BUSINESS STRATEGY ANALYSIS FOR AT&T, T-MOBILE AND SPIRIT 19
BusinessStrategy Analysis for AT&T, T-Mobile and Sprint
Abusiness strategy of a firm describes how and where it competes, andthe approaches that it uses to rival with other entities. Typically,a business strategy of an organization specifies the goals, productsand services provided, the markets served, as well as the basis forcompeting (Meyers, 2010). For instance, the competing foundation maybe service, price, and quality among other aspects. Emanating fromthe definition of a business strategy, it implies that firms viewtheir tactics as significant because they help them in maintainingaggressiveness in the market against other businesses operating in agiven industry (Meyers, 2010). In case organizations do not formulatetheir business strategies, they are likely to lose in providingcompetitive services or products to customers. Therefore, it isalways recommended that businesses should develop their tactics thatwould assist them in creating more value that would result inretaining aggressiveness. This report will focus on analyzing thestrategies used by AT&T, T-Mobile, and Sprint Companies. In theanalysis, company profiles would be provided, market/industrystrategy, as well as a critical analysis of the competitiveapproaches of the three companies, and recommendations for strategicvalue innovation. The Blue Ocean framework of strategic analysiswould be used.
AT&Toffers telecommunication services to businesses, consumers, as wellas other entities. The company is categorized as a diversifiedtelecommunication services. The organization has its operationspredominantly in the United States (AT&T Inc., 2015). The companyhas the ability of providing both wireline and wireless-basedtelecommunication services to its customers. The service offerings ofthe entity include data/broadband and internet services, localexchange services, and long-distance services. Also, the businessoffers telecommunications equipment, video, managed networking,publishing and directory services, as well as wholesale services. Theorganization has been around since 1876, the time when telephonebecame invented by Graham Bell. AT&T has its headquarters atDallas, and is the largest landline and wireless service provider inthe United States. The company offers voice coverage in more than 225countries, data roaming in more than 205 nations, and 3G in above 145countries. The entity provides solutions that help businesses givetheir customers better services. Furthermore, the company deliversadvanced services to approximately 3.5 million firms on 6 continents(AT&T Inc., 2015). In addition, it is the world’s largestprovider of pay TV, having over 25 million American videosubscribers. The business is the prime communications corporation inthe world.
TheT-Mobile Company became incorporated in 2004 as a provider of mobilecommunications services. The entity offers wireless communicationsservices that include, messaging, voice, and data under itstrademark. T-Mobile offers wireless communications services to anestimated 60 million clients in the postpaid, prepaid as well aswholesale markets (T-Mobile, 2016). The organization providesdevices, services and accessories across its brands, T-Mobile andMetroPCs, in Puerto Rico, the U. S., and the United States VirginIslands. The company uses fourth-generation (4G) long-term evolution(LTE). Also, T-Mobile provides an assortment of wireless devices,including tablets, phones, and other mobile devices forcommunication, as well as accessories. Furthermore, the companyoffers reinsurance for handset insurance policies and extendedwarranty contracts provided to the entity’s communications clients.The organization offers mobile communications service using mid-bandspectrum licenses for example, advanced wireless services (AWS) andPCS (personal communications service), as well as low-band spectrumlicenses using 700 megahertz A-Block spectrum. Three primarycategories of customers are served by the company in the provision ofwireless communications services these groups include brandedprepaid, branded postpaid, and wholesale. Branded prepaid clients arethose who pay in advance while branded postpaid customers arequalified to pay after utilizing the wireless communication service.Alternatively, wholesale clients entail Machine-to-Machine and MobileVirtual Network Operators these operate on the T-Mobile network andare controlled by wholesale partners (T-Mobile, 2016). Theorganization’s service plan options include the Simple Choice plansthat allow clients to subscribe for wireless services differentlyfrom the purchase of a handset. Clients who are on the Simple Choiceplans usually benefit from mitigated monthly service charges and arecapable of choosing whether to utilize their well-matched phone onthe company’s network, buy a handset from the entity or one of thesellers or rent a device using the JUMP on Demand program of theorganization (T-Mobile, 2016).
