Telecommunications world is changing and currently, we have new technologies that mark the era of global e-commerce. These technologies include wireless internet access and the broadband. The new technologies have enabled telecommunication services to have high revenues of about six hundred billion USD.
What strengths did AT&T bring to its joint venture with Unisource?
In 1994, when the AT&T-Unisource Communications joint venture took place, AT&T was the largest United States telecommunications company (New York Times, 1994). Even before the smartphone and social media craze of the twenty-first century, AT&T was a dominating company in its quickly developing field. Attractive perks of partnering with the company included: advancements in technology, large amounts of capital, an enormous clientele base, and most importantly, a strong name of the brand and the years of experience. A strong brand name is a necessity for the success of any given service; it can be expensive and time-consuming to maintain. Unisource was composed of small companies that were based in Europe while AT&T was already a highly popular and successful corporation, with approval in every market they entered. In addition, “AT&T was the leading provider of communication services and products including computer systems and network equipments to government agencies and consumers. It was the world’s networking leader having more than 26000 employees 17 countries in Europe.” (Business Wire, 1994).
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What were some potential complications that could have arisen in the AT&T–Unisource joint venture?
First, in the case that AT&T could have found a possibility of making money outside the joint venture, they would have dissolved in order to seek different partners solely for profit maximization. The second potential complication is that governments would have viewed the venture to be a foreign invasion and they would have possibly banned the whole venture affecting the two companies. Other potential complications due to the joint venture would have been: language barriers, incoherence among employees and customers alike, strict European regulations, and fierce competition within the telecommunications market. This particular joint venture provided jobs to employees from seventeen different countries (Business Wire, 1994), and could very well have encountered major hurdles prior to a successful business relationship. There may have arisen possible roadblocks to progress due to a lack of clear communication. That being said, “Unisource is a joint venture by itself. Originally, it included PTT Telecom Netherlands, Sweden’s Telia AB, and Swiss Telecom PTT” (Wild & Wild, 2016, 345). John and Kenneth Wild report that “Later, Telefonica de Espana joined the Unisource venture (2016). This further suggests the possibility of confusion amongst the plethora of diverse cultures and languages incorporated in the AT&T-Unisource. One just cannot help but remember the biblical reference in the story of the Tower of Babel.
Assess the formation of Global One, Unisource, and other partnerships in this case. What strategic factors might have influenced the entry mode choices that these firms make?
| Global One - Sprint, France Telecom, & Deutsche Telekom | AT&T-Unisource - | Other Partnerships (Concert Communications & WorldPartners | |
| Cultural Environment | Challenges arose due to three diverse cultures and the need for communication using three different languages (Wild & Wild, 2016, pg. 345) | Despite cultural differences including separate religions, traditions, values, and the fact that Unisource had “five corporate parents” (Wild & Wild, 2016, pg. 345), they were able to set aside their differences for the good of the joint venture. | World Partners is comprised of 10 companies which present difficulties of languages, values, and religions. Concert Communications include British Telecommunications PLC allied with Telefonica de Espana. This joint venture has obvious barriers to business including language and values |
| Legal & Political Environment |
In Europe during the time of joint ventures and globalization of the telecommunications industry, there were strict regulations against the operations of said communications Corporations. Sprint used a joint partnership in order to gain a proverbial foothold in the European telecommunications community |
All across the board, American companies were jumping at the opportunity to expand globally via joint partnerships with smaller European companies. In Europe during the time of joint ventures and globalization of the telecommunications industry, there were strict regulations against the operations of said communications corporations. | Europe has smaller countries some of which are smaller than a single USA state and therefore they can possibly find themselves taken over by a major foreign company. So they will try and do everything to prevent this |
| Market Size | The joint venture agreement between Sprint, France Telecom and Deutsche Telekom was scrutinized by many for being too monopolistic. Ironically, one of the most outspoken on the issue was AT&T, who was just bitter they did not land the deal with the two European powerhouses. | At the time, AT&T had the largest network in the United States and entering into a European market provided it with “the largest consumer market in the world” (New York Times, 1994). | The market for World Partners spans ten countries including Japan, China, New Zealand, and Australia. At the time there were many small individual companies for each nation, and yet, for a short period, they functioned significantly better than Global One |
| Production & Shipping Costs | Global One would surely be obligated to build production and service centers in France and Germany so as to increase efficiency in its labor force | The CEO of the AT&T-Unisource joint venture realized that they will need a base in Europe in order for them to be competitive there (Wild & Wild, 2016, pg. 345) | World Partners and Concert Communications may incur some problems attempting to regulate employee procedures, shipping, and general production in all of its ten countries. Being such a widespread joint venture creates a stress that simply is not present in a more geographically close corporation |
| International Experience | There was (and still remains to this day) a high sense of competitiveness between telecommunication companies; this greatly benefits the consumer because high competitiveness produces the best quality of services and products. | The globalization of the telecommunications industry was evident to suppliers and the companies wanted to get a head start on expanding in the international marketplace. | The most predominant role of all the joint ventures was to provide network data services and global voice to multinational corporations (Wild & Wild, 2016, pg. 345). In other words, their mission statements were dedicated to the inevitable global expansion that they foresaw occurring in the near future |
References
"AT&T and Unisource Announce New Communications Company for Europe." Free Online Library . Business Wire, 13 Dec. 1994. Web. 02 Nov. 2016.
"Joint Venture by AT&T Aims at Europe Market." Business Day . New York Times, 14 Dec. 1994. Web. 1 Nov. 2016.
Wild, J., Wild, K. (2016). International Business: The Challenges of Globalization . The United States: Pearson Education, Inc
