Environmental Analysis

Environmental Analysis

La Shawn Baker

ECO/501- The purpose of this paper is to do an environmental analysis of AT&T. The environment of the telecommunication industry has three components of the macroeconomic environment, the industry environment, and the operating environment within the organization. This paper will cover the history of AT&T and it affected the communication industry. It will also outline the three variables that affect the telecommunication industry.
AT&T (American Telephone and Telegraph) establish in by Alexander Graham Bell. With the success of the telephone, Bell earned patents that also gained the interest of investors created a Bell Telephone Company. The telephone became the new found gadget of telecommunication; the service other exchange companies established across the United States. American Bell sought obtained Western Electric Company in 1882 making Bell Telephone Company into Bell System (History of AT&T, 2010). The telecommunication market, developed by AT&T, and expanded from one inventor, two investors by 1984 being 149 billion dollars, 1009,000 workers. Also in 1984, AT&T reduces long distance rates by 6.4%, as non-traffic sensitive costs begin moving from rates to local-company managed access charges. This was the first in a series of rate reductions over a six-year period (Milestone of AT&T, 2010).
AT&T has several strengths, which, derives from their products wireless, landline, internet, and data TV. Their global network slowly expanded in 1921 to Cuba, Great Britain in 1927, and Japan 1934 with the mission to connect to everyone in the world over the course of AT&T long history there have been three components that has established: Transmission, the routes over which the messages traveled. Switching, the systems for routing the messages Management, the intelligence that makes the whole system function and grow as the demand for telecommunications continue to evolve (History of AT&T, 2010).
When addressing the variables in telecommunications there are is three variables that can alter then growth of the wireless: macroeconomic growth, telephone intensity and price elasticity. Macroeconomic Growth: the initial reference point for the Gross Domestic Product (GDP) is how growth is determined within the industry. The intensity of pricing as it grows or drops within the industry. Economic growth can be defined as a long-term extension of the productive potential of the economy. If the growth can be, maintain for a period, economic growth could lead higher real living standards and rising employment. Short-term growth is measured by the percentage of customers that may churn from the company from the consumers or from the employees. AT&T will measure any change in real GDP through knowing their customer base preventing possible churn and they will also need to provided reassurance of quality of goods, products and services provided to the community.
Telephone Intensity, is the determining factor, which determines supply and demand of the wireless products. New product development is the key to Telephone Intensity. Consumers are demanding products that work. They are latterly looking for the next best thing and they are willing to pay extra for the product that satisfies that need to purchase and have the best option even in time of economic hardship (AT&T, 2009). Derek D. Rucker, an associate professor of marketing, and Adam D. Galinsky, a professor of management and organizations, both at the Kellogg School of Management, found new research that suggests insecurity may be the real force behind why people spend a large amount of money. Even in economic hardship consumers will buy, the newest toy mainly because it satisfies underlies the desire to acquire status-related consumer goods (Galinsky; Rucker, 2010).
Lastly Price Elasticity (Revenue change due to changes in pricing): this is the where industry prices are determined by supply and demand as demand increases or decrease it will determine value and price (Weingarten, 1994). In 2009, in an effort to compete with their number one competition the changed their unlimited $99 dollar plan to the $69 unlimited voice. Soon after they followed their competitors by implementing Smart phones, required data plans on all PDA devices. In an effort to reduce, the company’s credits for data overages (AT&T, 2010).
The graphs below will show the outward trend of cell phone trends from 1995 to 2005 where the United States lead the sales in sale phones and the decline. The next graph will show the growth from the declining market of 2005. In conclusion, AT&T was the global leader in telecommunication, however competition has forced the company to change current marketing strategy, to prevent churn of customer base. The company’s three variables allow them to follow current trends in the industry that will define their marketing position.

Reference
AT&T History 2010 Retrieved From http://www.att.com/gen/investor- relations?pid=5711s: Benito-Martin, Juan Jose; Weingarten Michael. (1994).Monitor Telecom
Advisory Services. U.S. Telecommunications demand retrieved from http://www.signallake.com/publications/demandpaper.pdf
Galinsky, Adam D; Rucker, Derek D.(2010). Desire to acquire powerlessness and compensatory consumption. Kellogg School of Management retrieved from http://insight.kellogg.northwestern.edu/index.php/Kellogg/article/desire_to_acquire