Analyzing the Directv Phenomenon

¶ … 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

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

II. Question Marks -- Small Market/High Growth

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 I owing to the reason that the company has fast market growth and a strong competitive position as it boasts of almost one quarter of the market.

Quantitative Strategic Planning Matrix (QSPM)

The Quantitative Strategic Planning Matrix (QSPM) was employed for assessing conceivable and prospective strategies and making comparisons of them as alternatives among each other. This particular approach was beneficial in setting significances in relation to strategies that are more appealing and fitting for DIRECTV taking into account their aims and objectives.

Expand the market in Latin America

Delve into online television

Key Factors

Weight

Rating

Weighted Score

Rating

Weighted Score

Opportunities

Partnerships or Agreements

0.15

3

0.45

4

0.60

Increasing Demand Basic Service

0.15

4

0.60

2

0.30

Constructive Demand for High Definition (HD)

0.10

1

0.10

3

0.30

1st Party Programming

0.05

2

0.10

3

0.15

25% growth increase in Latin America

0.10

4

0.40

1

0.10

Threats

Intense competition

0.10

3

0.30

3

0.30

HULU, Netflix cable services

0.10

3

0.30

1

0.10

Prospective Merger agreements

0.07

2

0.14

3

0.21

Third party programming

0.10

1

0.10

2

0.20

Theft and loss of digital content

0.07

2

0.14

1

0.07

Total

1.00

Strengths

Strong Market Position

0.15

3

0.45

2

0.30

Strong Customer Service

0.10

4

0.40

3

0.30

High Consumer Satisfaction

0.05

4

0.20

4

0.20

Strong Infrastructure

0.10

4

0.40

3

0.30

High Sales Growth

0.10

3

0.30

2

0.10

Weaknesses

Burden of Debt

0.15

4

0.60

2

0.40

Concentrated Operations

0.10

2

0.20

4

0.40

Capital Expenditures

0.05

2

0.10

3

0.15

Programming Costs

0.10

1

0.10

2

0.20

Return on Equity

0.10

4

0.40

3

0.30

Total

1.00

5.78

4.98

Possible Strategies

One of the possible strategies include DirecTV starting to have and transmitting their own shows. This is referred to as 1st party programming. Despite the fact that this might be a costly approach, this strategic approach will increase the profitability, market share and position of the company in the long- run. Another possible strategy is for DirecTV to start offering internet as well as telephone services to its consumers. The increase in the product line will prompt the prevailing subscribers as well as potential ones to purchase internet and television as well. This will increase the revenue and expand the market share of the company. Another possible strategy for DirecTV is IPTV. the reasoning is that owing to the advancement in technology and preferences of the consumers, internet television is fast growing and increasing in the market.

Cultural Strategies to be considered

A number of cultural factors should be considered in analyzing and choosing among the alternative strategies. One of the factors is language barriers. For instance, if DirecTV plans to start airing its own television shows, it is imperative to consider language barriers. For instance, a majority of its consumers and subscribers in Latin America do not speak and barely understand English. Therefore, the company will have to consider this and air many different, dissimilar shows. The other cultural factor to take into account is the technological preference of its targeted consumer base. For instance, the question to be considered is whether the consumers prefer internet television or the conventional television.