Analysis of AT & T Organization - Essay Example

?Analysis of AT & T Organization Introduction The AT&T organization is an American company that offers telephone and telegraph services to the public. It is the leading company in the offering of telecommunication services throughout the country (Noll, 2007). This did occur after the merging of AT&T Company and the SBC group in the year 2005. This organization is originally a company of Alexander Graham Bell, the inventor of telephone services, and has their headquarters in Boston. The organization is a previous monopoly business that serves the population in the telecommunications and information technology sector (Keidel, 2005). It involves itself in the development and sale of telecommunication services in the country and across the entire globe (Verzuh, 2007). The organization has recently been experiencing problems in the loss of customers to their competitor, Verizon Corporation. This is because their competitor’s did introduce a similar product to their iphone. They are also able to offer better pacts than the organization (Green, 2006). For example, Verizon Corporation offers no limitations on data transfers and still charges a set price. The organization is currently unable to provide their customers with the satisfaction they require from the network capabilities on offer. This results in the company making big losses in terms of customers leaving the organization for their competitors. The organization has not been able to keep their customers to the business (Valikangas, 2010). I would like to suggest that the company develops a project to explore into these issues. They should form teams comprising of experts and some technical staff to address this issue across their various branches. The organization will expect to improve their products and increase the number of customers to their business (Valikangas, 2010). Analysis of the Current Situation This organization offers telephone communication services across twenty-two states in America. The company also offers internet facilities, data transfers and phone services. Financial analysts in the company suggest that the organization is likely to make profits in the next few years. The organization is also currently enjoying great revenues from their wireless trade (Estabrooks, 2005). The organizations debt currently stands at $1.4 billion, which is below EBITDA standards by 1.6 periods. Their pensions are hard to approximate and it finds difficulties in their cash flows since they have many debt to repay and dividends to pay to the shareholders. The dividends they pay out amount to more than ten billion dollars (Temin and Galambos, 2007). The organization intends to acquire another company by the name of T-Mobile USA. These activities are likely to affect the organizations capital composition though the financial analysts believe that the company’s performance will remain constant. The company has to cut the costs they incur to ensure that their performances remains relevant to the current market conditions (Hodges, 2002). The disadvantage that the organization currently encounters on limitations in their network will get their solutions after the organization acquires the additional firm. The management of AT&T expects that the additional organization will come with the networking resources they require. The organization’s provision of wireless services is far beyond their competitors abilities. The organizations leadership focuses their cash on the repayment of their debts (Ellis, 2009). This move did come into play over the past few years with the aim of reducing their debts. This act enables the company to cut their costs to the current value of 65 billion dollars. Their investment formation remains the most traditional in their industry. This gives the company the advantage of quickly adjusting to changes in the economic conditions the country experiences (Temin and Galambos, 2007). The organization’s main competitor in the provision of Iphones, Verizon, has a customer base of more than ninety four million people and makes over a hundred and two million connections in the country (Luo, 2006). The company records an average of a hundred and five billion dollars in revenue on an annual basis. Their annual net incomes total to over two billion dollars and growth in the company’s income results from an increase in their provision of wireless technology (Ellis, 2009). The number of new subscribers in the company continues to grow continuously at a yearly rate of 11%. This company has an advantage over AT&T Company since they do not have a big debt. Verizon Company is increasingly enjoying a growth in the number of subscribers joining their network whereas the AT&T Company witnesses a reduction in the number of subscribers to their network (Temin and Galambos, 2007). This is attributable to the fact that their competitors are offering more superior products along with better services to their customers. The employees in both firms are many and get good salaries though the team at Verizon is more successful in achieving better results (Ferris, Rosen and Barnum, 2005). This is attributable to their superior innovation skills, which enables their company to create a competitive advantage over their competitors. In diagnosing the organizations strategic needs, the management needs to consider the bargaining powers of the consumers and suppliers. The organization also needs to consider the threats of substitute goods, the presence of strong competition and the ease of entering the market by other newer competitors. All this elements should be put into consideration for determining the best ways to improve the organizations profitability (Ferris, Rosen and Barnum, 2005). Their financial statements for the year 1998 indicate