The Impact of Macroeconomic Variables on the Telecommunication Industry

1704 Words Jan 14th, 2007 7 Pages
Running head: ENVIORONMENTAL ANALYSIS

The Impact of Macroeconomic Variables on the Telecommunication Industry
University of Phoenix
MBA 501
Forces Influencing Business in the 21st Century
January 22, 2007

Introduction
The intent of this paper is to perform an analysis of the cable industry's external environment. The first sections of the document will discuss environmental scanning and define the telecommunication niche that is currently occupied by cable operators such as Comcast. The next section will identify the macroeconomic variables that currently impact cable operators and will compare two variables to two corresponding industry variables. The final section of the paper will identify some of the challenges and opportunities
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These changes in disposable income impacts the cable industry's subscriber numbers through subscriber churn (subscriber leaving) and premium services churn (dropping and adding premium services), these changes are reflected in revenue stream which in turn affects the market value of the cable operators.
Inflation the "general increase in the level of prices" McConnell, Brue (2004) pg 82 is one of the macroeconomic variables that directly impacts the revenue stream of cable operators. Like most industries that maintain fleets of vehicle the escalating cost of fuel has an immediate impact on the bottom line. As a service providers and the owner of the infrastructure one of our largest costs is related to the installation of our services and hardware. In most cases after a new customer orders service the company rolls a truck. A truck roll requires that a technician is scheduled to drive to the customers home, connect their home to our plant, install the ordered product into the customers home, activate the product and do onsite training of the customer. The escalating cost of fuel directly increases the cost of truck rolls which depending on installer status (employee or contractor) is on average a $150.00. In most cases the company does not charge an install fee for this truck roll so the cost is added to the ROI (Return on Investment) that is calculated for each customer. Interest rates also have a profound impact on the cable industry, there are huge
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