Course Learning Assignment

MEMO RESPONSES 2

MEMO RESPONSES 2

Memo Responses

Student’s Name

Institutional Affiliations

Memo responses

Memo 1

To: Regional Vice President, Tri-State Region

From: Pricing Manager, Tri-State Region

Re: Revenue from EPIX

Hello, I believe the idea to have an add-on is strategic. It is important to note that add-ons have no direct competition because they are options to a firm's products (Stiving, 2016). This means that an organization can charge higher prices for the add-ons. Add-ons present an opportunity to segment the market. It is true to argue that customers tend to be price-sensitive for add-ons. It is crucial as a manager to be price-sensitive to determine the value you create in the new product. Also, it will help evaluate the customers' willingness to pay. Lowering the price for the new subscribers may seem discriminative in the firm. Therefore, the organization should be strategic so that every subscriber feels accommodated by the organization’s plans.

The law of demand states that if other factors remain constant, an increase in the price of a product would be supplemented by a decrease in the demand for the product. A fall in price may not significantly lead to a decline in revenue. If demand for the product is elastic, the more units sold will outweigh the revenue lost from the price decrease. Therefore, cutting the price to relatively low levels may increase revenue. Suppose the subscriber base rises to 16,500; the company could set the price levels at $8.95. This would result in a total income of $147,675, which means that the company should decide the price considering the subscription base and elasticity of demand. Besides, interdepartmental consultations would be necessary to share views on other means to improve the company's revenue.

Thank you.

Reference

Stiving, M. (2016). Ask the Experts: Are There Advantages to Creating Product Add-Ons Over Bundling?. Pragmatic Institute. Retrieved 1 February 2022, from https://www.pragmaticinstitute.com/resources/articles/product/ask-the-experts-are-there-advantages-to-creating-product-add-ons-vs-bundling/

Memo 3

To: Vice President, Strategy Group

From: Junior Executive, Strategy Group

Re: Strategy Analysis

I recognize your concern about the strategic analysis of our business and our organization. Notably, different firms adopt different approaches towards succeeding in a competitive market. According to Michael porter, the state of competition in an industry depends on five basic forces (Bruin, 2016). I want to respond by providing a detailed analysis of Michael porter's five forces in Time Warner Cable.

The bargaining power of buyers; is a significant force applied in the case of Time Warner Cable. Due to the availability of different television and film entertainment companies, customers can choose to subscribe to them. This means that customers have higher bargaining to shift industry if the quality of services in their preferred industry is not satisfactory. Such shifts affect firms' ratings and advertising expenditures. Bargaining powers of suppliers; the bargaining power of suppliers in the cable industry is low. The leading suppliers are mainly fine arts academies and celebrities. The cable industry has progressively grown due to its good relationship with customers by providing them with the best entertainment services.

Threat to new entrants; different firms have threatened to enter the market due to increased demand for media services. However, the Cable industry has maintained strategic links with entertainment suppliers such as Netflix. Since the capital requirement for the new entry is vast, it would take too long for new firms to survive. The cable industry can sustain its growth because it is well established. Threat to substitution; Cable service providers are experiencing a threat to product substitution. This is due to the introduction of various mix of channels in which television and film programs can be accessed, such as the browsing sites. The last force is the rivalry among the existing firms; Time Warner Cable faces intense competition from the current rivals. However, the company has taken strategic plans to survive, like merging and trade agreements like Samsung and apple. These strategic plans are good to keep the company growing. Therefore, Cable's long-term profitability is not doubtful.

Thank you

Reference

Bruin, L. (2016). Porter's Five Forces EXPLAINED with EXAMPLES | B2U. B2U - Business-to-you.com. Retrieved 1 February 2022, from https://www.business-to-you.com/porters-five-forces/

Memo 5

To: Vice President, Residential Telephone Services

From: Marketing Director, Residential Telephone Services

Re: Customer Retention

A company must identify a problem before a solution is found. In this case, the problem is that the number of VOIP telephone users has declined due to increased expenses on the use of home phones. It is worth noting that a firm can adopt multiple ways to retain customers, for instance, providing a discount of approximately 35% to customers who show signs of quitting using our services. However, the success of this service would be based on terms and conditions such as being availed for a defined period. Although a company will incur a considerable expense, this plan is strategic because it will hold customers for a significant amount of time.

When consumers realize that the discounted prices aim to retain them in the company, they may wish to remove the telephone connection. If the service provider wanted to maintain the customers anymore, he would do so but at the expense of loss. The wireless service might still be non-satisfactory; hence the retained customer may decide to depart from the service. The analysis, in this case, shows that the discount plan may function in a way to maintain customers for some time. However, our company may not realize economic profits because some customers will consider the program while others will not.

Furthermore, the plain is designed to take a short period, meaning that customers may end up terminating the service upon expiry. This means that the service provider will decide whether to continue providing discounts or not. If all plans to retain customers fail, the service provider will be operating at an economic loss situation.