the organizations return to profitability with a net income of 11 billion dollars which are profits while it was reporting losses for the past few years. From the year 2009, the AT&T organization has seen their incomes grow to $19 billion (Keidel, 2005). The growth in sales in the year 2009 of 36.9% did raise the 2010 sales to 43.10 billion. The company’s net profit margin is 15% for the year 2008 and increases to 22% in the year 2009. The organizations ratio of Debt/Equity is 2.8 while the average score for the entire market sector is 4.6. This implies that the organization is improving their performances despite the presence of huge debts. The beta of 1.8 implies the company faces a small threat due to its unpredictability. The AT&T organization returns are below the scale of the overall’s market returns. This is because there are other companies making bigger profits such as Verizon Ltd (Ferris, Rosen and Barnum, 2005). The analysis of their financial statements examines the company’s growth, their price shares, profit borders, their fiscal conditions, their investment income, and the efficiency of the management at AT&T organization in comparison to Verizon ltd and their other competitors. Since the year 2008, AT&T organization witnesses a slow growth (5.8%) in comparison to the industry (17%). The losses that the company suffers during the period result from the global recession of 2008. Their sales grew to 4.3% in the year 2009, which is slightly below the industry’s 5.8% (Keidel, 2005). This reflects a rise in comparison to the whole industry. In comparison to Verizon, AT&T organization performs poorly which shows the need for improvement by the management (Keidel, 2005). A high P/E share indicates a good performance since the investors still have expectations of their earnings growth in future. Their current ratio of P/E, which stands at 9.6%, is a bit low in comparison to their competitor’s Verizon, which stands at 19.8%. This is low for the investors who tend to go for companies with higher profits. Their net profit margin is relatively lower than Verizon, which has been able to obtain successful mergers. The organizations net profit margin is lower than their competitors which implies that the organization needs to come up with better strategies to cope with the markets pace (Ellis, 2009). The company’s net profit margin for the period of the previous three-years shows the profits the company makes from the year 2008. The fiscal condition for the company shows the undervaluing of the company and is a good buy because their market price of 4.54 trades below their book value of 7.50. AT&T organization’s ratio of Debt/Equity is close to the sector’s which implies that the company is currently growing despite the presence of huge debts (Temin and Galambos, 2007). Their competitor’s Verizon has a ratio of 2.15, which is quite a good performance. The management’s effectiveness is relatively low with indicators such as the return on assets (ROA) going to as low as 0.3%. This is not the common tendency since their competitors, Verizon Ltd’s management scores over 6.7% for their management’s effectiveness. In comparison to the industry, the return on equity (ROE) for AT&T is much lower at 4.2%, which shows the company’s minimal profits in comparison to other companies in the sector (Keidel, 2005). The measures of Income/Employee give the abilities of the management in using their employee’s assets successfully to bring profits to the company. This is below the industry’s average and Verizon’s average, which implies that AT&T is less competent than the other companies in the sector. The ratio of Revenue/Employee shows an organizations productivity and AT&T has a lower productivity than the industry’s average. The productivity reduction that the company encounters in the past is a result of the retrenchments that take place. The previous three-year fiscal statements show that the company incurs profits despite the economic recession of 2008. In the year 2011, the financial statements show an increase in income for the organization with the amount rising to $13 billion from $11.2 billion (Ferris, Rosen and Barnum, 2005). This is a result of their increase in their number of subscribers and the launch of their iphones. The movement of possessions, liabilities and capital is stable according to an analysis in the BS. The organizations main competition comes from Verizon ltd though they have less investment in terms of capital. AT&T lacks the infrastructure to handle more users and these results in their minimal profits in view of their competitors. AT&T comes behind Verizon in their values of net income (Hodges, 2002). This results from their competitors’ ability to provide more features on their products thus attracting more customers. AT&T’s income is the lowest in the market despite the previous monopoly they enjoy. The company lags behind due to the management’s inability to join other companies in mergers that are more beneficial. The organization retrenches workers according to their yearly reports that show a decrease in their number of employees from 50,000 in the year 2008 to 27,000 in the year 2010 (Ellis, 2009). The organizations market share reduces due to the influence of their competitors. The reduction in the number of employees is to address the issue of the excessive expenses the company incurs but ends up reducing their productivity. This report suggests that the organization should develop strategies to improve their productivity. This can either be by developing a more efficient infrastructure and improving on the quality of their products. The instability in the organization because of the 2008 financial brings a lot of retrenchments and losses with it (Noll, 2007). The leaders in this economic sector in