AT&T

Executive Summary

In this competitive business environment, organizations have to devise effective strategies to adapt in the dynamic business environment in order to achieve competitive advantage and market growth. In addition, it is imperative for an organization to stand out in its industry; this is possible through exploiting unique resources and capabilities or devising strategies that are less likely to be imitated by competitors. AT&T is one of the companies that have managed to emerge on top in the telecommunication industry, which can be attributed to a number of critical success factors, which include a strong organizational culture, outstanding customer service, technology, innovation, brand name, and restructuring and downsizing. Despite this critical success factors, there are a number of areas that need improvement in AT&T, which include strategic planning and performance, in the sense that the company should emphasize on hiring strategic employees to help the management find and decide on the way forward about the main issues facing the company and the industry. Another area that requires improvement is with respect to its brand name, wherein, the firm can rebrand its operations in green technologies, which caters for issues such as climate change, environmental protection and energy efficiency. In addition, AT&T should invest strategically in the internet-based R&D to come up with affordable and timely technologies. Some of the critical success areas with respect to technology include virtualization, green data center and cloud computing.

AT&T

Introduction

In this competitive business environment, organizations have to devise effective strategies to adapt in the dynamic business environment in order to achieve competitive advantage and market growth (Goldsmith & Hu-Chan, 2003). The business-level and corporate strategies adopted by any organization should be able to respond effectively to the changes taking place in their environments. In addition, it is imperative for an organization to stand out in its industry; this is possible through exploiting unique resources and capabilities or devising strategies that are less likely to be imitated by competitors. One of the companies that have managed to deploy effective strategies is AT&T, which is an American based multinational telecommunication company headquartered in downtown Dallas, Texas. It was formerly known as, the American Telephone and Telegraph Company. The foundation of the corporation that would become AT&T was established by Alexander Graham Bell in 1876. AT&T is a Fortune 500 company and one of the 30 stocks that amount to the Dow Jones Industrial Average. As of January 2013, the company had 240,000 employees. It operates in four segments: Wire line, Advertising Solutions, Wireless and Other. AT&T’s other unit includes customer information services (operator services) and corporate operations. As of June 2012, AT&T offered both fixed and mobile telephony in the US. The company also provided broadband subscription services television services. During the same year, it was the 13th largest non-oil company in the world, and the 17th largest company globally in terms of market share. In 2012, the company reported consolidated revenue of $126.7 billion under the leadership of the chairman and Chief Executive Officer, Randall Stephenson. As of June 2013, AT&T was the largest telecommunication holding company in the world in terms of revenue. As of May 2013, AT&T reported a market capital of $200.06 billion (Forbes, 2013). Its subsidiaries include AT&T mobility, AT&T Corp., and AT&T Teleholdings. This report identifies the key success factors at AT&T, the factors that need improvement, and make recommendations for AT&T to increase its market share and growth.

AT&T Key Success Factors

Strong Organizational Culture

Organizational culture refers to all aspects that uniquely identify an organization. This includes the values, policies mission, vision, ethics, brand and beliefs (Mckeown, 2012). AT&T is engaged in a very volatile and dynamic industry. The AT&T code of conduct states that AT&T is a global telecommunication company that connects people with their world, everywhere they work and live, and does this better than any other organization. This mission statement unifies and provides direction for the company. AT&T’s mission also provides a framework for all the stakeholders to protect the company’s long-lasting reputation as a reliable, honest and ethical business. These aspects propel its brand name to greater heights in the telecommunication industry. The goal of the company is to enrich its customers’ lives and make the business more successful by providing useful communication services and build the shareholders’ value in the process (AT&T, 2013).

AT&T’s Code of Business Ethics outlines certain fundamental commitments the company makes to its customers, shareholders and to all who play a role in AT&T success (AT&T, 2013). The Code of Business Conduct provides rules that cover most challenges or situations. It serves as the guide to the company’s commitment and lead it to ethical decisions that eventually benefit all AT&T’s stakeholders. By maintaining those commitments and making those critical decisions, the company safeguards its solid reputation (AT&T, 2013). AT&T reputation enables it to deliver on its mission with integrity and honest customers expect. The Code of Business Ethics also ensures that unlawful harassment; for example, sexual harassment and discrimination in employment is not tolerated. This aspect is based on the fact that actions that may make others feel offended lose dignity or to feel intimidated ails the whole company in terms of performance or productivity. Motivated employees put more effort on their individual and group tasks, which results in higher overall productivity. High efficiency and performance is also subject to a high employee turnover and lower absenteeism. AT&T encourages success based on individual performance and abilities regardless of the color, national origin, religion, race, age, gender, sexual orientation, marital status, disability and citizenship status (Whitacre & Cauley, 2013). The company strongly supports and adheres to laws that prohibit discrimination in all aspects of its operations.