Thank you.

Memo 7

To: Vice president, Marketing

From: Pricing Manager, Central State Region

Re: Strategic Pricing Decision

I believe reducing our price to $79.95 is not strategic. It is worth noting that when there is an increase in the supply of service providers and the demand remains unchanged, prices tend to fall to a lower equilibrium price. However, our case is different considering our competitor.

Instead of reducing the price, we should charge the 10 percent premium over our competitor’s price ($79.95). The following condition is applicable; if we charge a 10 % premium price, our competitor's price will remain at $79.95 while our price will be $87.94, which is 10% above our competitor's. By summing the programming fees, maintenance, service, and billing cost, we get a total cost of $56. At this point, if we charge a 10% premium price, our market share remains at 60 percent. Given that the total household is 110000, 60% will represent 66000 households. The difference between our price ($87.94)) and cost ($56) gives the profit per subscriber. Therefore, in this case, the total gain will be (66000x31.94) = $2108040.

On the other hand, if we charge the same price, the competitor's price and our price will be $79.95. The total cost is $56, and the market share at this point is 65%. Therefore, 65 percent of 110000 is equal to 71500 households. The difference between the price and cost ($79.95-56) gives $23.5 as the profit per subscriber. This means that the total profit is (23.95x71500) = $1712425. This profit is much lower than $2108040, which the company gains when the price is at $87.94. Therefore, my recommendation is that the company should not reduce the price. Instead, it should consider charging a premium price above its competitors.

Thank you

Memo 8

To: Board of Directors

From: Strategic Planning Committee

Re: Potential M&A Target

Here is the response to the memo concerning the acquisition of Viacom. Notably, the business acquisition increases the market power of a firm. The acquiring firm may choose to buy its competitors to increase its market share. In this case, support the idea to acquire Viacom. Besides increasing the market share, acquiring Viacom would be a great idea because it will expose our company to a lot of content and programming. Viacom operates in over 160 countries worldwide and has about a 700million subscribers. Besides, it runs multiple digital networks.

Acquiring the company will open an avenue whereby our content will be placed and streamed on different television networks. Also, it will improve our potential in film production. Due to increased market share, our content and programs will achieve broad access to our subscribers because they will be broadcasted by most Viacom-owned networks such as paramount pictures, MTV, Spike, Nickelodeon, VH1 and, Comedy central. Viacom operates almost everything through social handles. It runs over 400 Facebook pages, 400 YouTube channels, 60 Instagram, and over 100 Twitter handles. Besides, it publishes over a hundred times on each platform except YouTube.

Its efforts in advertisements and research have gained it a broad customer base and large subscription. Viacom uses its posts for social advertisements, driving traffic to its website, and creating awareness about its programming. The company uses advanced technology to determine when influencers can be used to drive content. Besides, the technology provides a notification within eight hours whether any publication would perform very well as expected. All Viacom’s departments have easy and quick access to online data making it cheap to make quick decisions. Therefore, acquiring Viacom will help grow our broadcasting services through advanced technological networks and to a broader customer base.

Thank you

Reference

Britannica, T. Editors of Encyclopaedia (2012, October 10). Viacom Inc.. Encyclopedia Britannica. https://www.britannica.com/topic/Viacom-Inc

Memo 10

To: Chief Operating Officer

From: Director, Content Acquisition

Re: Retransmission Negotiation

The disagreement between the affiliate and our company is basically on the monthly subscriber charges. The affiliate demands $1.25, while our company is willing to offer $1 per month. Before negotiating the deal, it is essential to conduct market research and study the industry to determine how much the affiliate charges for retransmission. Later, both companies should hold a negotiation where each party feels accommodated in the agreement. Since there is a big difference in the costs per subscriber, the affiliate will be willing to participate in the contract negotiation. Besides, the affiliate should be considerate in terms of transmission fees to save the subscriber base. It would be necessary for both companies to settle at $1.15 per subscriber without delays to prevent customers from switching to other substitutes. However, the decision to choose the amount of monthly fee will depend on the agreement in the negotiation.

If the negotiation is delayed for a long time, the number of subscribers in our company will progressively decline. For instance, delaying the negotiation for over a month will lead to 40500 losses in the subscription number. That is; 810000 x (2%+3%) = 40500. Due to a decline in the subscription base, there will be an enormous loss in revenue. This means that the two companies should negotiate quickly to maintain the subscriber base. It is important to note that the affiliate company has a higher market power due to the advantages of the market conditions. Therefore, our company should consider liaising with multiple network affiliates to contract out. Negotiating with other companies may seem a threat to the suggested network affiliate. As a result, our company will slowly grow in the bargaining power in the market and improve in the subscription.

Thank you

Reference

Baye, M. R., Prince, J., & Squalli, J. (2006). Managerial economics and business strategy (Vol. 5). New York, NY: McGraw-Hill.