terms of net profit margins have 54% and 48% in term of ROE. The top company performs better than AT&T because it has more customers and uses better management strategies (Ellis, 2009). Conclusions from the Trend Analysis According to Porter, the five forces that influence the analysis of trends in a market are the bargaining abilities of the buyers and suppliers and the presence and threat of substitute goods. The other factors include the presence of reputable competitors and the entry of new competitors into the market (Luo, 2006). The organization faces an unstable and unfavorable environment for their operations. The company is unable to accommodate their customers’ data traffic thus their customers do not find the satisfaction they expect to get. The organization is also unable to provide enough Iphones to their target market due to the inferior technology and management principles they use. The management of the organization fails to secure the facilities of a merger on time and this will greatly hinder their sales efforts (Ellis, 2009). This leads to an insufficient supply of the products to their target market and a loss in income for the organization. The provision of Iphones from their competitors, Verizon Corporation, along with better terms and conditions for using their products results in the organization encountering low sales and profits. Many existing companies in the economy do exist and offer better quality products than AT&T (Ferris, Rosen and Barnum, 2005). These bring about stiff competition within the sector and fallout for companies who do not strategize well on the most appropriate methods of countering it. The entry of new competition into the market also adversely affects the organization. New entrants and new mergers between the existing companies greatly hinder the organization’s ability to reinforce their presence in the market (Temin and Galambos, 2007). Many existing companies have been indulging in mergers with other companies for the purposes of improving their efficiency (Hodges, 2002). The organization expects to have a very large customer base but their efforts to merge with T-Mobile did not bear fruit on time. The company also had many expectations in making profits but instead ended up incurring big debts (Noll, 2007). Change Initiative Overview In order to aid in mitigating the problem of handling a large volume of the customers’ data traffic, the organization ought to establish a team of experts and support staff to handle this issue. The team will aim at establishing a cheaper and more effective infrastructure to assist in handling their customers’ traffic (Ferris, Rosen and Barnum, 2005). A decision will have to be made by the management on what facilities they need to build a fresh or upgrade. These activities will require the management’s commitment to offer the finances and all the equipment that the team requires. By strengthening their current network transportation systems, the company will be able to handle more data traffic along with more customers. This will lead to the eventual increase in profits for the company along with the benefit of having more customers (Hodges, 2002). Change Initiative Analysis To implement the project the organization will require many finances. This will be put to the use of paying the personnel working on the systems and purchasing equipments that the technicians and experts forming the team will use (Keidel, 2005). The organization will encounter barriers in time to complete the project and competition from other companies providing similar services. The organization will require the services of experts who have the abilities of carrying out the tasks effectively. The recruitment criteria to be put to use when acquiring the experts will depend on the minimum set levels of academic achievements within the company (Temin and Galambos, 2007). The availability of the appropriate technical staff is also a limitation that the company’s management will have to address. The limitations on time can be overcome by the use of appropriate time management methods. The counter the competition in the market, the organization will have to produce goods that are more superior. The use of aggressive methods of advertisement to increase the customers’ awareness of their goods will ensure the organizations survival (Ferris, Rosen and Barnum, 2005). The educational levels set for the experts working in a company will undergo reviews with the aim of getting many professionals to work for the company. Similarly, the qualifications for the technical team will undergo a similar process to ensure the organization counters their inadequacy (Keidel, 2005). The presence of new competition in the market is inevitable since technology is rapidly advancing. There are also companies that are forming mergers with others for ensuring that they come up with better products. The companies that enter the industry are likely to introduce new products to the market. To deal with the issue of the organizations products becoming obsolete the management should support the activities of research and development within it (Temin and Galambos, 2007). Finances should also be made available to the team to the enable the easier implementation of the project (Ferris, Rosen and Barnum, 2005). Ethical Analysis The ethical basis of consequences suggest that the intentions of performing an act does not make it to be right or wrong but their consequences do make them to be either of the two. Thus, the change that the process will bring is right since its consequences will positively affect the people lives (Keider, 2005). The ethics of duties suggest that a thing is right because it is the right thing to do. This implies that since the company has to expand their network infrastructure to serve