External and Internal Environmental Analysis: Telecommunication Industry and AT&T essay

Introduction

AT&T Inc. is one of the largest companies in the world telecommunication industry and the largest in the United States. It offers a broad range of innovative services in wireless communications, local and long-distance telephone service, messaging, Internet access, telecommunications equipment as well as in entertainment, broadband, and subscription television services (AT&T, n.d.a).

External Environment for AT&T: PESTEL Analysis

Political Factors

As a multinational company that outsources some of its production, AT&T faces politically motivated regulations of trade restrictions, tariffs, and taxes abroad and locally in the US. Nevertheless, the aforementioned political factors do not impede the company’s development.

Economic Factors

As a multinational organization, AT&T is affected by economic trends determined by the home market and markets abroad that account for a significant share of sales such as Germany. Also, employment and taxation laws that affect profitability have to be adhered to in every foreign market.

 

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Social Factors

Social factors such as fashion trends, customers’ tastes, demands, values, lifestyle, attitudes toward technology, branding, involvement in CSR, and customer satisfaction are the most important factors that contribute to success and good sales.

Technological Factors

This is critically important set of factors that impacts offer, demand, branding, customer satisfaction, and profitability. Currently, the most promising are technologies connected to Internet, advanced applications, automation applications, and solutions that enhance global communication.

SWOT Analysis

Strengths

• renowned and trusted global brand;
• diversified portfolio of multiple services and products;
• excellent revenues, positive cash flow, and robust finances during recent years;
• successful merger and acquisition strategies;
• one of the largest providers of mobile technologies.

Weaknesses

• frequent network security problems;
• poor performance of customer service department.

Opportunities

• opportunities for international expansion, acquisition, and expansion of coverage;
• increasing sales of new gadgets and growing market of 4G capabilities;
• further growth via partnership with Apple/iPhone.

Threats

• fierce competition for market share;
• saturation of markets with products and economic slowdown;
• stringent environmentalregulations.

Competitive Environment: Porter’s Five Forces Analysis

Bargaining Power of Suppliers

The power of suppliers is weak since AT&T has diversified supplier base and constantly seeks ways to reduce costs by looking for new suppliers (AT&T, n.d.b).

Bargaining Power of Buyers

The buyer’s power is high since customers can easily switch the provider of services in favor of rivals. AT&T joined forces with Apple to make iPhone compatible only with AT&T’s services, in order to reduce buyer’s power.

Rivalry among Competitors

The rivalry among competitors is high since many offer similar services and products. This fact motivates AT&T to improve and diversify its technologies and services, and expand its networks and connections. Main competitors are Verizon and Sprint.

Threat of Substitutes

It is unlikely thatthere will be a substitute for company’s telecommunication services on a global scale. However, there may be local substitutes from cable companies. Nevertheless, substitutes have lower performance and are limited (The New York Times, n.d.).

Threat of New Competitors

Barriers of entry for new competitors are high since it requires economies of scale, advanced technologies, strong brand name, high costs and capital requirements, and extensive distribution network (The New York Times, n.d.).

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Organizational Structure

AT&T includes ten fully owned companies, one partially owned, and long distance division. Chairman and CEO of the company since 2007 has been Randall Stephenson. Board of directors consists of 14 members including the chairman. The company has twelve departments and five sub-departments. AT&T has seven subsidiaries: AT&T Asia Pacific, AT&T EMEA, AT&T Global Network Services Canada, YP, NavLink, AT&T Latin America, AT&T Government Solutions (Official Board, 2014).

Organizational performance is affected by organization’s greater focus on the output and effectiveness rather than on means to produce outcomes. Therefore, AT&T enjoys high performance, but suffers from vague vision, lack of leadership initiative, uninspiring corporate culture, bureaucracy, poor vertical communication and cross-functional collaboration, poor teamwork, idea, and knowledge management. Notably, the company places stronger focus on becoming customer oriented enterprise instead of improving internal processes.