The communications industry

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CHAPTER II

LITERATURE REVIEW

INDUSTRY ENVIRONMENT

The largest market share in the communications industry is, held by Nokia, with Motorola trailing in second place. In general economic conditions in most global industries have hit a point of stagnant or declining sales. In today’s world, businesses need to somewhat accurately forecast the future outlook for global economies and then make investments and decisions accordingly.

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The communications industry is dependent on vendor financing and has taken a big hit because of it. “Vendor financing is an important part of the purchase decision for buyers. Vendor financing helps equipment makers capture large contracts even when capital is scarce while allocating carriers to build out their networks more quickly and cheaply”. (www.activemedia-guide.com/telecos_equipment.htm)

Due to main reliance on vendors, this industry has substantial risks. “The biggest threat to telecommunication hardware vendors may be the growing clout that cable companies have with high speed Internet access using cable modems” (www.activemediaguide.com/telecos_equipment.htm). If Nokia and Motorola do not stay ahead of the cable companies in technology, their position in the market will be highly threatened.

Communication hardware companies are benefiting from “worldwide deregulation in telecommunication services and intense competition among industry players” (www.activemedia-guide.com/telecos_equipment.htm). By deregulating the industry, companies will have more freedom in their decision-making processes.

In addition, there is intense pressure on demand for changing technologies. Communications hardware companies need to ensure that their products are compatible with the newest features. Many are trying their best to differentiate their product from their competitors. Examples include features such as voice mail, two way text messaging, e-mail capability, and Internet access. The competitive advantages in this industry include making versions of the features superior to that of the competition. With that in mind, the industry will experience a transition from copper wire to fiber optic transmission. Due to the high costs of installing fiber optic cables it will take years for the global markets to become saturated. This change in the industry includes benefits such as “voice, data, video, and text over the same line”…and “fiber optic cable does not suffer from signal distortion and degeneration” which “copper wire suffers from” (www.activemedia-guide.com/telecos_equipment.htm).

The communications industry does not show a strong sense of ethical values. Most companies use a generic template. Communication corporations do not make any of their own additions to the documents, nor do they elaborate on the topics, as Motorola has always done. Motorola has a training program that gives their employees “what if” scenarios. These scenarios are a way that Motorola tries to make their employees aware of situations and guides them through the ethical way of handling each. Devoting all the time and money that Motorola does to their ethical training proves that their focus is on conducting business in an ethical way,

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