Evaluation Essay on CenturyLink

Introduction

Headquartered in Monroe, Louisiana, CenturyLink is America's third largest telecommunications company. The services it offers include data and network management, information technology consulting, hosting services and cloud services. The company's vision statement is: "To improve lives, strengthen businesses and connect communities by delivering advanced technologies and solutions with honest and personal service. To achieve this level of success, we must be committed to living the Unifying Principles". The mission statement is "to "be recognized as the first choice to serve the total communications needs of our communities". CenturyLink has over 55 data centers distributed across Asia Pacific, North America, and Europe. Financially, the company recorded a revenue of US$ 17.5 billion in fiscal 2016. In terms of the workforce, the company has approximately 48,000 employees.

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CenturyLink's SWOT Analysis

SWOT is an acronym standing for strengths, weaknesses, opportunities, and threats. Considering these four elements moves a long way in helping one establish the stability of the current internal environment of the organization as well as the company's overarching strategy (Mello, 2009).

Strengths and Weaknesses

Huge reputation - With almost 85 years in the market, the company has built it brand image and reputation extensively.

Well spread high speed fiber optic cables - The company has nearly 265000 miles of domestic fiber-optic plant. The company has been facing a falling curve in total revenue as well as net income.

CenturyLink has been performing poorly in terms of unveiling new innovative and creative solutions.

Opportunities and Threats

CenturyLink has the opportunity to increase long-term evolution (LTE) penetration in both underserved and unserved areas

Penetrate in domestic and international market requiring hybrid solutions. The company has been facing stiff competition from incumbent local exchange carriers (ILECs).

New companies are providing voice over internet protocol services that severely impair CenturyLink's services

Three Scenarios That Threaten Centurylink’s Future Existence

A fast advancing technology is the first major scenario threatening the success and the existence of CenturyLink. Besides new entrants providing VoIP services over the internet, they are also providing faster broadband speeds. Similarly, cable television companies have also began delivering telephone services over the same network.

Second, the lobbying and formulation of new environmental regulations pose a threat against CenturyLink's future. The Paris agreement of 2016 provide a classic example. Stakeholders are pushing for products and production approaches that have zero negative impact on the environment. In thus tune, CenturyLink faces the challenge of replacing a host of existing products.

Third, changing consumer purchasing behavior also threatens CenturyLink's future. As a function to technological advancements, present day consumers are heavily relying on online channels for purchasing as opposed to the traditional supply chain model that relied on physical infrastructure. CenturyLink need to learn and utilize how digital marketing and selling options.

The Probability of Each Future Scenario Occurring

The probability of each of the three future scenarios outlined above is 50%. The three scenarios have similar probabilities of occurring as they all revolve around technological advancements and product innovation.

Strategy for Each Scenario

The strategy for dealing with the first threat is to embrace new technological advancements in general, and the VoIP services in particular. The benefit of embracing VoIP is that majority of consumers today depend on the internet to conduct their businesses. Hence, this approach will make CenturyLink relevant to the internet-generation that comprise the largest proportion of the population.

In dealing with the second threat, the company needs to move towards attaining a climate neutral status. To ensure that all products and operations meet new regulations, the company need of necessity to embrace environmental sustainability. CenturyLink should aim at reducing carbon dependency, risk, and exposure. Moreover, the company should inform the market through marketing initiatives that it is realigning itself in tune with corporate social responsibilities with an emphasis in environmental conservation.

For the third threat, CenturyLink should develop social media sites with the capacity to interact, and engage with customers. For example, the company should have an active website that presents not only the products and services CenturyLink offers but also customer and sales services.

Defense for Each Strategy

With respect to embracing VoIP services, the company will not only reach the i-generation but will also provide better services in terms of convenience, efficiency, and speed. Also, VoIP services provide a better profit margin as compared with traditional network services.

Adopting environmental sustainability initiative will move a long way in safeguarding customer loyalty and also attracting new customers. An increasing environmental consciousness is prompting consumers to act in favor of firms working towards zero carbon emissions and against those showing no effort of countering global warming (Urip & Urip, 2010). Hence, this strategy provides CenturyLink with a competitive angle in the market.

Building social media platforms and claiming an online presence confers the company with two major benefits. First and foremost, CenturyLink will have the opportunity to interact with consumers on daily basis making it possible to realize changes in tastes, needs, and preferences. Second, the company will reduce the costs associated with physical infrastructure supply models.