SprintCorporation is a holding business, which together with itssubsidiaries, provide a range of wireline and wireless communicationsservices and products designed to satisfy the needs of customers,government subscribers, businesses and traders. The organizationoperates through two sections, which are the wireline and wireless.In offering its services, the entity utilizes various technologiessuch as third generation (3G) code division multiple access (CDMA),and fourth generation (4G) services using LTE (long term evolution).Sprint Corporation offers a collection of wireline voice and datacommunication services to other communications entities and businesssubscribers. The wireline segment offers data, voice and InternetProtocol (IP) communication services to its wireless segment. Theservices and products of the company include both domestic andinternational data communications using different protocols.Alternatively, the wireless segment provides services on a prepaidand postpaid payment basis to both wholesale clients and retailsubscribers. In the postpaid option, the company provides differentprice plans for consumers and business subscribers. Also, theorganization offers family plans that include numerous lines ofservice under one account. The device portfolio of the organizationincludes different handsets from varied original equipmentmanufacturers and hotspots, which permit the connection of multiplewireless fidelity (WiFi) enabled devices to the company’s platform,as well as embedded tablets and laptop devices. In addition, theentity creates, engineers, and installs different expertiseincluding two wireless networks offering portable data services,instant international and national push-to-talk capabilities, as wellas an international Tier 1 Internet backbone.
Thetelecommunications industry is progressing to change at a high speed.Organizations operating in the industry have realized that there aredifferent disruptions, which must be looked at strategically inensuring success in the business (Gentzoglanis & Henten, 2010).The firms are taking advantage of their pivotal enabling role in thedigital world to overcome the challenges that affect them. However,this focus is mounting pressure to companies and working onefficiencies remains a strong drive for survival of entities (Wulf,2012). Also, other firms are exploring new opportunities in therapidly broadening digital ecosystem as they attempt to seek a newwave of consumer demands. Operators are well-placed in acting ascatalysts of change in the fast-changing digital society however,before they can take merits of the changing customer and industryexpectations, they need to make a decision concerning where they wantto play, and then focus on developing strategies that would be gearedfor success.
Differentstrategies have been adopted by firms operating in the industry in anattempt to keep off disruptive competition. Most of the players haveconsidered diversifying their revenue streams however, it ischallenging to ensure that the new services that companies try tooffer generate healthy margins (Gershon,2013).Besides, over-the-top (OTT) players are expanding the range of theirofferings a move that disrupts different industry verticals. Almostall companies in the industry are currently seeking new points ofdifferentiation so as to maximize their share of customer spending.While firms still enjoy a majority of ecosystem revenues, the OTTshave expanded their share in a span of a few years (Wulf, 2012).
Anotherstrategic agenda that dominates in the industry is customerexperience management. Most firms perceive providing clients with thebest experiences as one of the strategic priorities that help them tocompete favorably. In building this strategic approach, organizationsconsider boosting customer loyalty and personalization of services asimportant levers (Wulf, 2012).
Upgradingof networks and cost control are other strategic priorities thatentities in the industry are considering, and these tactics are alsoranked highly. In an attempt to control cost, companies are focusingon attaining efficiencies that ensure that the cost of operationsreduce significantly (Wulf, 2012). Also, quality is a primary focusfor the businesses as they try to upgrade their networks for enhancedcompetition.
Furthermore,operators in the industry usually make the decision of eitherconcentrating on certain domestic markets or expandinginternationally in an attempt to compete in the industry. When itcomes to the consideration of the domestic markets, an organizationseeks markets that are not saturated by firms in the industry, andthat have the potential of growing. Alternatively, in thinking of theinternational markets, companies consider either forming mergers orventures since the costs for expanding abroad may be substantiallyhigh. Therefore, when choosing the strategy to adopt, it is importantfor entities in the industry to understand the potential they haveand their likelihood of succeeding by using the approach (Wulf,2012). In addition, differentiation has been heavily applied by thefirms operating in the industry. Since through the strategy anorganization has the ability of charging a unique price, companieshave considered it an important element. Most of the businesses inthe industry that attempt using this tactic are usually engaged inconstant innovations so as to identify what is not in the industry,but is required by clients.
Analysisof Competitive Strategies of the Companies
Thebusiness strategy of the company is to become a leader integratedcommunications entity in the world. Thus, the strategy of theorganization is not focused on one area but five areas, which includedifferentiation, a bit of cost leadership, reliable service, superiorservice, and fastest service. These areas are discussed in thefollowing paragraphs.
Leadershipin Connectivity & Integrated Solutions
Thecompany believes that everything commences with connectivity. Leadingnetwork assets are the foundations for providing the integratedvideo, mobile, and data solutions that clients of the company need.The entity uses one or all of the following technologies inconnecting its customers Wi-Fi, wireless LTE, fiber optics, IPnetworks, and satellite (AT&T Inc., 2015). The business focuseson delivering seamless connectivity to every device, and help toensure that it is highly secure, fast, and reliable.
