Segmentation, Focus Strategy, and Key Success Metrics of At&T - Case Study Example

AT&T Segmentation AT&T has used its huge infrastructure to best advantage by developing products in line with changes in the world economic structureand innovations in information technology. The spread of internet, devices with increasing levels of portability and functionality have forced it to develop hardware as well as software to cater to the new challenges. The company claims that it not only develops product lines in congruity with its customer base, but also takes into consideration cultural factors which influence its customer base, and provides adequate support for the services offered (ATT web). The current clientele is divided into the ‘Signature Client Group’ (SCG), in which it has 300 accounts in collaboration with Global multinationals and spends $ 5-10 M (million)in the telecom sector on it, the ‘Premier Client Group’ (PCG), in which it has a stupendous 22K+ (thousand plus) accounts composed of the Enterprise, mid-market and acquisition sectors where the total telecom spend is $ 1M and the small business (SMB) sector, wherein it covers the national and the regional business markets, spending $100K-1M & $50K-100K on each respectively (Kalata, 2011). The SMB currently has 125K accounts. Besides these three major groups, it has global ramifications which it labels as ‘Most of World’ (MOW) which incorporates the non US based clientele, where the projected spend is $500K, and also offers government solutions in the local government, educational and medical sectors’ (Kalata, 2011). AT&T offers network, devices as well as applications’ to its consumer base. Focus Strategy AT&T has developed its product lines for its varied customer base by focusing on differentiation and cost leadership which can be illustrated with Porter’s Generic Model. Picture Courtesy: http://www.mindtools.com/pages/article/newSTR_82.htm) AT&T subsidiaries and affiliates provide a wide array of network resources for their consumers within the US as well as internationally (Stephenson, 2008). Keeping abreast with technology, it is currently the exclusive provider of the fastest 3G network within the United States with eyes on progressing towards 4G as and when it acquires the capability for it through its constant focus on innovation. In addition, it claims to provide the fastest wireless, wifi, internet broadband and voice services within the US. It has also diversified into the TV broadcast (DIRECTV) and yellow pages business, offering multimedia local search solutions. Their IP (Internet Protocol) based business communications services are considered the most advanced in the world. The company offers tailor made solutions for the different cultural groups within the United States , never forgetting what is important for the consumers, shareholders, business associates and employees. Key Success Metrics In the highly competitive global environment, survival and sustainability of a company depends upon the level of its adaptability to the continuously changing consumer demand, ability to come up with affordable and technically abreast products for its market, good employee management and judicious expenditure of resources. In terms of its financial infrastructure, AT&T is a giant amongst its competitors and its workforce is one of the best in the telecommunications sector. AT&T has diversified its business and focused on aspects in which it can really excel. It has kept its primary focus on developing GSM wireless networks which occupy the envious position of being 88% of the currently prevalent global networks. It is therefore the largest US operator in the global market. Being the best provider of 3G networks, it is gradually focusing on transitioning towards the 4G technology, although its global deployment may take some years. The latest technology in communications known as LTE is already undergoing trials under the aegis of AT&T. The company has invested billions in its wireless networks around the world. In 2009, AT&T invested $17.3 billion and intended to increase the amount further in subsequent years (Kalata, 2011). The company invested $ 23 billion on the development of its wired and wireless networks which includes investment on acquisitions and spectrum purchases (Annual report). 47% of the amount was spent on wireless networks, 22% on wireline voice services and 6% on advertising and miscellaneous expenditures. AT&T regularly contributes to educational endeavors and other social causes increasing its stature amongst the public. The primary reason for its success despite the economic downtrend has been its financial backup and ability to come up with reasonably priced products and services for its worldwide consumers. SWOT Analysis A company operates under numerous internal and external threats in face of competition within as well outside the international borders and must access its strengths, weaknesses, opportunities and threats on a continues basis. Strengths AT&Ts strength lies in its historical dominance and the well oiled machinery