Case Prompt:
A major telecommunications company, often referred to as a Baby Bell, wants to expand into areas beyond just providing phone services. They're thinking about getting into the electronic home security system market. Your task is to help them decide if this is a good move.
Key Considerations:
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Industry Attractiveness: Use a tool like Porter’s Five Forces to decide if going into the electronic home security business is a good idea. Think about what kind of profits can be expected.
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Value Chain Analysis: Look at the process of how value is added in the home security business.
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Matching Competencies: Analyze if the skills and strengths the Baby Bell company already has will match what’s needed in the home security market.
Final Analysis
To advise the Baby Bell company on entering the electronic home security business:
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Industry Attractiveness:
- Use tools like Porter’s Five Forces to figure out if the home security market is attractive, considering factors like rivalry among companies, threat of new entrants, bargaining power of buyers and suppliers, and threat of substitutes.
- Understand the profit potential and growth prospects in this market.
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Value Chain Analysis:
- Examine each step in the process of providing electronic home security services, from manufacturing and installation to ongoing monitoring and customer support.
- Identify where value is created and where the company can excel.
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Matching Competencies:
- Assess if the skills and strengths of the Baby Bell company match what’s needed in the home security market.
- Consider the company's expertise in installation, operator services, and transmission systems.
Suggest a plan of action based on the assessment, considering the fragmented nature of the home security market, the different market segments, and the economic model involving equipment, installation, and monthly service charges. Emphasize the need for further market research to determine growth and profit potential in each market segment.