According to Whitacre & Cauley (2013), AT&T’s success is based on that fact that the company supports a work environment that is diverse and inclusive. The company respects and embraces the diversity in cultural traditions and social customs. It also creates a secure and safe place to work. The importance of a safe working environment is part of AT&T’s organizational culture. AT&T promotes safety to protect both its customers and workforce. This is evident by the reasonable precautions the company has taken to safeguard the public (Hill & Cronk, 2010).

Outstanding Customer Service

AT&T has a reputation of providing a superior customer experience to its customers when compared to its competitors in the telecommunication industry. Because of its commitment to offer high quality services, AT&T consumer communication services received a quality honor in 2013. AT&T also employs a hybrid of differentiation and cost effective strategies in its market. Product differentiation has also contributed to its success for the past decade. The company also has a language line service which gives its customers access to effective and professional interpreters in over 250 dialects and languages instantly. When a customer needs an interpreter, the language line is usually on within a minute given that it request is set up. This language line is customer-oriented and accommodates special requests. According to AT&T (2013), the AT&T Language Line scores high marks from customers as a user-friendly, customer focused and fast service. Its outstanding customer service gives it a competitive advantage in the telecommunication industry.

The other factor driving AT&T’s success is the fact that the company runs its business with business partners, third parties and suppliers that enhance its level of customer service and provide products of better-quality. It is in the culture AT&T to seek suppliers that share its commitments to human rights, for example, the labor rights. It also carries engages suppliers that embrace diversity, ethical and sustainable business practices.

AT&T also emphasizes that its customers always know that they are valued. The company fairly represents its products and services to customers or consumers (AT&T, 2013). The CEO pointed out the success is associated with the fact that they listen to customers, and challenge themselves to find new and feasible ways to provide solutions of high quality available to help them communicate efficiently, safely and sustainably (AT&T, 2013). Whitacre & Cauley (2013) also noted that the company has earned and preserved customers’ trust by treating them with integrity and honesty as well as in a professional and courteous manner. Given that customers are at the core of an organization’s success, AT&T strives to deliver what it promises. In scenarios where the AT&T’s customers are its suppliers and competitors as well, the company serves them in the same professional manner it would extend to any customer.

Technology

In today’s dynamic market, technology plays a critical role in the success of a business (Hirschey, 2010). This is subject to the fact that technology propels all the management functions including planning, controlling, organizing, staffing and directing. Some of the aspects of technology include the use of computers, mobile devices and the internet. According to Maddock, Uriarte, Flaim, & Miller (2011), technology is a Critical Success Factor (CSF) for any organization since it can be incorporated in almost all organizational processes to increase efficiency. For example, the use of the internet based services has enabled the company to sustain successful relations with customers and local suppliers (AT&T, 2013). Technology has enhanced speedy response and communication both internally and the external environments. The extensive implementation of up-to-date technologies has enabled the company to increase its competitiveness versus its competitors. Online marketing and advertisement has also enabled AT&T to attract new customers (AT&T, 2013). The use of social platforms such as Twitter and Facebook has also directed traffic to its website. AT&T’s website is customer oriented and offers a high customer experience because it is user-friendly and light (AT&T, 2013).

AT&T has also a centralized Information Technology strategy for its telecommunication services sourcing. This has assisted the company to streamline and simplify its contracting process (AT&T, 2013). The centralized IT strategy is based on the logic that the corporation has distributed locations in the US and other regions. For example, AT&T has an Asian regional headquarter in Hong Kong. The centralized IT strategy involves the development of common practices or templates for qualifying vendors in the process of submitting proposals, weighting and defining provider selection criteria. It also involves the creation of scorecards or metrics to use in vendor management (Whitacre & Cauley, 2013). By sharing a common a foundation line of sourcing policies and templates regardless of the organizational structure in distributed locations, AT&T has managed to reduce the administrative tasks and resources essential for managing each phase of the acquisition cycle. This approach has also resulted to better contracts, potentially faster and easier contracting, and improved vendor management and contract governance. The company was also awarded 2013 Corporate Excellence Honor for Cyber Security Leadership by National Association of Counties (AT&T, 2013).