The Kind of Setting CenturyLink

CenturyLink is in the hyper-competition model. One of the primary indicators that this company is in this setting is that the telecommunications market is facing intense competition and also rapid innovation. As already discussed in the first sector, CenturyLink is facing significant threat from VoIP services and faster broadband speeds from ILECs. Because of these technological milestones, the rival companies have an upper-hand against CenturyLink. Nonetheless, these competitive advantage are not long-lasting, which is another characteristic of hyper-competition.

Players in hypercompetitive markets need to master customer changes as well as technology and innovations among others. In the case of CenturyLink, these two variable are the greatest concerns. On the one hand, the company needs to adopt VoIP services. On the other hand, the organization is under pressure to adjust accordingly to the changes in consumer purchasing behavior.

The 5 Forces Impacting the Attractiveness of an Industry

The five factors that impact the attractiveness of an industry and also shape the strategies of existing players are: (1) threat of new entrants; (2) bargaining power of suppliers; (3) bargaining power of buyers; (4) threat of substitute products; and (5) rivalry among players (Graham, 2005).

Impact of the Five Forces on CenturyLink

Each of these forces have a remarkable impact on CenturyLink. Beginning with the first one, new entrants increase pressure on CenturyLink to not only safeguard its competitive advantages but also invent new ones. For example, new players are not relying on physical outlets to reach the market. All they are doing is to have a vibrant online presence. In so doing, CenturyLink's competitive edge associated with having many and widespread physical stores is neutralized. In response, the company has to find new ways of reaching and supplying to customers.

An increase in suppliers bargaining power poses negative effects on the profitability of firms. In other words, suppliers holding dominant position have the power to decrease CenturyLink's revenue and profit margins. In reaction, the telecom giant has to develop long-term relationships with multiple suppliers. Similarly, the company has to keep experimenting with possible raw materials so that that in the occasion that the prices of one raw material shoots then the firm can shift to alternatives.

In terms of buyers bargaining power, consumers always want to acquire the best by paying the minimum prices possible. Growth in this power exerts pressure on the company's profit margin in the long run. To deal with the ensuing pressure, CenturyLink has to increase its customer base. Generally, smaller consumer bases are more powerful. On top of increasing the number of customers, the firm must make releasing new and innovative products a constant. The bargaining power of buyers is higher for the products they are already familiar with.

The threat of substitutes impacts CenturyLink in that they pose the possibility of meeting customer needs in unique and better ways. At the same time, these substitutes may present a unique value proposition. Hence to ensure that customers do not move to a rival firm, CenturyLink has to ensure that switching cost are very high. Lastly, rivalry among players affects CenturyLink negatively as it fierce competition pushes prices and profits downwards.

The Company is in an Unattractive Industry

Based on the analysis above, CenturyLink is in an unattractive industry. No company wants to get into an industry where there is constant pressure to narrow profit margins. The demand of constant innovation means that a sizeable proportion of revenue must go to research and development. Consequently, there is always pressure to reduce profits.

The Four Strategic Types in the BCG Matrix

Using the BCG matrix, there are four main strategies namely stars, cash cows, question mark, and the dog segment. The stars strategy promises high growth and huge market share. The cash cows strategy refers to businesses that have low growth potential coupled with high market share (Griffin, 2007). The question mark strategy refer to businesses in markets that witness high growth and low market share (Daft & Daft, 2007). The fourth strategy, the dog segment, are businesses that have low market growth and low market share.

The Best Strategy Type for CenturyLink

The question mark strategy best describes CenturyLink. Under this strategy, the firm has either of two options, invest heavily and succeed as the market leader or quit. In this tune, if CenturyLink has any hopes of remaining in the market, the management must agree to invest heavily in research and development, creating an organizational culture that facilitates innovation and creativity, and adjusting accordingly to changing consumer needs, tastes, and preferences. Failure to invest means that rival companies will eventually take all the customer base that CenturyLink now enjoys. Unfortunately, the only way of keeping customers loyal to the brand is to ensure that the company is able to offer products and services that match or even outperform their needs.

References

Daft, R. L., & Daft, R. L. (2007). New era of management. Mason, Ohio: Thomson South-Western.

Graham, G. (2005). Exploring supply chain management in the creative industries. Bradford, England: Emerald Group Pub.

Griffin, R. W. (2007). Fundamentals of management: Core concepts and applications. Boston, Mass: Houghton Mifflin.

Mello, S. (2002). Customer-centric product definition: The key to great product development. Boston: PDC Professional Pub.

Urip, S., & Urip, S. (2010). CSR Strategies: Corporate Social Responsibility for a Competitive Edge in Emerging Markets. Chichester: Wiley.