more people, it is the right thing to do (Ferris, Rosen and Barnum, 2005). This is because it will bring positive benefits to their customers. The ethical theory of virtue suggests that an activity is either a virtue or a vice. An activity, which is a vice, goes against the moral standards in a society while a virtue is any activity, which supports the moral standards of the society (Cabral, 2000). The development of a more efficient network infrastructure is a virtue since it will assist in improving the lives of the users. The development process will have to adhere to the set legal standards because they will be handling their users’ information (Keidel, 2005). The intention of the organization when creating the new infrastructure will be to assist more users in the transfer of data. Building Support The company intends to build support for the project internally by explaining the benefits of the project to the employees. This will be done through direct interaction with the workers to explicitly explain to them these benefits. The external approval that the project requires will be achievable by adhering to all the set regulations (Cabral, 2000). The organization will have to comply to all regulations that their competitors also follow. Among the political issues that the organization expects to encounter are the payment of taxes to the authorities and the adherence to the law when implementing their project (Temin and Galambos, 2007). This initiative is likely to get opposition from our competitors since their share of the market is likely to reduce. The competitors will be very keen to ensure that the company complies with all the regulations before implementing the initiative. The resistance that the company encounters will be dealt with by the compliance to all available regulations governing similar projects (Cabral, 2000). The change will require the support of the financial arm of the organization to provide funds for the project. They will also require the support of licensing bodies to effectively access their capabilities and the impacts of the project to the society. The additional support the organization will require will come from their customers or subscribers, the suppliers of various equipment and other organizations in the trade. This will be for making mergers that will advance the organizations production of more superior commodities (Daft, 2009). The organization intends to capture the voice of the customers and the stakeholders by holding activities such as general meetings and establishing customer care centers across all their branches. These centers will be responsible for collecting their customers feedback on the quality of services they are receiving (Main, 2007). The company needs to collect information on the costs they will incur, the period they intend to complete the project and the information on their customers’ requirements. The methods that will be put to use when collecting this information will include the use of interviews and questionnaires to ascertain their customer’s needs. The organization will also require carrying out further research into issue to determine the authorities’ requirements for such a product. They will also have to ascertain the impact the project will have on the environment and the community at large (Temin and Galambos, 2007). The company also needs to build alliances with other organizations by using negotiations and holding joint business ventures. The major selling point for the project on completion will be the wide network coverage it will provide the organization with. The organization will be able to support more customers in addition to providing more features for their users. It will be possible for the organization to attain high levels of profits once the project is complete (Carr and Nanni, 2009). Implementation The project team will be responsible for the implementation of the change. They will first collect the available requirements from the customers then provide a list of all the equipment they need. They will then come up with a work plan and a schedule for the performance of the tasks (Verzuh, 2003). The sharing of tasks and responsibilities in the project will be done during this stage. The experts in the team will have to come up with a design to use when implementing the changes and the change itself. After the approval and purchase of the equipments they need to work with, the job will then commence. The activities in their schedule will have to be done within the limits of cost and time. The project has to ensure that the implementation process is environment friendly and safe for the workers and customers. The Company requires the labor of experts, network technicians and casual laborers when implementing the project. The company also requires additional finances to support their growth efforts (Keidel, 2005). These finances will be obtainable from financial institutions though their debts are still a crisis. The company currently has an insufficient amount of staff with the appropriate qualifications working for it. They will recruit more members to the team to provide the additional labor the team requires when performing their tasks. The management of the organization will have to send applications for loans and other forms of financial benefits such as bank overdrafts (Carr and Nanni, 2009). Timeline and Milestones Fig 1.0 PERIOD MILESTONE September, 2011 Collection of the users’ requirements November, 2011 Designing and collecting of the necessary requirements December, 2011 Implementation and maintenance of the project January, 2012 Success in testing of the project on a sample population The team could lack the financial and political support they require when implementing the project. Resistances to change can also come from