Patrick Zuliani is the founder and CEO of Zuliani Telecom, a publicly traded cell phone service...

 

Transcribed Image Text:

Patrick Zuliani is the founder and CEO of Zuliani Telecom, a publicly traded cell phone service provider that is about to start offering service in remote areas across Canada (see grey area in figure 1) following the approval of their application to the Canadian Radio-television and Telecommunications Commission (CRTC). The CRTC was willing to fast-track the approval for Zuliani Telecom to enter these markets as there is often only one provider of wireless mobile in these areas and rural Candians have been complaining about high prices and poor customer service. The CRTC has not yet granted them access to any of the densely populated urban areas of Canada (see yellow area figure 1). Zuliani Canada's current mobile wireless industry can best be described as an oligopoly where Rogers, Telus, and Bell have over a 90% market share. This means that the market can be potentially very lucrative if Zuliani telecom can strategically secure a foothold in the rural market and create a strong business case to present to the CRTC so that they gain access to the urban market. WA OR Canada ID MT WY ND SD MB NE Figure 1: Canada Cell Phone Coverage Map MN IA WI Hudson Bay ON MI NY ос NH PE The shareholders and the board of directors for Zuliani Telecom are getting very impatient with the current share price of the company and the large capital investments that have been made to enter the Canadian wireless mobile market. The pressure is on Mr. Zuliani to present a strategic plan that will impress the board and show the company's long-term profit outlook justifies the recent investments. Mr. Zuliani's friend, Nathan Price, has recommended you based on your outstanding work helping Northern Cottage Living. Therefore, Zuliani Telecom has made you a lucrative offer to consult them during this important time. Advertising Strategy: In order to increase market share in Zuliani Telecom's current Canadian markets they are considering launching a new advertising campaign. Analysts have studied the past behaviour of Bell, Telus, and Rogers and how they react to advertising campaigns by their competitors and what the effect has been on profits. Research has shown that all 3 major cell phone service providers have behaved very similarly in the past with similar effects on profit levels. Zuliani has narrowed their strategy to 3 options: 1) 'Extensive' Advertising Campaign 2) 'Targeted' Advertising Campaign 3) 'Minimal' Advertising Campaign Zuliani Telecom will essentially only be competing with one existing company in rural markets who have the exact same options available to them. A summary of the options and the expected adjustment in yearly profits is shown in figure 2. Minimal (45, 35) (60, 0) (80, -40) Figure 2: Rural Advertising Strategy Outcome Summary Zuliani Competition Targeted (0,40) (40, 30) (20,-20) Minimal Targeted Extensive Extensive (-80, 50) (-60, 10) (-40, 0) Mr. Zuliani wants you to use your knowledge of game theory to give an in-depth analysis of what Zuliani Telecom should do and what they can expect their competitors will do. Patrick Zuliani is the founder and CEO of Zuliani Telecom, a publicly traded cell phone service provider that is about to start offering service in remote areas across Canada (see grey area in figure 1) following the approval of their application to the Canadian Radio-television and Telecommunications Commission (CRTC). The CRTC was willing to fast-track the approval for Zuliani Telecom to enter these markets as there is often only one provider of wireless mobile in these areas and rural Candians have been complaining about high prices and poor customer service. The CRTC has not yet granted them access to any of the densely populated urban areas of Canada (see yellow area figure 1). Zuliani Canada's current mobile wireless industry can best be described as an oligopoly where Rogers, Telus, and Bell have over a 90% market share. This means that the market can be potentially very lucrative if Zuliani telecom can strategically secure a foothold in the rural market and create a strong business case to present to the CRTC so that they gain access to the urban market. WA OR Canada ID MT WY ND SD MB NE Figure 1: Canada Cell Phone Coverage Map MN IA WI Hudson Bay ON MI NY ос NH PE The shareholders and the board of directors for Zuliani Telecom are getting very impatient with the current share price of the company and the large capital investments that have been made to enter the Canadian wireless mobile market. The pressure is on Mr. Zuliani to present a strategic plan that will impress the board and show the company's long-term profit outlook justifies the recent investments. Mr. Zuliani's friend, Nathan Price, has recommended you based on your outstanding work helping Northern Cottage Living. Therefore, Zuliani Telecom has made you a lucrative offer to consult them during this important time. Advertising Strategy: In order to increase market share in Zuliani Telecom's current Canadian markets they are considering launching a new advertising campaign. Analysts have studied the past behaviour of Bell, Telus, and Rogers and how they react to advertising campaigns by their competitors and what the effect has been on profits. Research has shown that all 3 major cell phone service providers have behaved very similarly in the past with similar effects on profit levels. Zuliani has narrowed their strategy to 3 options: 1) 'Extensive' Advertising Campaign 2) 'Targeted' Advertising Campaign 3) 'Minimal' Advertising Campaign Zuliani Telecom will essentially only be competing with one existing company in rural markets who have the exact same options available to them. A summary of the options and the expected adjustment in yearly profits is shown in figure 2. Minimal (45, 35) (60, 0) (80, -40) Figure 2: Rural Advertising Strategy Outcome Summary Zuliani Competition Targeted (0,40) (40, 30) (20,-20) Minimal Targeted Extensive Extensive (-80, 50) (-60, 10) (-40, 0) Mr. Zuliani wants you to use your knowledge of game theory to give an in-depth analysis of what Zuliani Telecom should do and what they can expect their competitors will do.

Answer rating: 100% (QA)

Based on the provided information and the outcomes summarized in Figure 2 we can analyze the situati... View the full answer