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McI Communication Corporation Case Study

Autor:   •  April 5, 2014  •  Case Study  •  1,271 Words (6 Pages)  •  946 Views

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Background of Company

MCI communication corporation was a telecommunication company found in 1963. In the beginning the business plan of MCI was to build up a group of microwave relay stations that allow limited-range two-way radios signal to transfer. Which means providing long distance telecommunications.

In 1971, the Federal Communications Commission (FCC) allowed those long distance companies compete and try to break out AT&T's monopoly telephone service in the U.S. MCI wanted to grow further, however the AT&T did not want to provide interconnection services which MCI needed. As a result, MCI sued AT&T in 1974 and later won the law suit and FCC force AT&T to provide service to MCI , thus MCI continue its construction on its own network build.

Before 1974, MCI was not profit too much but is all change based on their successful business strategy, knew as "Execunet" service they offer affordable service to those customers who could not afford AT&T's service. MCI successfully attracted small business user and residential to use their services. Due to that success strategy MCI turning to very profitable. Because of that, MCI saw a really high potential growth opportunity that could bring the company to a different level. However, they find out the need more funds and capital to support the growth.

AT&T is MCI's major competitor. And AT&T break up its business , AT&T now compete with MCI in the local telephone business, the means MCI must rise their rate in the local business, but at same time AT&T left a big cake on its market share that MCI could toke from them.

SWOT analysis

Before AT&T break up, MCI has strengths on its Execunet service, and fairly lower charge in their local network services. Their weakness is short of capital and market shares which control by AT&T. Their opportunities was growth execunet services. They also face threats such as competition from AT&T.

Before AT&T break out:

Some of the SWOT analysis have changed after AT&T break up. Now their strengths beside execunet service is their high stock value and large amount of cash on hand. Their weaknesses are still lack of investment capital and market share. But they do have opportunities on take over AT&T's market share, also their interest coverage ratio is high. The threats they are facing is great competition from AT&T and other firms.

After AT&T break out:

Financial strategy and Analysis

At beginning MCI was a very risk company, and like all other high risk company, MCI had high interest rate to cover its high risk. They offer a put warrants

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