Situation Analysis Company background Founded in 1980's was known as Control Video Corporation Could not meet competition from Apple II and Commodore 64, thus it was reorganize to form Quantum Computer services Persuade Tandy corporation and Apple to develop an on-line service, but Apple withdrew at the last minute and left Quantum Computer service to stand alone Innovative market strategy to corner the market through flooding the countryside with diskettes containing America Online software Thus, the born of America Online in 1985 Present Situation Merger with Time Warner America online is a division of AOL Time Warner Before the merger, AOL services included it flagship AOL service, Compuserve, ICQ, MapQuest, AOL Instant Messenger, AOL MovieFone, Spinner. com, NullSoft's Winamp, Digital City. Strategic alliance with Sun Microsystem AOL international division operates in 16 countries with 8 different languages Define the Problem 1) Pricing Strategy Introduction of Flat Rate Pricing in October 1996, which cost $19. 95 unlimited Price decrease Price increase Dec 1994 Jan 1995 Oct 1995 May 1996 Oct 1996 $9. 95 (5 hrs) $9.
95 (5 hrs) $14. 95 (20 hrs) $19. 95 (20 hrs) $19. 95 (unlimited) $3. 50 (after 5 hrs) $2. 95 (After 5 hrs) $1.
95 (After 20 hrs) $2. 95 (After 20 hrs) Encourage more user to switch to AOL Increase in AOL usage and more busy signal User complain not getting their money's worth 2) Tech Support (too many users) a) Software Design Could not support the increasing number of user Keep upgrading the AOL software to support the amount of customer Customer had a hard time keeping up with the upgrade b) Hardware Support Not enough modem to support all users at peak hour System capacity did not matc the increasing number of users 3) Unsatisfied Customer Long telephone conversation Long wait time to be speaking to a customer representative over the phone Unable to answer questions about the busy signal Expected the user themselves to regulate the use on the internet S. W. O.
T Analysis Strength 1) Strong Strategy Alliance 2) Timely Merger with Time Warner 3) Good Brand Awareness 4) Easy to use 5) Mobile (account) 6) Large Customer Base 7) Company Identity 8) Pre-install software on computer Weakness 1) Not Consistent Profitable 2) Long wait on the telephone for customer service 3) Tech Infrastructure (too many users) a. Software Design b. Hardware Support 4) Weak merger (global navigation network) 5) Poor market research (system cannot support too many user) 6) Lack of global market research 7) Lost identity (when too big) Opportunities 1) Global Expansions 2) New generation of wireless Internet linkup. Join venture with Telecommunication Company. 3) Marketing strategy (new market) (merger) 4) Research & Development (new product) 5) Explore new marketing (tech) Threats 1) Competition 2) Government (regulation) (FCC) 3) New technology 4) Bored of so many new version.