Thecompany has consumers all over the globe, so it also operatesglobally to reach them. Thus, the entity continues to invest toensure that it is capable of providing integrated solutions thatconnect businesses and people around the world. The organization is aleader in the transformation of its network from hardware tosoftware-centric. The software-defined network makes it easier forthe entity to provide products internationally (AT&T Inc., 2015).
Thecompany is involved in creating a modern network architecture thatwould offer the highest efficiency and productivity in the industry.In attaining this, the business concentrates on changing its networkfrom hardware to software-centric, which allows it to deliver thelarge amount of network traffic at the lowest marginal cost in theindustry. Furthermore, the company is simplifies operations, gets thebest prices from its supply chain, abridges offers, and makes moreinteractions digital to mitigate the time taken to provide service.
Deliveryof an Effortless Customer Experience
Thisarea emphasizes everything that the company does. When the firmdesigns its processes, products, or a user experience, it createseffortless encounter into every touch point. Whether a client isviewing content, searching for a product, or interacting withcustomer care, the process must be simple. In order to make“effortless” a competitive advantage, continuous investment andimprovement are required. Over the next few years, it will take thecompany a lot of work in making this a reality as the businessintegrates DIRECTV into the entire customer experience however, theentity has allocated enormous resources in making it happen (AT&TInc., 2015).
Thearea of differentiation is another crucial section of the companysince it helps in keeping up with the competition in the industry.The organization uses this strategy in ensuring that it matches itsservices and products with the needs of customers. In realizing thisapproach, the entity is involved in continuous innovations. Emanatingfrom the improvements of its products and services, the company is ina position to provide for the future needs of its clients, and thusremain competitive in the industry (AT&T Inc., 2015).
Thechief advantage posed by the tactics that the business applies isthat more resources would flow into the business since the company isin a position to reach a huge number of clients who require theservices. Moreover, another merit is that the products and servicesare relatively cheap and of quality, implying that its approachsatisfies consumers. However, the disadvantage is that not everyoneis likely to afford the services since they are not lowly-priced.
Thecompany uses the Un-carrier strategy, which became launched in 2013with the goal of eradicating customer hurting levels from theneedless complication of the wireless communication industry(Stapleton, 2013). The strategy has eight phases, which are describedin the following paragraphs.
Phase1: Simple Choice
Thisplan was created to eliminate annual service contracts and permittedqualified clients to buy Smart phones and pay for them lowly without-of-pocket payments. The initiative also helped to remove 24interest-free monthly installments.
Thisstage permitted participating consumers to improve their entitleddevices when they desire, instead having it done on a predeterminedschedule.
Phase3: Simple Choice
Justlike the name implies, this plan was geared towards making a simplechoice. The initiative helped in reducing U.S. to global callingrates, data roaming and messaging. Also, it facilitated travellingabroad in more than 100 nations at no additional price with SimpleGlobal. Part 2 of phase 3 allowed users of T-Mobile tablets toutilize up to 200 MB of free LTE data monthly provided they own andutilize the tablets on the T-mobile’s network.
Phase4: Contract Freedom
Thisphase focused on eliminating one of the remaining barriers forclients desiring to change from other operators to T-Mobile byproviding to reimburse customers’ early execution fees the momentthey switch from other providers, and operate in their eligibledevice.
Phase5: Test Drive
Thecreation of this stage by the company helped clients to testT-Mobile’s system with an Apple iPhone 5 having unlimitedcountrywide service for a period of seven days for free.
Phase6: Music Freedom
Thedevelopment of the music freedom plan was critical since it permittedSimple choice clients to be in a position to brook music from trendymusic services without counting it against their share of data.
Phase7: WiFi Unleashed
Thisbecame developed in September 2014. The creation of this phase helpedto deliver coverage to consumers in additional locations, offeringWi-Fi calling and texting for Simple Choice clients on competentsmart phones.
Phase8: Data Stash
Thisphase was developed in January 2015. It gave clients the capacity ofrolling their unutilized high-speed data on a monthly basis in orderto use it when they required it for up to one year. The servicebecame available to every T-Mobile client at no extra pay, providedthe customer was enrolled on the postpaid Simple Choice plan withadditional LTE data.