within the organization (Main, 2007). It comes from the workers who do not like what the organization is doing. These factors could easily disrupt the activities of the project and bring them to a halt in extreme cases. The management of the organization has plans to save the situation if it goes wrong. They plan to raise funds from the company’s shareholders if they lack the financial support they need from the institutions. In order to cater for the issue of the shortage of workers the company intends to lease these services from outside firms. The organization could discontinue the project as a result receiving a ban on their activities from the authorities (Verzuh, 2003). Key Success Factors The factors that will enable the organization to achieve a high level of success are the quality of their eventual product along with its efficiency. The other factor that will ensure the organizations success is the products design (Besanko, Dravone and Shanley, 2009). The quality of the product is the most critical factor that will ensure the organization attains success in their endeavors of serving more customers reliably. The quality of a product results from its ability to meet the set standards. In order to achieve a high quality in the products, the team will ensure adherence to all the standards and procedures that the organization has to meet. The timelines set and the milestones the team expects to achieve will be the driving force for the team. The designing and development of the infrastructure will be done by personnel who have all the qualifications that the regulation bodies require. The teams’ management will have to comply with the budget constraints that have been set for them. This will help in ensuring that there is no wastage of resources within the organization. The objective of the team will be to provide a network infrastructure that supports all the activities that the users require (Klinger, Nakada and Mendez, 2001). This infrastructure will also have to be reliable and safe for their users. The performances of the team will be under constant supervision from the senior management and other regulatory bodies. This will help the company in ensuring that the product is developing according to the set standards (Cabral, 2000). Metrics Among the performance metrics that the organization will monitor to ensure the effective performance of the project are the project scope, the time to incur along with the costs. The other metrics that the organization will have to monitor includes the use of the resources in the organization along with the team members’ actions (Kandula, 2006). The information on the metrics will come from the expeditions to the fieldwork and evaluation of the teams’ progress reports. The other sources of information for the firm will include the interviews and questionnaires done on the users. The management can hold discussions with the team leaders to ascertain the progress of their projects (Yoffie, 2006). The measurement of the performance metrics will be done on a weekly basis to ensure that the team meets the set standards. Key decision points will occur in instances where there are shortages of equipment and experiences of difficulties hindering the completion of the project. These difficulties include the lack of finances and the display of inappropriate behaviors by members of the project team. These decisions will have to be made by the team leaders along with the senior management of the company. This is in case there will be emergencies to be dealt with (Vega, 2003). References Besanko, D., and Dravone, D., and Shanley, M. (2009). Economics of Strategy. New York: John Wiley and sons. Cabral, L. (2000). Introduction to Industrial Organization. Washington: MIT Press. Carr, L., and Nanni, A. (2009). Delivering Results, Managing What Matters. Los Angeles: Springer. Daft, R. (2009). Organization Theory and Design. London: Cengage Learning. Ellis, W. (2009). Starting over, Renewing Life in Transition. New York: iuniverse. Estabrooks, M. (2005). Electronic Technology, Corporate Strategy and World Transformation. San Francisco: Greenwood Publishing. Ferris, G., and Rosen, S., and Barnum, D. (2005). Handbook of Human Resource Management. London: Wiley Blackwell. Green, J. (2006). The Irwin Handbook of Telecommunications. New York: McGraw Hill Professional. Hodges, T. (2002). Measuring Learning and Performance, Sixteen Case Studies from the Real World of Training. Washington: American Society for Training and Development. Kandula, M. (2006). Performance Management. Washington: PHI Learning Pvt Ltd. Keidel, R. (2005). Seeing Organizational Patterns, a New Theory and Language of Organizational Design. Boston: Barrett-Kohler Publishers. Klinger, D., and Nakada, Y., and Mendez, M. (2001). AT&T Reliability Manual. Los Angeles: Springer. Luo, Y. (2006). How to Enter China, Choices And Lessons. Michigan: University of Michigan Press. Main, J. (2007). Quality Wars, the Triumphs and Defeats of American Business. Chicago: Simon and Schuster. Noll, M. (2007). Highway of Dreams, a Critical View along the Information Superhighway. New York: Routledge. Temin, P., and Galambos, L. (2007). The Fall of the Bell System, a Study in Prices and Politic. Cambridge: Cambridge University Press. Valikangas, L. (2010). The Resilient Organization, How Adaptive Cultures Thrive Even When Strategies Fail. New York: McGraw Hill Professional. Vega, G. (2003). Managing Teleworkers and Telecommuting Strategies. San Francisco: Greenwood Publishing. . Verzuh, E. (2003). The Portable MBA in Project Management. New York: John Wiley and sons. Yoffie, D. (2003). Beyond Free Trade, Firms, Governments and Global Competition. Harvard: Harvard Business Press. Appendix Fig 1.0 Timelines and Milestones………………………………………………………..10. Read More