks
Product grouping exhibiting high sales growth but has a minimal contribution to total profits
3. Cash cows
Product grouping exhibiting low sales growth but at the same time has a significant contribution to total profits
4. Dogs
Product grouping exhibiting low sales growth and has minimal contribution to total profits or nothing at all.
I. Stars -- Large Market/High Growth
DirecTV Latin America
III. Cash Cows -- Large Market/Low Growth
DirecTV USA
IV. Dogs -- Small Market/Low Growth
DirecTV Caribbean
The BCG Matrix indicates that the DirecTV USA is the source of income of the company. In 2013, the company was able to generate about 6 billion in revenue from subscribers in the United States. On the other hand, the rising stars looming on the horizon is the DirecTV Latin America. In the same year, the company was able to generate about $1.6 billion in revenue from subscribers in Latin America. The most underperforming category for the company is DirecTV Caribbean, which is the new business category (DirecTV, 2016).
Grand Strategy Matrix
The Grand Strategy Matrix was used to cultivate different strategies for DirecTV's different business units. As an outcome, product groupings fall under four dissimilar quadrants in relation to their competitive position and market growth. Different strategies can be selected from each of the four quadrants.
i. Quadrant I
This encompasses product groupings with a strong competitive position and fast market growth.
ii. Quadrant II
This encompasses product groupings with a weak competitive position but has fast market growth.
iii. Quadrant III
This encompasses product groupings with a weak competitive position and has slow growth in the market.
iv. Quadrant IV
This encompasses products with a strong competitive position but have slow growth in the market.
Fast Market Growth
Quadrant II Quadrant I
1. Market Development 1. Market Development
2. Product Development 2. Product Development
3. Liquidation 3. Backward Integration
4. Forward Integration Weak Competitive Position
Strong Competitive Position
Quadrant III Quadrant IV
1. Cost-cutting 1. Associated Diversification
2. Associated Diversification 2. Unassociated Diversification
3. Unassociated Diversification 3. Joint Ventures
4. Liquidation
Slow Market Growth
In this case, DirecTV would be grouped under Quadrant…
References
Arline, K. (2015). What Is a BCG Matrix? Business News Daily. Retrieved 19 February, 2016 from: http://www.businessnewsdaily.com/5693-bcg-matrix.html
DirecTV. (2016). Financial Reports and Filings. Retrieved 19 February, 2016 from: http://investor.directv.com/
Yu, R. (2014). AT&T buys DirecTV for $48.5 billion, USA Today. Retrieved 19 February, 2016 from: http://www.usatoday.com/story/news/usanow/2014/05/18/att-buys-directv/9247795/
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