Fromthe analysis of the Un-carrier strategy developed by the company, itcan be indicated that the entity focuses on customer experience andaligned cost structure. This is because the propositions made by theUn-carrier have strengthened the company’s position as a providerof high-speed LTE service. Furthermore, the entity is capable ofretaining a lot of customers through the delivery of an enhancedwireless customer experience. Alternatively, through the Un-carrierstrategy, the organization has been able to pursue a low-costoperating model that is associated with saving costs, which canbecome reinvested back to the business. Items such as customerroaming, network optimization, and customer service, have helped inrealizing operational efficiencies. The advantages of the businessstrategy applied by T-Mobile is that consumers from all backgroundscan be attracted, which implies that the business can have a strongconsumer base. However, the strategy seems confused since the companycannot be in a position to concentrate on one specific item thatwould help a large number of consumers.
Thecompany has focused on cost-leadership as its strategy. The entityhas focused on aggressive price drive that is likely to sternsubscriber losses during the short run however, it is limited bytight margins. Sprint has been an aggressive competitor using prices,but it is fighting to with them back and remains constrained by tightmargins. While the company can be successful to win some subscribersduring the short term, the strategy may not be sustainable in thelong term. The low-pricing strategy of the company has beenfacilitated by the simplification of the product offerings instead ofcost-cutting. Apart from the pricing strategy, the business isfocusing more on customers through building its brand and customerexperience. The advantage of the tactic embraced by the company isthat the low-cost approach can allow the entity to forecast itsfuture revenues based on how consumers turnout to buy its servicesand products. Nevertheless, the strategy is likely to attractlower-class consumers who are highly price-sensitive.
Thisframework became created by Renee Mauborgne and W. Chan Kim. The twodeveloped the idea of a firm being capable of operating in a leagueof its own without immense competition (Kim & Mauborgne, 2015).According to them, a company has the ability of setting its pace inthe creation, selling and making of profits in new markets that havepotential. The blue ocean strategy is utilized as a metaphor torepresent industries, where there is high likelihood of realizinggains. Therefore, this emerges as the objective of the blue oceanstrategy. Alternatively, Renee and Kim perceive a read ocean as anindustry in a recognized market space. In this case, entities facestrict competition within a given industry boundaries. Red oceansusually become crowded, a move that mitigates the chances of firmsmaking profits. The blue ocean strategy is viewed as a reconstructionof a market where no accepted boundaries exist (Kim & Mauborgne,2015). The structure can be developed or recreated through the stepstaken by operators in the market. Preconceived barriers do not limitstrategy and thinking, and a change occurs due to a focus on thesupply side to a focus on the demand side. The blue ocean strategyserves as a diagnostic aid as well as an action framework. Inapplying it to an organization, the strategy uses four actionscreate, reduce, eliminate, and raise. During the four actions, newindustry factors that can generate more value, and mitigate as wellas remove those ideas that are not of significance to the business.This framework will be used in providing recommendations forstrategic value innovations for the three companies whose tacticshave been discussed above.
Recommendationsfor Strategic value Innovations
Oneof the recommendations for strategic value innovations for thecompany would be increasing customer loyalty as well as retentionrate. Although the company is applying differentiation as a way ofsatisfying their needs, there is a need to enhance customer loyaltyin order to continue as the leader in the industry. This is becauseincreased client satisfaction would result in happy loyal consumers,a move that would make the company continue taking the leadershipposition. Another recommendation for the company would be to enhancethe wireless spectrum that would be availed to consumers. Because ofthe birth of the iPhone and smart phones, and how easily they can beaccessed by the current clients, there is an explosion in the usageof data on the wireless networks. The excess usage of data has led tocongested networks. In an attempt to make the business successfullyserve its increasing client base, it needs to increase the bandwidthas well as the wireless network capacity for its consumers throughtechnological innovations. This move would help the entity inremaining competitive in the industry. The company should continuefocusing on its five key areas since they are all vital to itsoperations and success in the market. Therefore, through these tworecommendations, the organization would be capable of augmenting itscompetitive edge in the industry since they would create more valueto the clients and shareholders.
TheUn-carrier strategy of the company with the focus on the client hasbeen successful since it has helped the business expand the number ofsubscribers. However, the proposition of the Un-carrier for Businessmay not be successful since there is no guarantee that the businesssegment would be attracted to the strategy just like the customersegment was appealed. Thus, I recommend the company not to considerthis option since it may be a failure and it is not a priority. Sincebusiness customers might value the quality of the network and itsreliability more compared to low costs, I recommend that the businessshould improve its network quality as well as reliability. Consumersare likely to become highly satisfied with an enhancement of networkquality as well as its consistency. Also, it has become difficult forthe entity to attract new customers who are not familiar with itsphases. In tackling this problem in its strategy, the organizationshould focus on promoting the Un-carrier phases. Carrying out aninformative campaign would help consumers to understand the offeringsof the company based on the Un-carrier phases. This would help inincreasing the number of clients that would subscribe to the firm’sservices.
