Analysis of Strategic Options and Recommended Action
This report will analyze the strategic positioning of Comcast Corporation, an American based multinational company that offers television, cable TV and Internet services to its consumers, and come up with the best way of making the company as competitive and productive as possible. This paper will focus on the company’s internet service provision branch and analyze how well the company can do in the US market as well as on the global scale when compared to its rivals. The macroeconomic and microeconomic aspects of the company’s operation will be taken into consideration during this process of analysis.
There are many definitions of the term strategy across various platforms and literature in the business world. The strategy involves the art of setting up, implementing and evaluating plans that will lead to the achievement of set goals (Tracy, 2015). The process of setting up a strategy usually involves identifying the company’s mission, vision and goals and coming up with the most effective ways of achieving it. A thorough analysis of a company’s operations is necessary to establish all the requirements needed to come up with an effective strategy.
Strategic management is the highest form of managerial duties as the primary functioning of the company, the allocation of resources and the evaluation of the necessary processes are determined through this process. The CEO with the help of the managing board is the ones who are usually tasked with the duty of planning and coordinating all the strategies and policies that will see the completion of the set tasks and objectives of the organization.
In studies conducted recently by Hessen et al. strategy is said to be crucial in achieving short and long-term goals of any company (Heesen, 2016). Strategies are deployed not only to meet the expectations of the stakeholders but to align all the operations to achieve the business's vision and fulfil its mission statement. Strategies need to be comprehensive and all-encompassing to bring out the best out of every department and the staff as well.
Although there are various definitions of strategy in the world today, it is clear that a good strategy will help the company analyze its operations, that of its competitors in the market as well as the overall position of the company in the global scale.
Importance of Strategy
A well laid out strategy has many advantages to the enterprise. A strategy will allow the company to assess how it is performing internally and against its competitors in the market. Any weaknesses and threats can be identified and corrected through the initial stages of creating a proper strategy (Valentin, 2015). A company will be able to find out ways to which they can remain relevant in the market.
A good strategy will also help the company recognize trends and future opportunities. Through the analysis of the political, economic and technological landscape, the company can identify the best routes to follow to gain more from its activities.
A business strategy is also important in creating a company’s vision that will be emanated throughout its whole operation. It is important that all stakeholders in the organization align all their activities towards this common vision. The vision is a guiding principle that the company aims to achieve with its impact often being greater than just making a profit. A good business strategy will also help the business have a competitive advantage over its rivals in the market. A good market will usually have more than one player providing the same services and goods to clients. Competition is a fundamental aspect of any healthy economy and cannot be avoided. The best strategies will usually see the company gain an advantage, be it in marketing or pricing, over businesses that offer the same products and services.
B. PESTEL Framework
PESTEL framework is used in the analysis of the broader macroeconomic environment that a company is usually found in. PESTEL is an abbreviation for the political, economic, environment, social, technological and legal aspects that affect the operations of business (Leeds Metropolitan University, 2010). This framework provides an analyst with a broad range of information on all the factors that interplay to affect the success of strategies in the company. Some literature argues that the information obtained through the PESTEL framework provides the most comprehensive analysis of the macroeconomic factors within which the company operates while others have dismissed the framework as being too wide and not all factors will ultimately lead to a specific influence on the operation of the SBU.
Political
The internet provision service in the USA had been growing independent of any form of regulation for years as no single policy was used to curtail and regulate them. In 2015, the federal government passed for the regulation of the companies in the same manner as television and cable companies (Tracy, 2015). The ISP does not pay more for a faster bandwidth thereby encouraging all companies based in the United States to use offer faster speeds to all their clients (Lenard, May, & Progress & Freedom Foundation (U.S.), 2006). This regulation also means that the companies are not allowed to block web traffic or slow it down. Net neutrality means that the corporations are not allowed to offer paid services for faster speeds (Films Media Group, 2014).
The technological advancement of the country is a crucial aspect to the growth of the country. Comcast Company is the largest internet service provider in the country and is, therefore, an important player in the advancement of increased connectivity of the people in the country. The government encourages startups and businesses that are based on the internet and therefore encourage investment into this area (Levmore & Nussbaum, 2010). Hotspots available in various locations and private subscribers to the ISP services offered by Comcast provide a large customer base for the business (Maniadaki, 2015). Strategies that increase the expansion of the company's internet provision reach are thereby favored by the current political inclination of the US government (Marsden, 2010).
Economical
The internet is changing the global economic landscape in a major way. The internet is changing the way we interact with each other, do business, create and access information. The extent to which the Internet has changed the economy is so great that if it were an independent sector, it would account for slightly more than agriculture in terms of the revenue generated per year. Internet accounted for 21% growth in the GDP of big economies over the past half-decade (E-Conomic, 2015). Big organizations have reaped great benefits from the access to internet services; the biggest winners are the small enterprises and individual business owners (Foroohar, 2016).
Social
The advent of email and later on social media has changed how people interact and socialize with each other in the society. The internet has grown into a great place for people and products to interact (Gilroy & Library of Congress Washington Dc Congressional Research Service, 2006). An increase in the popularity of social media sites such as Facebook, Twitter and Google + has revolutionized the socialization process and created a whole new industry. Facebook, the largest social media site, boasts of having over 1 billion active users monthly (Wang, 2014). This has created new growth opportunities for internet service providers in the country to be able to increase and improve the services they offer.
Technological
There has been lots of development in the technology needed to connect homes to the internet. The Internet is now available at very high speeds with 4G technology growing to become a standard speed for most of the internet users in the country.
