Internal Analysis Continuation

Competitive Rivalry

From the history of telecommunications in the United States, there are 10 main competitors of the firm. Although there are other companies approaching 70 in the telecommunications industry in the United States, these 10 are the one offering a direct competition to AT&T and Time Warner according to…?. These direct competitors include T Mobile, COX, Sprint, Google, Apple, EarthLink, NETFLIX, ADT, Vodafone, and DISH. Together, they have raised over $5.6 billion between there estimated 480,700 employees (Pouryeganeh, 2015).In terms of employees, AT&T and Time Warner have got 268,000 employees as per the 2018 analysis and it’s ranked at the top of all the competitors with the top 10 average number of employees being 68,531.

Considering the revenues of the company and its competitors, the following analysis table can be generated. How have the companies competing in this industry changed over the past decade or two, how have their market shares changed and how have those changes impacted sales and profitability in those industries….

From the above financial information of the following regression graphical analysis can be done concerning the market competition in terms of revenue of AT&T and Time Warner.

It’s clear from the above statistical analysis that, the top most competitors for the company are Google and Apple telecommunication companies, please explain how you reached this conclusion…, with EarthLink being the least competitors among the ten considered companies. Google as well as Apple companies have been presented as the major competitors due to their time to time innovations on issues to do with internet services connectivity as well as their relative competitive costs as far as their services are a concern. Although other close competitors who are becoming popular in the market of telecommunications like Vodafone as well as T Mobile without forgetting COX and Sprint companies simply because of their unique products branding as well as well laid marketing strategic measures, they have actually failed to reach the success which AT&T and Time Warner and partially Google and Apple have enjoyed in the telecommunication market so far (Forge, & Blackman, 2017). How did this analysis help you assess the attractiveness of the industry and influence the decision for the firm to pursue the strategy of merging?

Supplier Power you need to be analyzing 2-3 indsustries in which the firm competes and at least one industry that it could possibly consider competing in…. based on those results you will be able to explain why the firm chose the strategic direction it did

This force also presents the relationship that exists between the supplier in this case being AT&T and Time Warner and the buyers being the potential customers of its products. This force appreciates the fact that the more powerful the seller becomes in relation to buyer, the more influence the seller has. Through advantageous pricing, limitations in the products and services quality as well as shifting some costs to the buyer more especially those that are related to transportation, the influence enjoyed by the seller in this case can be used to reduce the buyers’ profits (Pouryeganeh, 2015).

From the market standings of AT&T and Time Warner currently, it’s controlling over 65% of the telecommunication market in the United States and other parts of the world. In 2017,

the firm had a supply of 72% of the entire United States Market. This was attributed to the acquirement of the Time Warner Company which made it to penetrate on the entire United States telecommunication market and a well part of Mexico market. Also, the company is enjoying the supply power because of the excessive costs that will be involved in changing from its systems to other companies’ systems more especially on the entertainment and internet connectivity devises. Since the design of the company’s products is not similar to its competitor’s products, therefore compatibility also is totally different (Curwen, & Whalley, 2017).

The incompatibility feature gives the company an advantage in the market as far as its potential customer are a concern since, if a customer has to change to another company products, therefore it means that he or she must completely change the system which is much costly. For instance, a customer would rather use $2000 to service and maintain the products of the company than spending $3 million in changing the system. The following tabulation shows the selling power of the company as compared to its four major competitors in the first quarter of 2019 telecommunication market.

From the above statistical data analysis, the following regression can be performed which can be a clear indication of the selling power of the various telecommunication companies where firm is also inclusive.

From the above statistical regression analysis, it indicates that the firm had a higher selling power as compared to its top competitors with a market share of 50.84 in the first quarter of 2019. This selling power of the company to some extend can be attributed to its threatening to forward integrate to the customers where the buyers are left with no option rather than to accept the influence from AT&T and Time Warner (Forge, & Blackman, 2017).

Buyer Power

This is also another Porter’s force which acknowledges the fact that, if the buyer is more powerful in relation to the seller, and then the buyer will tend to be more influential in the market. And that this influence can reduce the profits of the seller via a reduction in the prices of the seller products and services. The profits can be reduced through increased favors to the buyers while trying to entice them to buy the sellers’ products and services, for instance, increased customer services as well as increased order deliveries to the customers. However, the company has never experienced the challenges of buyer power because of its diversified number of customers all over the United States, Mexico and the other parts of the world. This allows it to be more leeway making it possible to ignore customer requests which are impossible to be undertaken (Evens, & Donders, 2018).

Also, due to diversification of the company’s customers, it doesn’t depend on one customer to buy in bulky; this gives the company the opportunity to refrain from giving favors to single customer as a strategy of customer retention. The fragmented customer base also allows more flexibility for the company to ignore a difficult customer requests (Roos, & Von Krogh, 2016). The following statistical analysis shows the diversification of the AT&T and Time Warner customers in the United States, Mexico and the World which protects it from the buyer power.

The above information can be plotted in the statistical analysis graph below. On an average, the United states is the leading in terms of customer distribution of the company with 72%, the Mexico which is followed by the world market.

