Abstract
Comcast Cable currently enjoys the number one market position in the United States. The company has a long history of fueling and sustaining its growth through the acquisition of other companies. In the past, Comcast’s implementation of this growth strategy has worked well and has remained unchallenged by government regulatory agencies. Since Comcast’s early growth was fueled by the acquisition of indirect competitors, the company received positive results by being able to expand its technological capacity and customer base. Comcast was able to grow its profits exponentially as a result of its series of acquisitions. The company’s 2014 attempt to acquire Time Warner Cable was unsuccessful due to the fact that the potential acquisition raised anti-trust concerns with the U.S. government. In addition, Comcast had amassed a reputation for extremely poor customer service and being the “worst company in America.” Due to its focus on frequent, mass growth, company leaders failed to attend to other forms of evaluation and measurement from the market. If Comcast is to move forward with implementing growth and development strategies, it must look to other options besides destroying the existence of its competition.
Keywords: Comcast Cable, Market Strategy, Strategic Implementation
Introduction
The successful implementation of any strategy is often determined by a combination of knowledge, skill, random chance, and the perceptions of those the implementation is bound to affect. Since corporate marketing strategy is often formulated behind closed doors, it can be difficult for executive managers to grasp how their theories will unfold in the actual market. Although it is the job of corporate leaders to acquire and possess the knowledge that leads to sound strategy, evaluation and measurement tools help determine how effective the strategy is in the marketplace. Without evaluation and measurement tools, corporate leaders cannot assess whether theory matches up with practice. The evaluation and measurement process also provides valuable feedback to executives on whether their knowledge and perceptions of the marketplace is accurate. In many cases, including Comcast’s, evaluation and measurement can help leaders improve several aspects of their business models and develop competitive advantages.
Historically, Comcast’s implementation of its market strategy has been through acquisitions of other cable and telecommunications providers (Lev-Ram & Newmyer, 2015). The company began as a small cable provider in northern Mississippi in 1963 (Lev-Ram et al., 2015). The primary ideas behind Comcast’s strategy were growth and expansion. The implementation of these strategic goals came in the form of buying out small competitors in the area and then expanded to larger entities (Lev-Ram et al., 2015). By the early 2000s, Comcast had annual revenues of twelve billion dollars and market dominance in areas such as Atlanta, San Francisco, and Philadelphia. Comcast also expanded its service capacity with its acquisition of AT&T’s broadband Internet service in 2001 (Lev-Ram et al., 2015).
Signs of the company’s inability to continue to successfully implement its strategic initiative started to show in 2004. Comcast was unable to acquire Disney’s media sector, but was able to take over NBC Universal in 2011. Comcast’s failed attempt to acquire Time Warner Cable in 2014 amidst U.S. government concerns revealed to Comcast executives that the business of expansion at all costs had eroded the company’s ability to satisfy its customers (Lev-Ram et al., 2015). The company had become known as one of the least admirable and customers were extremely displeased with the level of service they received (Lev-Ram et al., 2015). Comcast has recently begun to overhaul its approach to customer service, from the executive to the front-line level. Executive Vice President for Customer Experience, Charlie Herrin, has been quoted as saying “we know the service isn’t where it needs to be. The product always needs to work, and when it doesn’t, we need to get it fixed and simplify the process” (Smith, 2015 p. 32).
Analysis
Comcast’s strategy of growth and expansion has worked well for the company in the past. Comcast is currently the largest cable and broadband Internet service provider in the United States (Sokolove, 2014). The company has fueled its growth and expansion through the acquisition of other companies that provide similar services to its own. These services include cable television, Internet services and content. In recent years, Comcast has used its existing network resources to offer bundled phone services (voice over IP or VOIP) with its cable television and broadband Internet services (Lev-Rem et al., 2015). Given the fact that Comcast has been able to fuel its growth through the purchase of other company’s resources and infrastructure, one can reasonably assume that the company’s strategy has neglected to include a three-hundred and sixty degree evaluation process. If one is simply buying up existing resources and existing competencies, then one does not have to invest as much in determining the effectiveness of one’s expanding footprint. Since the focus is on expansion and growth, more time and energy is put into continuing to grow one’s size. The complications that come with frequent, constant expansion means other operational areas become neglected.