Communication at AT&T takes many forms, including the social media like blogs and Wikis are appropriate, professional, and respectful (Forbes, 2013). At AT&T, the communications systems in place are primarily for business use. Employees occasionally use the systems for personal e-mail or Internet access. However, the company does not allow this application to be disruptive to the stipulated needs of the business. The company also maintains its reputations by deterring the use of its communication systems distribute or access obscene or offensive media.

AT&T has differentiated its products on the basis the quality of the network and customer service. According to the 2012 AT&T annual report, the company continues to set and quickly break records within its industry. The Leitchman Research Group 2012 survey notes indicates that AT&T has recorded an increased number of calls handled by its network as well as the number of its broadband internet subscribers. At the end of 2011, the company had 16,472, 000 broadband subscribers (LRG, 2012) whereas its closest competitor, Verizon, had 8,670,000 subscribers. AT&T also had approximately 21,200, 000 residential phone lines, followed by Verizon and Comcast with 12,626,000 and 9, 342,000 residential phone lines respectively (LRG, 2012)y. The use of technology has enabled AT&T’s network to be more resourceful to its customers every day. Some of the improved features include dial-up video conferencing and internet access.

Innovation

In the current global landscape, innovation is inevitable and has been enshrined in AT&T’s organizational culture. Innovation gives the company a competitive and sustainable advantage in the industry. Furthermore, innovation is the company’s distinctive core competency that keeps it growing. AT&T’s organizational culture values creativity and encourages different perspectives in assessing risks for new opportunities. In 2012, the company won CIO 100 award for the fifth year because of its innovation (AT&T, 2013). According to AT&T (2013), customers visiting the AT&T’s retail stores in the United States reported an enhanced experience and fast service, which was made possible by AT&T’s innovative use of technology. AT&T invests heavily in Research and Development. Its laboratory constantly seeks new ways of making technology more useful to its customers and employees.

Brand Name

AT&T is one of the most popular brands globally (Whitacre & Cauley, 2013). According to Forbes (2013), AT&T’s brand name is number 21 in the world’s most recognized brands. AT&T managed to reach the global standard recognition because of quality products and services and high advertising budgets. According to Maddock, Uriarte, Flaim, & Miller (2011), consumers apparently are willing to pay more for popular brands than unknown products. Effective branding process conveys the brand message vibrantly, create and maintain customer loyalty, persuade the potential customers for the product, and develop an emotional linkage with the customers. AT&T’s branding efforts generally forms the potential customers’ perceptions about its products and services. It should raise customer expectations about the product. The main reason behind creating branding in a volatile industry is to create differentiation.

AT&T’s strong global brands reduce customers’ perceived social, safety and monetary, risks in buying products or service. The potential customers can easily link with the intangible goods with the help of a strong brand name. For instance, customers may subscribe to the broadband services because of the strong brand AT&T enjoys globally. Furthermore, the strong brand corporation has high market share. Maddock, Uriarte, Flaim, & Miller (2011), pointed out that AT&T gives its brand a good worldwide support and that is why it has been able to sustain itself for a long time. They also highlighted that the company has developed brand equity through brand management over a period of time. Brand management has helped AT&T to building a strong corporate image. This has been achieved through the professional brand managers who oversee AT&T’s overall brand performance. AT&T is a successful brand because the brand management system is competent.

The modern globalized economy, technology driven markets have created new challenges to branding. Customers or consumers have gained more access to a company’s and product information than ever before. The internet has become central framework through which product information propagate raising expectation level for companies (Maddock, Uriarte, Flaim, & Miller, 2011). AT&T has responded to this challenge by managing the way it operates its marketing campaigns, by exploring new platforms or media to showcase its products and services. For instance, the company sponsors teams, events and involvement with a social cause. AT&T is a corporate sponsor of the Boston marathon. The company also embraces the social media platforms to market its brand and sustain its market share. This includes Facebook and twitter.