Averagely, from the above graphical analysis, the AT&T and Time Warner has got 64.3% of the telecommunications markets a situation which exonerates it from the lowering profits a situation that is forced by buyer power as well as the backward integrate of buyers. Lastly, the telecommunications market analysis carried out on the year 2018 indicated that 55% of the AT&T and Time Warner customers are youths (Pearlson, Saunders, & Galletta, 2016). This is also potential indicator since the youths are the determinants of the technology market where AT&T and Time Warner is inclusive.

Threat of Substitution

This is another force which acknowledges the fact that, in the market, there are products which can be used on behave of others. These products are referred to us substitutes. Usually, the more substitutes a product has the more elastic its demand becomes. This means that the products’ consumer price sensitivity is increased which further indicated less certainty of profits. In this case, the AT&T and Time Warner face a threat from the new innovations which are being undertaken by its competitors. As part of the strategies of market competition, the competitors are coming up with similar products and services like those of the company but with a new branding (Lerman, 2018).

They are also adding some technological features which are meant to make the products new but they are just the same as those of the company. Although the company can argue that services from Google, Apple, as well as T Mobile aren’t the best substitutes for AT&T and Time Warner services as the companies offer less extensive coverage as well as inferior customer services as per the consumer surveys but price leading strategies from these other companies is an issue that is greatly tempting the market of the company as far as the substitutes are a concern (Shapiro, 2018). The following table shows the statistics that was carried out by consumer surveys of the telecommunication company’s inferiority in services delivered to the customers.

The above statistical information can be interpreted in the statistical regression graph below.

Although AT&T and Time Warner uses its minimal inferiority of services delivery to counter the substitutes from its competitors, the following are other measures being taken by the company to maintain its stability in the market despite the threat from the substitutes in the market.

· AT&T and Time Warner Company have always maintained their efficient service delivery rather than just being product oriented like its competitors.

· AT&T and Time Warner Company have always focused its attention on understanding the core need of the customer rather than what is being bought by the customer as well as increasing the switching cost for all its potential customers (Curwen, & Whalley, 2017).

Threat of New Entry

This is another force which takes into consideration the new entrants into the market who are the potential competitors of an existing business and in this case, AT&T and Time Warner. In the last two decades, about 309 entrant companies have been registered in the United States telecommunication market. Although these companies have since remained negligible in comparison to the AT&T and Time Warner’s average annual revenues, selling power, as well as inferiority in the services delivered, they must not be neglected such much. It’s with no doubt that most profitable companies like AT&T and Time Warner attract more new competition until the downstream pressure on prices do squeeze a good part of the economic profits from the profitable company. Some of the factors which facilitate the entrants of these new firms into the industry include, low consumer switching costs in the industry, product differentiation, reduced government barriers into the industry, favorable economies of scales, low capital requirements for new firms to venture into the industry, as well as easy access to the distribution channels in the industry (Evens, & Donders, 2018).

In 2018, AT&T and Time Warner carried out an analysis on the impacts of the new entrants into its sales, number of customers served as well as their general impact on the company’s overall industry standings and the results were as shown in the table below.

The above information can be interpreted using the graphical statistical analysis as shown below.

From the above graphical analysis, other factors kept constant, the 1st period was 10 years and the second period was 8 years. It’s clear that the percentage change of the total sales keeps on increasing which generally has a negative impact on the sales of AT&T and Time Warner Company (Barry, 2018). The company under its counter tactics move is employing the following which will help it retain its strong market share despite the new entrants;

· The company is embracing at building economies of scale for the purpose of lowering its fixed cost per unit

· The company is also innovating new products as well as new ways of delivering its services.

References:

Barry, M. (2018). Verizon Wireless Communications: A Financial Analysis.

Curwen, P., & Whalley, J. (2017). The evolution of US mobile operators within a multi-play world. Digital Policy, Regulation and Governance, 19(1), 40-57.

Curwen, P., & Whalley, J. (2017). The evolution of US mobile operators within a multi-play world. Digital Policy, Regulation and Governance, 19(1), 40-57.

Evens, T., & Donders, K. (2018). Policing the Platforms. In Platform Power and Policy in Transforming Television Markets (pp. 201-242). Palgrave Macmillan, Cham.

Forge, S., & Blackman, C. (2017). Europe’s 5G field of dreams: if we build it, will they come?. Digital Policy, Regulation and Governance, 19(5), 337-352.

Lerman, A. (2018). REMNANTS OF NET NEUTRALITY: POLICING UNLAWFUL CONTENT THROUGH BROADBAND PROVIDERS. Brooklyn Journal of Corporate, Financial & Commercial Law, 12(2), 5.

Pearlson, K. E., Saunders, C. S., & Galletta, D. F. (2016). Managing and using information systems, binder ready version: a strategic approach. John Wiley & Sons.

Pouryeganeh, P. (2015). Broadband Race: A Case Study on the Status of Connectivity in the United States.

Roos, J., & Von Krogh, G. (2016). Managing strategy processes in emergent industries: The case of media firms. Springer.

Shapiro, C. (2018). Antitrust in a Time of Populism. International Journal of Industrial Organization, 61, 714-748.