Cox Communications competitive analysis using Porter's Five Forces

Cox Communication

The pace of progress in the economic, social, technological aspects is related to human living whether professional or personal demands an easy access. Easy access centered towards information, knowledge, resources, finances, opportunities and profitability. The scientist, businessmen and laureates call it the "era of telecommunication." This new avenue has gathered attention of local corporate and investors. The opportunities of investment, growth, returns are high. Although the elements of local rivalry exist, accompanied by foreign investors, and unless modified and revised strategies aren't formulated by the giants of telecommunication supremacy is difficult to achieve.

Looking into the profile of particular telecommunication giant COX. it's an industry with strong market hold. The company is itself a dynamic unit, which for the sake of supremacy, dominance and in view of customers need keep launching new products and incentives.

PORTER'S FORCES

Competition, challenges are dependent on each other. The rules delivered by Porter best fit into the present era that requires competence and formulation of effective strategies. The Porter's Five Forces is a simple but powerful tool for understanding where power lies in a business situation. It is a useful application because it helps in understanding and evaluating both the strength of company's current competitive position and the strength of a position that company is intending and planning to move into. Looking into the profiles of telecommunication companies, the factors that significantly mould the COX's profile and growth are; the satisfaction of the customers and, the introduction of latest technology at nominal rates.

With a clear understanding of where the strength actually lies, company can take fair advantage of a powerful situations with an opportunistic approach, improve a dimmed situations, and avoid taking wrong measures. This makes it key part of monitoring and handling the expected and unforeseen business conditions.

Situation of weakness is a self explanatory term which is either unexpected scenario-based or product failure.

APPLICATION of PORTER'S FORCES and FACED IMPLICATIONS

Porter's Five Forces" analysis assumes that there are five important forces that determine competitive power in a situation. These are:

Influence of Supplier - Ease for suppliers to drive up prices.

The factor is controlled by the suppliers of each key input.

It was also influenced by the adaptability of the COX's product or services, and its exclusivity.

The company's strength and control over the market. This is evaluation towards the factor of dominance.

It also includes some monetary predictions i.e. The cost of switching from one product to another.

The control of the COX's profile is influenced the by presence of rival companies. Few the choices of suppliers, more powerful such that sole supplier stands in the market.

Purchasing Power of the Buyer - Influence of buyer's towards fixing of product's value.

The factor is monitored by the numbers of major buyers / consumers.

The importance of individual buyer towards company's business.

If the customer network is narrow, then the customers are often in the position to dictate their respective terms and conditions.

Competent Companies- Number and capability of market competitors.

Presence of many competitors, and their comparable and attractive products and services offering, influence the hold of the respective company.

If a suitable deal with suppliers and buyers can't be worked out, the company's market share gets disturbed.

Situations when the rival company offers what the respective can not do. This again disturbs the market shares of the respective company significantly.

Replacements and Alternatives-Ability of the customers in finding alternatives towards the Cox's products or services.

If substitution is easy and substitution is viable, then this weakens Cox's power.

Threat of New Comers - Power is also affected by the ability of people to enter the market.

If minor input in terms of finances and time is required, than others can enter market and compete effectively.

If there are few economies of scale in place, or if the company has little protection for its key technologies, then new competitors can quickly enter market and distort the shares holding.

If Cox has strong and durable barriers to entry, then the Cox can preserve a favorable position and take fair advantage of it.

COX: GENERIC STRATEGY

Following strategies have been formulated by Cox to subsidized towards the incentives and plans launched by the rival companies.

COST MONITORING

COST ADVANTAGE' is the focus. The low cost leader in this communication market gains competitive advantage from being able to many to produce at the lowest cost. Products are lauched, facilities icorporated, labor is recruited and trained to deliver his/her utmost in bring the cost of the product lowest. However, low cost input does not always lead to low price of the product, as the total expenses required in the production phase may exceed the estimated expenses.

VARIETY in the KIND of SERVICE

Varied goods and services fulfils the needs of the customers by overcoming sustainable competitive factors. This allows COX to fix the prices irrespectively and focus on values, services, research, manpower and expertise, in all the perfect combination of teamwork that generates a comparatively higher price and a better margin. The benefits of varied prices require Cox to segmentize the market and customers into the factions such the product can be delivered to the particular class of the market, thereby generating a higher price.

The differentiating organization will incur additional costs in creating their competitive advantage.These costs must be offset by the increase in revenue generated by sales. Costs must be recovered. There is also the chance that any differentiation could be copied by competitors. Therefore there is always an incentive to innovated and continuously improve, which comes with the passage of time i.e. introduction of VoIP by replacing Telephony.

COX: RIVALS and STANDING

Cox's rivals include ILECs, Time Warner, Charter and Comcast.

Refering to the Exhibit 10, the following conclusion can be easily out i.e. Cox shares large edge over its rivals on the virtue of its customer satisfaction, lauch of products that offer incentives and optimized utility.

In the following areas,

Managed local network

Reliability with Broadband

Interconnection with PSTN

Regulatory compliance

Provisioning the company offers wide range of servicing and facilties which rival companies don't. The company certainly has certain advantages much because of its services and offerings. However the price factor is an area of major concern for Cox. But by offering discounts to its old customers Cox is commited towards forging strong ties with its old customers, and definitely this attirubte gets valuation from the new customers, as for some the new customers services, technology sidelines the monterary influence.

STRATEGIES

Cox marketers observed a strong customer response when they offered BUNDLED STRATEGY i.e. telephony on a bundled basis with video and high speed Internet access services. Cox typically promoted low total price. Cox offered subsidized rates for particular number of months. The results of the deal where outstanding, reflecting the self-selection, which is the commitment of the loyal customers towards each and all offerings of Cox.

Following standards have been formulating factors towards Cox strategies and have given an edge to Cox over ILECs i.e.

Cox doesn't face an obligation to provide phone services to all homes in its franchises

Ignored geographic averging rules doesn't face any requirement to sell unbundled network elements doesn't face regulations mandating the provision of lifeline service.

Cox had no obligation to contribute VoIP derived revenues to the Universal Service Fund, however the Cox management decided to contribute voluntarily. This way Cox has tried to enhance and build its stature as both a good corporate citizen and established carrier.

Although VoIP was in line; Cox didn't breakout its variable and fixed expenses for residential telephony.

RECOMMENDATIONS

Cox had proven its ability to profitably provide first rate telephone service. In doing so, they have experienced that bundled offerings could significantly reduce churn.

There is no to launch the operations of VoIP speedily. By doing so Cox can lock in customers, otherwise Cox would be exposed to competition and rivalry from DBS and other ILECs who are steadily and gradually building the art and science of bundling. Cox should better plan its ploicy such that it can cater for the supremacy of the competitors.

The training cost of the employees will substainially reduce through the implementation of VoIP, as the complaints and queries of the customers using VoIPs will be directly handled by the regional call centers.

The task for the implementation of the new projects should be bifurcated so that they can be managed and handled well. The Cox management at first should apply for grant of permission from the regulatory, negogiate an interconnection agreement with the incumbents, and avoid the circuits and related utilities from the incumbents once the initial agreement has been taken care off.

The related cost and finanacial estimates should be made in view with the future plans of the competitors so that Cox can bear the unexpected surprises with confidence, without getting affacted by its product sale and customers expectations.

Cox should lauch a reseach department within its unit, that its completely focused towards the lauch of the technology that intends to supersede VoIP. The complany should plan for the next 10-20 years rather than jumbling up in the current scanerios. The difficculties and complications of the currently are manageable, but its better to prepare before these mushrooms companies takeoff the stage.