AT&T considered its brand to be important not only for the company, but also for consumers or potential customers. For the potential customers or consumers, the brand indicates a commitment towards quality from AT&T hence reducing the time taken in arriving at a purchase decision. For AT&T, the brand indicates a sort of point of reference in terms of product quality as well as the customer expectation. To summarize, AT&T’s brand acts as a point of differentiation from its rivals and a steady source of profit.

Restructuring and Downsizing

The modern business landscape is characterized by rapid transformations brought about because of technological, social, political and economic changes. Change has become inevitable in the modern globalised economy. Moreover, the rate of market transformation is extremely rapid and the degree of damage or losses in businesses that resist change is brutal that the only option out for most firms is to embrace change or risk failing. Based on this observation, it is very critical that businesses establish the capabilities to adjust and drive change to their advantage (Whitacre & Cauley, 2013; Hill & Cronk, 2010).

Given that telecommunication industry has a very turbulent external environmental pressure, the company restructured itself by buying SPRINT, MCI, QWEST and Bell Atlantic (AT&T, 2013). For AT&T to become the low cost provider without compromising its profit margins within the industry, it has to restructure and discontinue expensive marketing promotions. Some of the external factors include government regulatory policies and competition from its competitors. Stiff competition threatened the loss of the main revenue obtained from long distance services. Such pressures made the company to strategically downsize and restructure with profit margins in focus (Whitacre & Cauley, 2013). For example, the company reduced its skilled and capable workforce by 13 percent. The argument was that, the employment levels chosen represented a number of people needed to achieve the company’s mission in the increasingly cost-sensitive and competitive set of businesses. In addition, the lay-offs were not simply because of the economic recession. In this situation, downsizing was attributed to the long time effort of restructuring the company to minimize its operational costs. As much as most employees were bewildered by the approach, the change on the environment was justified by the increased profit margins.

According to Mckeown (2012), business transformation is critical for ensuring sustainability in turbulent marketplace. AT&T’s survival and success is attributed to the fact that it is strategically flexible. It underwent restructuring and downsizing because profit and survival were the main concern. Despite the process of restructuring being costly, disruptive and threatening at first, change has to be embraced when necessary to achieve a desired state.

AT&T’s Chairman and CEO, Randall Stephenson, clearly defined the need to embrace change when necessary. The messages were conveyed in the annual reports and the Code of Business Ethics (AT&T, 2013). This approach was aimed at building trust and clarifying the mission. Randall Stephenson took a dramatic approach to streamline spending. Some of the savings were registered on telemarketing and direct mails to customers. He also focused on targeted customer segments. The strategy resulted in reduced administrative expenses across business units (Whitacre & Cauley, 2013). The reduction in support and corporate staff, as well as the consolidation of functions lowered the marketing and sales costs. AT&T’s new CEO Randall Stephenson’s cost reduction strategy of outsourcing allowed the company to obtain greater sales at a minimal cost.

AT&T was structured into three independent companies: Lucent Technologies, AT&T Communications and NCR Corporation. Decentralized decision making replaced centralized decision making. The move distribute operations with a reduced permanent core employees reduced the human capital cost. The company also relied on its core employees to work efficiently and effectively by encouraging participatory leadership practices. This empowered them to take part in decision making thereby providing satisfactory customer experience and support to customers. Overall, the organizational culture at AT&T had to be transformed because of the external environmental factors. The change ensured survival and increased profit margins. Therefore, downsizing and restructuring are some of the key factors linked to the success of the company since the company managed to retain its share value and markets.

Factors that Need Improvement at AT&T

Innovation and Technology

To survive in the telecommunications industry in the future, AT&T must totally embrace the revolutionary impact of Internet technology on businesses. This will be an avenue to provide a wide range of telecommunication services beyond 4G LTE to add monetary value of maintaining its customers. In the current globalised economy, technology underpins communication and the way business is conducted (Forbes, 2013). There is a compelling need to transmit huge amounts of data safely and at an affordable cost. Internet telephony is also emerging as a substitute of the traditional cable lines. AT&T should invest strategically in the internet-based R&D to come up with affordable and timely technologies. Some of the critical success areas with respect to technology include virtualization, green data center and cloud computing (Maddock, Uriarte, Flaim, & Miller, 2011). The company should also make innovation and R&D a higher priority than focusing on its local market because it one of the strategic critical growth areas in the telecommunications industry.

