Shattered Dreams free essay sample

What was the planned strategy of Level 3 Communications in the late 1990s? Ans. To offer low-priced fiber-optic network that covers connections to major cities in the US focusing on the internet traffic for service providers and corporations. The plan starting from gathering funding from investors to build up a high capacity fiber-optic network that linked major cities in the US, then cut prices to attract major users of the networks including corporations, Internet service providers like AOL and traditional telecommunications companies. Why was Level 3 Communications able to raise so much capital? Ans. Because the business that Level 3 Communications were entering seemed to be promising in the view of investors. 2. 1A study in 1997 showed that the internet traffic was growing at 1000 percent a year expecting huge demand while supply side; the fiber-optic capacity, was still small. 2. 2The investors also had confident in Mr. Jim Crowe who started the ideas (eg. Mr. Walter Scott; an Omaha-based construction billionaire, he saw Crowe as a strategic visionary). We will write a custom essay sample on Shattered Dreams or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page . Investor sees the opportunity in the new business and wanted to be the first. 3. Was that strategy unrealized, or is it still part of the intended strategy of the firm? Ans. The strategy was realized but not successful as firstly expected. The fund was quickly gathered by a many investors, other than Crowe and Walter Scott Jr. , a legendary investor like Warrant Buffet also funded the project. The high capacity fiber-optic network was built. The price was low but it does not bring customers as much as expected. This was because Level 3 communications were not the only one who saw the opportunity. There are a lot of companies invested in the fiber-optic network business and build up capacity. The capacity was later on more than demand and pulled the price down without any effort in intentionally cut the price. The company was almost into bankruptcy but it could avoid that and then the strategy was shifted to involve the market consolidation and expansion of business based on the foundation of fiber-optic networks. 4. What have been the emergent strategies of Level 3 over the last few years? How do these emergent strategies fit with Level 3†s original plans? Ans. Emergent strategies were used to prevent Level 3 from bankruptcy. 4. 1Additional $500 Million cash were supported by the investors to acquire two software companies namely; Software Spectrum and Corporate Software so that Level 3 could ultimately use its fiber-optic networks to distribute and maintain the software made by companies such as Microsoft on the PCs and Servers as means to reduce cost 4. Level 3 consolidate the market by acquiring bankrupt competitor, Genuity at very low price. 4. 3Level 3 expand to offer Voice over Internet Protocol services to consumers and corporations aiming at market dominated by traditional wire line telephone companies. 5. Were any cognitive biases at work at Level 3, other communications companies, and the investment community during 1997-2001? What were those biases ? what were the effects of those biases? How might an entrepreneur like Jim Crowe have avoided them? Ans. Yes, there were cognitive biases at Level 3 and other companies as well as the investors during 1997-2001. The biases were†¦ 5. 1The statement in 1996 by Michael O’Dell, the chief scientist at UUNET that internet service had growth of 1000 percent. Later on, in October 1998, there was a study conducted by an internet researcher at ATT labs; Andrew Odlyzko that the growth was at only 100 percent but UUNET did not believe and still use the 1000 percent figures up until September 2000. . New technologies were increasing to enhance the efficiency of the existing fibers so that there was reduction in needs for new fiber. But once, the money was in, no one paid attention. 5. 3Many companies rush to enter the business around the same time assuming that they will be the first mover but they did not gather enough information on how many other companies jumping into the business and how much capacity expected to build up. Later on, it was found that capacity rapidly outstripped demand and by late 2002, less than 3 percent of the fiber that had been laid in the ground was actually being used. Effects: These biases led to mistake in planning of capacity building, pricing, and marketing. Many players also induced too much supply in the market made the price plunge down. Level 3 stock price tumbled by 95% and the company almost bankrupt. How to avoid. Carefully study and regularly monitor the business environment including demand growth, supply growth, and the competitiveness among players in the market, change in Technology, as well as economic circumstance =gt; in seek of strength, weakness, opportunity and threat. 2)Set periodical milestones or control points (result control points) and check points (process control points) to track the progress and the result of the plan closely. 3)Adjust plan, assumption, target, goal immediately if there were significant change in business environment mentioned in 1.