T-Mobileshould continue to buy spectrum strategically in order to maintainnetwork quality while monitoring the capital expenditures. Throughevaluating its spectrum, the company would be in a position tomaintain a quality network. Because of the huge spending that thebusiness may undergo as it tries to make its Un-carrier strategyappealing to different consumer groups, it is recommended that thecompany should do away with the items that seem to be exceedinglyexpensive. For instance, the company should target on reducingUn-career costs that deal with promotions however, this is not ashort term aspect but a long-term one since promotions are criticalin the short-term in an attempt to appeal to customers who would goalong with the entity to the long-run.
Furthermore,not all customers require services that are slow. This is one areathat the company has failed by not coming up with a service that isfast. Therefore, it should be recommended that the business shouldconsider differentiation of its products and services in order tohave a unique service or product that would attract more customers tothe company. Most importantly, the entity should focus ondifferentiating its services such that there would be a quick servicethat can be accessed by clients. This would increase the number ofconsumers requiring the services.
Thiscompany has concentrated on low-pricing strategy in an attempt toremain competitive in the industry however, the low cost forservices is not realized through cutting costs, but throughsimplification of services and products. Although the strategy takenby the company is not bad, it needs to be enhanced for creation ofvalue to clients and shareholders, as well as help the businessmaintain its aggressiveness. One of the recommendations that would ofimportance to the organization concerns the integration ofdifferentiation in its strategy. Since the firm has concentrated onmitigating the price to low levels, it has been able to serve onlythe low-income clients, leaving behind the middle and theupper-class. Therefore, the integration of differentiation tactic tothe business strategy of the company would help to produce superiorservices and products that appeal to the middle and upper-classconsumers. Differentiation would ensure that the entity does notnecessarily offer low prices for its offerings, but there would be apremium price charged for creating uniqueness in the services andproducts of the company (Paladino,2013).Thus, emanating from the integration of differentiation, theorganization would likely increase the number of consumers.
Anotherrecommendation for the company is that it should focus on building anetwork that would attract most customers instead of emphasizing onlowering its prices for its offerings. The increased drop of priceswould render the company unprofitable, a move that may see thebusiness taking a long period before it recovers losses made.However, by focusing on consumer needs, the organization would becapable of attracting numerous clients who would improve the earningsand gains of the entity. The company should stress on innovations inits strategy, and it would be in a position to match the customerpreferences with what it would generate. This would add value to thebusiness.
Thebusiness strategy that an organization adopts is very significant ininfluencing the competitiveness of the company. A strategy that hasthe wrong focus would usually lead to the defeat of a business by itsrivals, but a well organized tactic would help an organization emergesuccessful. Different strategies have been adopted by firms operatingin the telecommunications industry in an attempt to keep offdisruptive competition. Most of the players have considereddiversifying their revenue streams however, it is challenging toensure that the new services that companies try to offer generatehealthy margins. Other strategic agendas that dominate in theindustry are customer experience management, cost control, andupgrading of networks. In the case of AT&T, T-Mobile, and SprintCompanies, AT&T strategy is not focused on one area but fiveareas, which include differentiation, a bit of cost leadership,reliable service, superior service, and fastest service. For theT-Mobile, it uses the Un-carrier strategy, which has eight phaseswhile Sprint has focused on cost-leadership as its strategy. Byapplying the blue Ocean strategy, a key recommendation for strategicvalue innovations for the AT&T Company would be increasingcustomer loyalty as well as retention rate. Although the company isapplying differentiation as a way of satisfying their needs, there isa need to enhance customer loyalty in order to continue as the leaderin the industry. For the T-Mobile, it is recommended that thebusiness should improve its network quality as well as reliability.Consumers are likely to become highly satisfied with an enhancementof network quality as well as its consistency. Alternatively, a keyrecommendation for Sprint that would ensure value would be tointegrate differentiation in its strategy. Since the firm hasconcentrated on mitigating the price to low levels, it has been ableto serve only the low-income clients, leaving behind the middle andthe upper-class. Therefore, the integration of differentiation tacticto the business strategy of the company would help to producesuperior services and products that appeal to the middle andupper-class consumers.
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