that it has been in the telecommunication sector in the last century. Being a pioneer in this sector it is capable of coming up with newer technologies and products earlier than its rivals. Already established as the leading provider of telecommunications services within the US, AT&T had no compunction in being relegated to the second position in wired services to Verizon. It has rightly focused its attention on the wireless sector and wisely stayed with the GSM technology, visualizing its global expansion well in time as compared to its competitors. It is looking beyond the 3G spectrum, which is already being ridiculed by technical nerds in favor of the high speed LTE technology, trial for which are already underway in AT&T. The company has developed smartphones with capability to be run on the latest operating systems like Android for which the future seems bright. AT&T has the manpower and the infrastructure to remain the leader, both in hardware and software development. Weaknesses The telecommunications’ giant is facing stiff competition from rival players within as well outside the US. Companies like Verizon, Sprint and T mobile have their focus narrowed down on specific segments and are not burdened with the reputation which AT&T has to shoulder. Japanese and European companies are offering stiff competition in the international arena due to their close proximity and influence in the developing countries like China and India. Although AT&T has taken care to develop services in multiple international languages, local small players often have a clear advantage. Moreover, AT&T’s financial results in the last two years have not been very encouraging. The net income is still showing as loss which has increased to $ 19,864 M in 2010 as compared to $ 12,138 M for the preceding year. Opportunities Due to its innovative strategies, AT&T is a leader in offering mobile productivity applications for various businesses and professionals which has a promising future. With GPS systems being used with increasing frequency worldwide and dependence of almost every business for its success on wireless technology and rapid communication through wireless networks, AT&T is in the pipeline for success due to its global leadership position. It has already ventured into most countries of the world, either alone or in collaboration with its associate companies. Focus on the entertainment media is also one of its string points in which it is bound to succeed. Threats Although AT&T has a strong infrastructure, rival companies are not far behind and third world countries are increasingly biting into the market share by providing software solutions and competitive products at a much lower rate. The current economic downtrend and resentment in the employees due to outsourcing are other factors which the AT&T management has to consider carefully. Internalization As AT&T already has a global presence, it can be supposed to have used the Sprinkler model for its international ramification. However, the waterfall strategy i.e. entering a new territory in a step-wise fashion would be more appropriate for AT&T. The availability of 2G and 3G spectrums are variable in different regions of the world, although the almost 90% utilization of GSM technology in most countries of the world can assist AT&T in establishing a foothold. It is already banking upon its competitive edge in providing hardware as well software solutions in majority of the industrialized world, besides the USA. Recommendation AT&T stands to gain by grabbing the major chunk of international business, once newer technologies become operational. It possesses the infrastructure and technology to offer products in congruence with consumer demand. As AT&T is pioneering the launch of spectrums beyond the 3G, which is still considered the fastest in most countries of the world; it is likely to experience less competition as other companies might struggle to keep pace with AT&T. Rapid communication and secure platforms will be the requirements of the future, upon which AT&T can build its business strategy. References A Network of Possibilities AT&T Inc. 2010 Annual Report, Retrieved August 2, 2011 from: http://www.att.com/Common/about_us/annual_report/pdfs/ATT2010_Full.pdf AT&T to deploy 4G LTE Network in 2011, Retrieved August, 2011 from: http://gizmodo.com/5468470/att-to-deploy-4g-lte-network-in-2011 Kalata, S (2011). AT&T Mobility, Improving, Expanding, Evolving and Innovating, Retrieved August 2, 2011 from: http://www.google.co.in/url?sa=t&source=web&cd=5&ved=0CDYQFjAE&url=http%3A%2F%2Fwww.telegration.net%2Fpresentations%2FATT-Mobility-Network-Value-Add-Telegration-2011.pptx&rct=j&q=at%26t%20market%20segmentation&ei=c0Y4Tt-9I4nJrQfz6LAe&usg=AFQjCNHtwuwtgPMyl_2jUUAx2XFiC7Aqtg Porters Generic Strategies Choosing Your Route to Competitive advantage, Retrieved July 20, 2011 from: http://www.mindtools.com/pages/article/newSTR_82.htm Stephenson, R (2008) AT&T Citizenship and Sustainability Report 2008, Retrieved August 2, 2011 from: http://att.centralcast.net/CSRBrochure09/Default.aspx Read More