British Telecom Essay -- GCSE Business Management Studies Essays

British Telecom My aim in this investigation is to discuss whether or not British Telecom has successfully grown and developed since its Privatisation to compete on a world scale. In addition to this has it any long-term strategies for future growth and development of products. According to the 1996 Budget Red Book, more than 50 major businesses have been privatised since 1979 and the state owned sector of industry has been reduced be two-thirds. British Telecom was privatised in 1984, with no major restructuring. This meant that a public monopoly was transferred directly into private hands, this natural monopoly benefited from having economies of scale. Of course this move had it's advantages but there were also disadvantages. These were mainly among the staff who now had much less of an 'easy time' in work. Not only this but as a result of privatisation the company obviously became cost effective and jobs were lost in order to reduce costs. 'Privatisation is seen as a way of reasserting consumer sovereignty, raising standards of provision, of increasing efficiency and of reducing costs.' There are many reasons to why the Government chose a course of denationalisation. State monopolies create inefficiency, are poor in innovation and restrict consumer choice; instead of the consumer being sovereign, power has been transferred to the state and its bureaucracies. Before privatisation all nationalised companies had to have their expenditure passed by the Treasury, because of this they found it difficult to raise money. During these years almost 250,000 people who wanted a new phone line couldn't get them and BT didn't know what to charge the people who did have them. Privatisation gave companies t... ...nge' from Mercury and have seen their share price rise from an initial 130p back in 1984 to an incredible 1351p now. BT, while being a natural monopoly in Britain realise that their position is being challenged. Although their share of the land-line market has still nearly been all encompassing they have seen that the market as a whole decrease as almost half of the UK population have gone out and bought mobile phones. In answer to this threat BT have taken up a strong position in the mobile phone market themselves, competing alongside the big guns such as Orange and Vodafone. Through several acquisitions they have established themselves as a leading company with 7 million UK customers and very sound plans for the future, which they see as being a unification of the latest mobile phone technology along with the immense power the Internet has to offer.