...Case No.2 Arch Communications Group Inc. 1. To me it seams that Arch is showing good performance and risky and agresive growth in bad industry. The paging industry is growing on average of 27% a year and it is experiacing a market shift from bussines clients to consumer clients, but there are signs that show that this industry is not favorable and has 3 big problems that make the industry fragile and vulnerable. • There is fierce competition in the industry that has turned into a price war. This reduces the margins and drives out profitability. Curently the industry is consolidating (mergers and aqusitions), but it does not relieve the presure and the competition with lower price goes on. • The industry is dependant on 2 large supplyers. Most probably they are avere of this situation and use it but grabing the bigger share of profits generated by pagers, by seting prices for the devices higher than they could with more competitors around. The cost of paging devices tied up cash in paging service companies, causing them to look for means of financing for that and that results in large interest expense and depreciation. • The case describes the cellular phone service industry as harmless, but as a much younger industry it is already almoust the size of paging industry (34milj. Pagers, 32milj. Mobile phones). The pager is a complement product for cell phone, althought they both use similar technology. In case cellulars develop mesaging service the...
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