Situation AnalysisCompany backgroundFounded in 1980’s was known as Control Video CorporationCould not meet competition from Apple II and Commodore 64, thus it was reorganize to form Quantum Computer servicesPersuade Tandy corporation and Apple to develop an on-line service, but Apple withdrew at the last minute and left Quantum Computer service to stand aloneInnovative market strategy to corner the market through flooding the countryside with diskettes containing America Online softwareThus, the born of America Online in1985Present SituationMerger with Time WarnerAmerica online is a division of AOL Time WarnerBefore the merger, AOL services included it flagship AOL service, CompServe, ICQ, MapQuest, AOL Instant Messenger, AOLMovieFone, Spinner.

com, NullSoft’s Winamp, Digital City.Strategic allience with Sun MicrosystemAOL international division operates in 16 countries with 8 different languages Define the Problem1)Pricing StrategyIntroduction of Flat Rate Pricing in October 1996, which cost $19.95 unlimitedPrice decreasePrice increaseDec 1994Jan 1995Oct 1995May 1996Oct 1996$9.95 (5 hrs)$9.95 (5 hrs)$14.95 (20 hrs)$19.

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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 AOLIncrease in AOL usage and more busy signalUser complain not getting their money’s worth 2) Tech Support (too many users)a)Software DesignCould not support the increasing number of userKeep upgrading the AOL software to support the amount of customerCustomer had a hard time keeping up with the upgradeb) Hardware SupportNot enough modem to support all users at peak hourSystem capacity did not match the increasing number of users3) Unsatisfied CustomerLong telephone conversationLong wait time to be speaking to a customer representative over the phoneUnable to answer questions about the busy signalExpected the user themselves to regulate the use on the internetS.W.O.T AnalysisStrength1) Strong Strategy Alliance2) Timely Merger with Time Warner3) Good Brand Awareness4) Easy to use5) Mobile (account)6) Large Customer Base7) Company Identity8) Pre-install software on computerWeakness1) Not Consistent Profitable2) Long wait on the telephone for customer service3) Tech Infrastructure (too many users)a. Software Designb. Hardware Support4) Weak merger (global navigation network)5) Poor market research (system cannot support too many user)6) Lack of global market research7) Lost identity (when too big)Opportunities1) 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)Threats1) Competition2) Government (regulation)(FCC)3) New technology4) Bored of so many new version

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