External and Internal Environmental Analysis Paper Essay
External and Internal Environmental Analysis Paper
The purpose of the paper is to scan, “the internal and external environmental factors of AT&T internet access technologies for the consumer market. It further identifies and discusses the AT&T’s core competencies and sources of competitive advantage. Lastly, AT&T’s business model and its impact on the organizational performance” (UOP, 2013). AT&T uses the most common tool (i.e. SWOT analysis) to analyze its progress in the market and identify the strengths, weaknesses, opportunity and, threat. External environment analysis is important in determining the strategy that should be adopted by a business and internal environment analysis is critical to identify the core competencies of the business.
AT&T very well understands their competitors and external factors and hence, to better meet its customer needs, it formed the Broadband & Internet subsidiary. “The external environment consisting of all the conditions and forces that affect its strategic options and define its competitive situation” (Pearce & Robinson, 2013, p. 12). External environment can be broadly classified into three types: Remote, Industry and, Operating. 1. Remote environment consists of the forces like “economic, social, political, technological and ecological factors that originate beyond, and usually irrespective of, any single firm’s operating situation” (Pearce & Robinson, 2013, pg. 87).
2. Industry environment; “The general conditions for competition that influence all businesses that provide similar products and services” (Pearce, 2013, pg. 97). “Operating environment also called the competitive or task environment comprises factors in the competitive situation that affect a firm’s success in acquiring needed resources or in profitably marketing its goods and services” (Pearce, 2013). They also control a major portion of the Tier 1 backbone of the internet.
Remote Environment (RE):
With each environmental factor exerting its effect individually, the analysis in these three different kinds can be done separately. Some of the main remote environmental factor that affects AT&T are economic, political and technological factors. Economic factors affect because more and more consumers can afford excellent internet service in a good economy and, the number declines as the economy slows down. Political factors do affect the day to day functioning of the service and, regulation in the internet/ cable industry is very stringent. Any changes in the government policies/ regulations will directly or indirectly impact AT&T’s business and, consumers inflow. Technological factors also affect the company because there is always a need to adapt the latest technology in the industry. The ever changing technologies, apps, products and, services will alter consumer’s attitude and buying behavior.
Industry Environment (IE):
The IE factors that impact AT&T are buyer power, substitute availability and competitive rivalry. The internet users have increased dramatically in the recent years. Providing great service and technology requires a large investment, but when customer switches their internet carrier, it result in high loss (bad debt expense from this trend). While Time Warner and AT&T have attempted to combat, these losses by charging one month bill in advance. Though a huge amount was recovered before the customers were gone but didn’t guarantee, customer loyalty. New entries are always a threat, mainly if they provide services in rural areas, where AT&T is still trying to make a mark.
Operating Environment (OE):
The OE factors affecting AT&T are customers and creditors. With the slowed economy in the country, the “assessment of suppliers and creditors is critical to an accurate evaluation of a firm’s operating environment. Question like: Does the creditors fairly value and willingly accept the firm’s pricing strategy for the service AT&T provides? Do the creditors perceive the firm as having an acceptable record of past payment?” (Pearce, 2013, pg. 114). “Operational indicators, which measure performance in planning and implementing organizational strategies, are internal, and external customer satisfaction, quality metrics, internal processes, internal innovation, and continuous improvement efforts tend to drive future financial performance” (Curtright, 2000).
To analyze the internal environmental (IE) factors for AT&T, one will have to first identify the strength and weakness of the organization. AT&T is amongst the largest cable companies, serving every Fortune 1000 company, as well as neighborhood businesses around the country. “AT&T serves 17.8 million broadband customers, including wireline (DSL, U-verse High-Speed Internet and, Satellite) and wireless mobile broadband LaptopConnect subscribers” (att.com, 2015). AT&T’s services and competencies are well matched with their strength to meet the market needs.
“The major internal environmental changes, or areas for change, that could be expected to impact AT&T include: Marketing: new product offerings, new technology and, market trends. Financial: ability to acquire other firms and, corporate resources, capital expenditure. Operations: network management and partner relationships.
