Question

T&T is a firm that follows a strategy of related diversification. Evaluate its success (or lack thereof) with regard to how well it has (1) built on core competencies, (2) shared infrastructures, and (3) increased market power.

Answer 1

Rationale for Related Diversification	Successful/Unsuccessful ?	Why?
1. Build on core competencies	AT&T has been successful building its diversification on core competencies	AT&T has integrated its core networks, supplier lines, customer base, and technological advances to channel their power through each division of the company’s offerings. Each business draws from the benefits of the relationships and service lines in place. This is true for all of its offerings; Internet service, cellular service, home phone service, business services, and television service.
2. Share infrastructures	AT&T has been successful building revenue by sharing infrastructures throughout its different divisions.	Across AT&T’s offerings of service there are shared infrastructures and activities. Whether it’s the cellular towers that service both home and business customers or the shared hard wired lines that deliver both internet and home phone service, AT&T makes the most use of their infrastructure to deliver multiple products. They also make use of increasing revenue and sales by offering multiple products and services in a centralized sales office, as well as all in one place on their website.
3. Increase market power	AT&T has been successful in increasing its market power through related diversification.	AT&T has achieved this is a number of ways. In the cellular market, not only do they provide the cellular service, but have also become their own distributors for the cell phones themselves by offering a variety of phones at their sales offices and online programmed especially for their networks. The same is true for their television service both with U-Verse and DirecTV as their market both the service and the equipment. They have also increased their market power by increasing negotiating power with their customers in offering bundled services where the customer can sign up for multiple forms of service at the same time and save money in doing so. This is true for supplier negotiating power as well. AT&T can offer a supplier to opportunity to sell different products through the same distribution lines because they have multiple divisions in which the supplier’s products can be marketed.