Brand Name

In spite of AT&T being one of the most recognized brands in the world, the company should come up with new ways to sustain the brand in the current market threatened with new entrants, high consumer bargaining power and threat of substitutes at the global landscape (Whitacre & Cauley, 2013). The firm can rebrand its operations in green technologies, which caters for issues such as climate change, environmental protection and energy efficiency. These measures will promote AT&T’s brand name to be more global and win the global recognition, especially with regard to the emerging ethical consumerism, wherein consumers’ buying decisions are influenced by the firm’s commitment towards factors such as environmental conservation. The company not only needs to build on its achievements, but also to identify and implement innovative approaches to win and serve its customers’ needs more effectively. This can be achieved through consolidation of R&D and extensive marketing (Mckeown, 2012; Capon, 2008). Through this, the company will be employing its rare resources and distinctive capabilities to the optimum. Consequently, the company will build a strong brand name and a distinctive advantage crucial for its presence in the competitive industry (Alkhafaji, 2003).

Strategic Planning and Performance Management

Effective strategic planning will help the corporation to improve its performance in the future. AT&T should emphasize on hiring strategic employees to help the management find and decide on the way forward about the main issues facing the company and the industry (Whitacre & Cauley, 2013). AT&T’s success is about creating value for the key stakeholders of the business. Strategic planning and thinking will enable the company to focus on this value creation and not on the management practices or tools (Peng, 2008). Investing in strategic leadership will improve long-term performance of the company at low risks. In addition, AT&T must also engage commitment to the long-term strategic objectives for the company’s success (Duane & Hoskisson, 2008). Furthermore, the company’s chosen strategies after an evaluation must be monitored and implemented against the long-term objectives. For example, a restructuring or acquisition approach should be evaluated and implemented in reference to the company’s desired state.

Productivity can be optimized by evaluating and measuring employees’ performance (Mckeown, 2012). AT&T should take steps to successfully address the negative view of performance management. This can be achieved by implementing innovative solutions or procedures that ensure real results are delivered to improve performance. An automated performance management system is recommended to implement best practices across AT&T. such a system would create documentation to reduce disputes and support decisions. It would also establish focus for skill development, especially in technology, and to logically develop learning activity choices. Additionally, AT&T should align individual employee’s daily activity with the strategic business objectives to optimize productivity.

Conclusion and recommendations

AT&T is a global company; therefore, it needs to continue making tremendous efforts in building a strong brand by focusing on the quality of products, enhancing innovation capacity, providing the best support or service and embrace a strong sense of corporate social responsibility. AT&T can rebrand its operations in green technologies, which caters to such issues as climate change, environmental protection and energy efficiency.

The company should also continue providing high-speed differentiated products so that it can adjust the prices in the market accordingly. This is subject to the fact that high-speed internet access services enables its online based customers to operate online rather than using the traditional lines for calls. The internet business is also justified by the fact that online distant learning and online careers are fast-growing trends. Most women are also seen to work online or learn about careers and career advancements. Almost all businesses have websites or intranets which needs reliable and fast internet services. This highlights the justification for investment in internet technology R&D or innovation. The global market will benefit from an unprecedented array of global products, which translates into development and growth of their operations at an affordable cost. AT&T should also invest in the diffusing industry of mobile devices or smart phones which connect most of the users to the internet without accessing computers. This will benefit its mobile customers.

AT&T’s corporate strategies must be formulated to accommodate the response to the market trends and the long term goals of the corporation. Besides the decision regarding where AT&T is headed to, the company must ensure that the means of achieving its goals are rare, unique and not imitable. On the strategy level, the company needs to engage in networking strategy. This can be implemented through networking market and networking enterprise. Networking strategy is characterized by scale-free supply chain, large-scale customization, leaderless management, borderless enterprise and localization. Localization involves design, production and distribution of products according to user’s needs. By recruiting local management, AT&T will benefit from the linkage to local markets these team servers. AT&T should also focus more on the customer experience, support, application of state of the art technology and innovation. To summarize, AT&T can utilize big events such as the Olympics, Boston Marathon and Champions League Football tournament to put its products on the global spotlight.

 

 

 

 

References

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