Personnel: key executive management positions. Quality: integration of controls on projects, monitoring of quality, system modernization and, operational support systems. General Management: performance and strategic planning” (Delahunty.com, n.d.)
The external environment factors that are being discussed cover most of the strengths of AT&T versus weaknesses. But addressing the ethical obligations and exceptions of the consumers will always help (Team’s feedback).
Core Competencies and Resources
“Core competence is a capability or skill that a firm emphasizes and excels in doing while in pursuit of its overall mission. Core competencies that differ from those found in competing firms would be considered distinctive competencies” (Pearce & Robinson, 2011).
The basic resources include; tangible assets, intangible assets and, organizational capabilities. Some of the tangible assets of AT&T are inventory, cash reserves. The financial resources and physical resources; property, plant and, equipment net. The assessed intangible assets at AT&T are its brand name, (Goodwill) reputation, trademarks, licenses, trade secrets and, copyright.
All the resources available at AT&T are valuables, and they provide the customer needs better than other alternatives. The resources are scarce and drive a key portion of overall profit. This makes the service provided by AT&T sustainable over a long period, which help in making better strategic plan for the organization.
Competitive position and possibilities
“Distinctive competencies that are identified and nurtured throughout the firm, allowing it to execute effectively so as to provide products or services to customers that are superior to competitor’s offerings, become the basis for a lasting competitive advantage” (Pearce, 2013, pg. 164). AT&T stands strong and gives very tough competition in its current competitive position. “AT&T Government Solutions provides professional services so agencies can better serve their customers and meet mission object” (Pragmatics, 2007).
AT&T’s pending acquisition of DIRECTV will give more customers more opportunities to enjoy their favorite movies, TV shows, music and, sports. “Final regulatory approval of the merger will enable the combined companies to deliver more content to customers across multiple screens – mobile devices, TVs, laptops, and the backseat displays of connected cars. It’s commitment to expand and enhance its deployment of high-speed Internet service to cover at least 15 million customer locations across 48 states – most of them in underserved rural areas” (att.com, 2015). Structure of the organization and how it affects organizational performance
AT&T has departmentalization structure as seen “in the division of labor as well as the decentralized decision-making assigned to teams, it shows that the existing policies, rules and regulations are directory in nature. Apparently, the chain of command in the business unit is rather limited to the team leaders and the Chief Operations Officer. Since the organizational structure is rather flat, the business faces the adverse attitude of the employees with reference to the change in the organization. This indicates that the informal structures of the organization tend to have a great influence on the actual behavior of the employees” (Management Paradise, 2011).
By focusing on the SWOT analysis (external and internal environmental factors), AT&T can identify its strengths, weaknesses, threats and, opportunities. This can help the company to improve its competitive position in the internet market that will in turn generate additional revenues.
AT&T. (2015). AT&T Company Information. Retrieved from http://www.att.com/gen/investor-relations?pid=5711 Coppola, J., Delahunty, S., & Keune, G. (n.d.). The Internet Connection War-AT&T Internet Services for Consumers, a Strategic Evaluation. Retrieved from http://www.delahunty.com/cv/paper_att.doc Curtright, J. W., Stolp-Smith, Steven. C., & Edell, E.S. (2000, January). Strategic performance management: Development of a performance measurement system at the Mayo Clinic. Journal of Healthcare Management, 45(1), 58. Management Paradise. (2011, February 2). Organizational Structure of AT&T. Retrieved from http://www.managementparadise.com/forums/human-resources-management-h-r/214644-organisational-structure-t.html Pearce, J.A. & Robinson, R. B. (2013). Strategic Management: Planning for Domestic and Global Competition (13th ed.). New York, NY: McGraw Hill. Pragmatics, Inc. (2007). AT&T Government Solutions. Retrieved from http://ites-2s.pragmatics.com/metadot/index.pl?op=show&iid=2231 UOP. (2013). External and Internal Environmental Analysis Instructions. Retrieved from http://newclassroom3.phoenix.edu/Classroom/#/contextid/OSIRIS:48364100/context/co/view/activityDetails/activity/df4da69c-3472-494d-952c-e99cc3619b2d/expanded/False/tab/Instructions