Dish Network: Competition AnalysisCapstone Project

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Competition Analysis: DISH Network

DISH Network Corporation is the nation's third largest pay TV provider. It is primarily concerned with the delivery of digital television services to its 14 million subscribers. Formerly known as EchoStar Communications Corporation, the company was formed by Charles Ergen, his wife Candy Ergen, and a friend, John Defranco (DISH, 2015). DISH was branded officially in 1995 after Echo Star 1, its first successful satellite, was launched. According to DISH (2015), this was the onset of the provision of television services by the company, which consumers could subscribe to. The company is based in Meridian, Colorado and it has employed approximately 24500 employees in the United States. It is well-known for its award winning DVR and HD technology and its high quality equipment, which enable its consumers to gain access to numerous video and audio channels, international channels, and interactive TV applications (DISH, 2015).

At first glance, the satellite television industry appears as one of the calmest yet successful industries. However, cable television companies, such as Charter Communications and Comcast, provide substitute products which make companies like DISH charge less for their services. This text takes a look at DISH Network's goals and objectives, its corporate governance mechanisms, and the strategies it applies. It also includes Porter's five forces analysis of its competitiveness and an analysis of its strengths, weaknesses, opportunities, and threats.

Impact of the company's mission, vision, and primary stakeholders on its overall success

According to Dubrin (2008), a company's vision gives a view of what it aims to accomplish in future, while the mission identifies its purpose. DISH has a vision to utilize its high quality equipment and technology to offer its customers the best satellite TV experience and at the same time gain substantial profits that will lead to the growth of the company and good returns to its shareholders. Its mission is "to be the very best at delivering video anywhere, anytime" (DISH, 2015). With such clear goals that are well articulated in the company's vision and mission, their attainment becomes a companywide campaign and the management team is able to channel the efforts of the entire team towards success. The company also seeks to satisfy the needs of various stakeholders, who include: the directors, the employees, investors, creditors, the government, and the community. The company acts in the best interest of all these stakeholders, which has seen an increase in its profit margins, consumer loyalty, good perception by investors and which has also improved its reputation. Moreover, once all stakeholders are satisfied, there will be less business interruptions and more incentive to work harder, which ultimately contributes to its success

Analyze the five forces of competition to determine how they impact the company

Michael Porter, well-known for his five forces model, provided a framework that managers would use to assess the competitive forces in a given industry (Hill and Jones, 2010). The analysis for DISH Network is as follows:

Threat of new entrants

According to Hill and Jones (2010), potential entrants are those who have not yet entered the market but are capable of doing so. The threat of new entrants for DISH is moderate because on one hand, most new companies cannot afford the technology and equipment that is required in installation. Furthermore, the two main players in the industry, Direct TV and DISH Network, have claimed a large market share and new entrants may not be able to compete well. However, new companies may be able to offer newer and more convenient services to customers.

Buyer power

Since the pay TV industry targets a specific type of customer, the bargaining power of the buyers is high. The customers can easily switch to cable television and they are highly sensitive to changes in price.

Threat of new entrants

Substitute products are those that differ from those produced by a particular company, but satisfy the same needs of the customers (New Charter University, 2015). The threat of new entrants is high because both DIRECTV and DISH face stiff competition from substitute products that are provided by cable television firms. Examples of substitute product providers are Charter Communications and Comcast.

Degree of rivalry

The degree of rivalry can be termed as moderate. The pay TV industry is not that concentrated, but upcoming rivals threaten the huge market share held by DISH. Only one competitor, DIRECTV, matches the companies' influence and power and the exit barriers are not that high. There are, however, high fixed costs and excess capacity in terms of television services.

Supplier power

The supplier power is low because DISH's suppliers are not that concentrated and the entity can easily source its raw materials from a variety of suppliers. Due to its high buyer power, it is able to control the suppliers and influence their prices.

A SWOT analysis for the company

The SWOT analysis is an evaluation of the internal environment, which involves an analysis of the strengths and weaknesses, and the external environment referring to the opportunities the company should explore and the threats that may be present in the market (Bohm, 2008). The SWOT analysis for DISH is as follows:

Strengths

Brand loyalty due to its state of the art technology that provides a good experience to customers.

Cheap rates.

Good customer service with full time attendants.

High definition packages.

A duopoly in direct broadcast services.

A diverse customer base even in the rural areas.

A huge market share.

Effective supply chains and state of the art equipment.

Weaknesses

High dependency on debt finance.

Signal interruptions by harsh conditions of the weather.

High cost of subscriber acquisitions.

High dependence on word of mouth advertising.

Numerous capital expenditures.

Opportunities

Mergers, takeovers and acquisitions of related companies.

Expansion to other countries.

New packages that will enable viewers to select from a range of channels.

The use of mobile digital communications which will see more requests for services.

Exploitation of emerging markets to increase profit margins.

Taking advantage of technological advancements in installation and programming.

Threats

Stiff competition from wireless and cable companies.

Tainted reputation due to the illegality of the tactics it applies in telemarketing.

Susceptibility to dynamic economic changes and fluctuations in exchange rates.

Competitors who may charge lower prices.

Disagreements regarding carriage fee by satellite companies and those who provide the networks.

Possibilities of financial crises and strikes that may affect productivity.

Strategies that will help the company capitalize on its strengths and opportunities, and minimize its weaknesses and threats

Ritcher and Pahl (2007) state that a thorough SWOT analysis will make it easier for a company to formulate effective strategies. In the world of business, majority of companies react to competition in the markets by raising prices for their products and services, which often turns out to be disadvantageous after a period of time. Therefore, the best strategy for DISH is cost leadership. Dubrin (2009) states that an effective cost leader avails products and services to consumers at a low price and in the process, increases their ability to gain a good market share. Since DISH is threatened by competition from substitute products, it would be advisable for it to continue charging low prices. It is already well-known for its cheap prices and hence consumer and brand loyalty will be reinforced because increased competition will see the company increase prices. It will also be the most affordable option for even low income earners and DISH will be able to maintain its market share even in tough economic conditions. If this translates to improved profit margins, the company may decrease its reliance to debt and set up better signal equipment that will not be affected by the weather. Moreover, subscriber acquisitions will be cheaper and the company can invest in better ways of advertising.

Once DISH gains more customers, it will be able to seize various opportunities such as global expansion and provision of better premium packages. In addition, competitors, who may not be able to compete with its prices, may willingly agree to mergers, takeovers, and acquisitions. The company will also be better equipped to deal with threats in the external environment. Inflation, exchange rate fluctuations, and harsh economic conditions will not paralyze the operations of the company. Competitors will struggle to beat its prices and it will also be in a better position to correct its tainted reputation.

Various levels and types of strategies the firm may use to maximize its competitiveness and profitability

There are three levels of business strategies DISH can use to increase its productivity and competitiveness. These are corporate level strategies, business level strategies, and functional level strategies. The various strategies for each level are as follows (Dubrin, 2009):

Corporate level strategies

Strategic alliances- DISH may form alliances with other companies in the pay TV industry that may not have the same sophisticated equipment and market share.

Diversifying its services to include streaming video services and other services provided by cable television firms.

Capitalizing on its strengths- Since DISH is well-known for its cheaper prices, it should use this strategy… [END OF PREVIEW]

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