One of the reasons why Comcast’s implementation might have succeeded in the past is because Comcast was able to integrate the acquired companies’ resources into its own in a manner that did not alienate its customer base. In addition, the telecommunications and cable industry is inherently monopolistic (Lev-Ram et al., 2015). No one really questioned Comcast’s strategic implementation of buying up other cable and Internet service providers. Under U.S. antitrust laws, two providers that have market dominance in different geographic regions are not considered to be direct competitors. In the face of U.S. regulations, the acquisition of a company that exists in a separate area is not considered to be a threat to competition (Lev-Ram et al., 2015). Comcast could continue to fuel its growth through the acquisition of smaller, geographically concentrated companies without raising suspicion or concern. Given the fact that acquisitions proved to be a successful way to fuel growth, Comcast’s leaders saw fit to continue with the same type of implementation.
Receiving positive feedback (or at the very least unchallenged feedback) is one of the dangers of the evaluation and measurement process. Comcast’s acquisitions continued to go unchallenged and corporate leaders became too overconfident, especially in their ability to continue to buy up other companies. Instead of fueling growth and expansion through other means, such as research and development, specialization, and genuine customer satisfaction, Comcast’s leaders continued to use what was tried and true. In fact, one could ascertain that company leaders became even more ambitious and perhaps driven by greed, in their recent acquisition attempts.
In February of 2014, Comcast announced that the company was making an offer to purchase Time Warner Cable (Sokolove, 2014). At the time of the announcement, Time Warner Cable was the number two provider of cable television services in the United States and the number three provider of Internet services (Sokolove, 2014). While Comcast’s leaders may have stated the acquisition was fueled by the need for innovation and growth, one has to wonder whether the acquisition was merely driven by the need to wipe out a formidable source of competition. Ultimately the acquisition failed due to pressure from the U.S. government and concerns over violation of anti-trust laws (Smith, 2015).
The implementation of Comcast’s strategy of growth and expansion through the acquisition of other companies failed with Time Warner because Comcast’s leaders failed to recognize other sources of market feedback. The company had been suffering from a bad public image and a reputation for extremely poor customer service for years prior to the acquisition attempt (Smith, 2015). Consumer Reports gave Comcast the “Golden Poo” trophy and labeled it as the “Worst Company in America” in 2014 and in 2010 (Smith, 2015). Some of the factors that contributed to its bad reputation include recordings of customer service representatives threatening subscribers that wanted to cancel their services and sending out bills to customers with derogatory sayings (Smith, 2015).
This reputation of poor customer service clearly demonstrates management’s lax attitude towards working in the best interests of its customer base. The size of the company may contribute to executive leaders’ inability to ensure that good customer service is being practiced on the front-line or the poor customer service may be manifestations of the executive leaders’ conquer at all cost mentality. At its foundation, implementing a strategy of growth through the acquisition of other companies is a tool of destruction. In order for Comcast to be victorious and grow, another company must lose and dissolve. The customer service representatives who used intimidation and abusive tactics on customers who wanted to part ways were simply enacting the corporate culture. Unfortunately for Comcast, the market environment and consumer preferences had also changed by the time 2014 arrived. These were additional sources of evaluation and measurement that company leaders failed to pay attention to when attempting to purchase Time Warner.
Conclusion
In order for Comcast to successfully implement further strategic initiatives, the company’s leaders must pay attention to cues from its market. These cues include how the customer base perceives the company and its services. Comcast leaders need to find out what customers are not happy with about current services and what services the customer wants. The company appears to be making strides in this direction, with the introduction of X1 pay per content, smartphone apps to rate service technicians and get instant information about service outages, increasing the number of customer service representatives, and overhauling its customer service training (Smith, 2015).
Instead of acting like a monopoly, Comcast cannot afford to ignore market feedback in favor of the ability to grow profits through a series of acquisitions. The company must stick with its recent initiatives to change its reputation in the mind of consumers and consumer rating agencies. As with any corporate culture change, the progress will be slow and prone to setbacks. In addition to seeking external feedback from customers and peers, Comcast’s leaders also need to measure the perceptions and attitudes of its own employees; particularly those who are directly responsible for providing the customer service experience. Perhaps one of the best measurement and evaluation tools would be to survey whether its own workers are satisfied with the service packages Comcast offers, and whether the company’s own workers, given the choice, would actually use and purchase them.
References
Lev-Ram, M., & Newmyer, T. (2015). How to lose friends and influence. Fortune, 171(7), 50-59.
Smith, G. (2015). Comcast tries to repair its customer service. Business Week, (4426), 32-33.
Sokolove, M. (2014, April 19). Comcast’s real repairman. The New York Times. Retrieved June 21, 2015 from http://www.nytimes.com/2014/04/20/business/media/comcasts-real-repairman.html?_r=0
