Introduction
AT & T is an industry leader in the telecommunications services. The industry giant deals with digital television sets, cell phones, high speed internet, home phones and wireless appliances. The company was doing relatively well until it lost the exclusive rights it enjoyed under a contract with Apple for its iPhone. This pressure in the market has been compounded by the 4G network from its fierce competitor, Verizon (Ireland, Robert & Michael 69). The company launched a bid to acquire T-Mobile for 39 billion dollars, although the deal never materialized. While all these factors affect the operations of AT & T, other factors in the general environment also influence how the company carries out its operations. This paper looks into these factors using the STEEP framework. This framework is important because it offers a prediction of how trends in the general environment will affect business operations.
General Environment Analysis
- Social Demographic
The demographic trends in the telecommunications sector are changing at a very fast rate. For instance, the demand for Smartphones has increased exponentially. The younger generation is more interested in mobile phones that have more than the basic capabilities. Additionally, the increasing use of mobile applications for marketing among other functions has effectively put the Smarthphone in the market. Additionally, there is an increase in information telecommunications literacy. The implication of this is the uptake of telecommunication products like wireless devices and plans, all of which are provided by AT & T. In this regard, the social and demographic trends in the market work positively to provide an ample market for the company.
- Technological
Technological trends in the telecommunications industry serve both for and against AT & T. The most porous technological trend in this industry was the migration from analog transmission to digital transmission in the United States of America. The implication of this trend is that the previously used would become virtually obsolete. As noted earlier, AT & T deals with digital television sets. This trend helped create a new market for the company. On a rather negative note, the trend means that any old stocks of analog television sets will not be bought, a feat that could lead to huge losses depending on the amount of stocks. Additionally, technological developments in the telecommunications sector also mean that players in the industry need to be innovative in order to retain the market share. This is because the landscape is changing very fast with new and faster networks being developed and better appliances being designed. As highlighted earlier, AT & T lost some of its clients when Verizon, a fierce competitor launched the 4G network, which is superior to the 3G network vended by AT & T. The implication here is that AT & T needs to be innovative in order to stay ahead of the competition (Strouse 22).
- Economic
Economic factors are very potent determinants of the behavior in the market. Businesses survive on the availability of surplus income, especially when the products are not of a basic nature. Many markets around the globe are still reeling from the economic slump that rocked the world later in the last decade. Additionally, inflation rates have skyrocketed in other markets causing the prices of basic commodities to be unsustainably high. This reduces the surplus income that customers use to purchase other things. The effect of the economic recession and high inflation rates is decreased discretionary spending by the consumer. In order for companies to maintain high sales, they are forced into offering more economical alternatives for their products. This has a negative impact on the turnover and the profit margins at AT & T (Uri 175).
- Environmental
Environmental concerns in the telecommunications industry are increasingly gaining perspective. As noted earlier, the technological landscape is changing tremendously because of increasing innovation as a result of research and development. As such, the rate of obsolescence has increased more than any other time in the past. Due to this fact, there is a theatrical rise in the quantity of electronic waste around the globe. In this regard, operators are increasingly keen on the environmental impact of their operations. Many telecommunication companies are launching ‘green initiatives’ in order to remedy the impact of their operations on the environment through energy saving mechanisms and reduction of emissions. Additionally, governments and international bodies have instituted regulations aimed at protecting the environment (Gershon 48).
- Political
The political arena also has an influence on operations in the telecommunications industry. There are rising concerns in the issues pertaining to digital rights management and piracy. As such, players in the industry are finding it extremely costly and legally complicated to offer entertainment content in different media channels. Additionally, infringement by governmental agencies is something with which players in the telecommunications industry have to contend. Other emerging political issues include policies that are instituted by the incumbent governments and how such policies might change with changes in the regime. Issues of taxation and industry regulation are also factors in the political arena that the players in the industry have to consider.
Conclusion
AT & T, being one of these players is in pole position due to its entrenched roots in the industry. It is the task of the management at the company to balance these factors so that the company remains competitive in the ever changing industry landscape in telecommunications.
Works cited
Gershon, Richard. Telecommunications and Business Strategy. New York. Routledge. Print.
Ireland, R D, Robert E. Hoskisson, and Michael A. Hitt. Understanding Business Strategy: Concepts and Cases. Mason, OH: South-Western Cengage Learning, 2008. Print.
Strouse, Karen. Customer-centered Telecommunications Services Marketing. Norwood: Artech House, 2004. Print.
Uri, Noel D. The Economics of Telecommunications Systems. Hauppauge, N.Y: Nova Science, 2004. Print.