Environmental
Most corporations are mandated to have a sustainable and environmentally friendly operation. There is increased pressure from both the federal government and international partners to have businesses reduce their carbon footprint. Big companies are under immense pressure from conservationist as well to reduce their impact on the environment leading most major companies to get involved in environment projects. Going green is usually a costly affair but one that is absolutely necessary to creating a sustainable way of doing work.
Legal
The US government has been a leader in promoting the concept of open and free internet. The laws passed to this accord include the net neutrality bill that sees all service providers treat the internet traffic equally (Hazlett, 2011). Net neutrality means that all persons accessing the internet are not discriminated against due to their financial capabilities. A large multinational company's web traffic speed should not be more than that of a high school student's blog. Both websites' traffic should be similar to encourage more people to access and use internet services regardless of financial capabilities.
Porter’s Five Forces Analysis
The five forces analysis is an in-depth look at factors that relate to an individual company and its position in the industry (Michaux, Cadiat, A.-C, & Probert, 2015). This method of analysis is based on the foundation that a company with a greater competitive advantage will have a greater market share and profit margin compared to its rivals. The five factors include threat of entry, bargaining power of suppliers, bargaining power of consumers, threat of substitute and competitive rivalry.
Threat of Entry
Entry into the internet service provision industry is limited due to the high cost of infrastructure and equipment required. There are an already established customer base and network among the existing market leaders.
Bargaining Power of Suppliers
Comcast uses a host of specialized equipment such as satellites, routers and boosters to carry out its operation. The equipment is therefore acquired from a limited number of suppliers who manufacture and provide them. There is a certain amount of dependence on these suppliers, but this situation is slowly fading due to the large size of Comcast. Comcast has made efforts to set up its shops that will manufacture the equipment and reduce dependence.
Bargaining Power of Consumers
Consumers are also witnessing a reduced power of bargaining due to the huge size of Comcast Corporation. The company has the largest and modern network control and can raise or lower its prices and its rivals would follow.
Threat of Substitute
This is the biggest threat facing Comcast; many ISPs in the market can offer similar services to Comcast's clients. The company must, therefore, increase its market share through offers of cheaper connection plans.
Rivals
Comcast operates in an oligopoly that is controlled by a few major players. The players in the market have achieved this by buying out smaller competitors and through mergers with other large internet service providers in the country. The takeovers and buyouts are possible because only a few companies are able to set up the necessary infrastructure and equipment to supply a large demography. Smaller ISP services which operate on a regional scale find it hard to compete with companies the size of Comcast. The main rivals of Comcast are Verizon, Century Link, Dish and AT&T (Datamonitor (Firm), 2000).
Summary of Key Drivers
The ISP industry is greatly influenced by external economic and political factors. The net neutrality policy affects the industry by ensuring that all the providers offer high quality and fast internet connections to all people in the country (Nunziato, 2009). The competition is therefore increased in the industry as the individual companies have to come up with other offers to attract new clients. The influence of technology and the internet on the economy of the country and the individual businesses has increased demand for good internet connection, leading to a sustainable growth in the industry. Comcast is well placed on the market because it does not rely on suppliers as heavily as other companies and has a large market share in the United States.
C. Porter’s Value Chain
Comcast acquires its equipment from a number of large suppliers in the market and can, therefore, exploit competitive pricing among its various suppliers (Robben & Probert, 2015). The company creates long-term relationships with its suppliers ensuring that quality and consistency is guaranteed in the acquisition phase. The company has its main office in Philadelphia with 12 data centers and hundreds of warehouses countrywide ensuring that the outreach of the company is not centralized in one location.
Employees at Comcast are also part of the value chain of the company. There is a Comcast College that aims at improving the skills of the workers in the company to keep them at peak performance levels (Roy, 2009). The employees are trained on how to serve the clients better, handle and repair of the equipment as well as how to best relate to each other. This leads to the increased customer satisfaction as well as increase in employee work satisfaction.
The company has fine-tuned its logistics to ensure that its products and services are easily accessed by the customers. This measure ensures reduced cost of operations as well as reduced overhead time during the process of installing a router in a business or home. The reduced time and money spent adds value to the company as well as increasing the levels of customer satisfaction.
SWOT Analysis
Strengths
Comcast is the largest internet and television provider in the whole country. Comcast has been able to expand its network across all regions of the USA and provides high-speed internet connectivity to the people in the country. Revenues of the company reached $74.51 billion in the year 2015 pushing the company to number 46 in the Fortune 500 companies. This large war chest gives the company a great advantage over most of its rivals and also builds the trust of its clients (Harrington, 2015).
Comcast enjoys a great deal of regional control in the telecommunication space because of the strict prohibitive entry barriers. Comcast operates as a monopoly in many regions where it has already established a firm network and client base. This situation is illustrated by how frustrated Google has been left in some of its attempt to establish a fiber network in the regions that are dominated by Comcast (Chang & Bloomberg News (Firm), 2013).
Weaknesses
The high cost of doing business counts as a weakness against Comcast. There is always a pressing need to improve the communication infrastructure within the country to keep Comcast at pace with its competitors. The onset of Netflix and other streaming services have also hindered the progress of Comcast. Comcast, the company behind NBC Universal, has to come up with new and entertaining content to keep hold of its market share. Customer satisfaction is yet another area of weakness for the large company, internet service providers and television companies usually face criticism and dissatisfaction from clients. Comcast, being the largest in the country, gets a great amount of this animosity.
Opportunities
Mergers and Acquisition with companies in the country offer an opportunity for Comcast to grow and reach a larger group of people as well as increasing its infrastructure. A good example of a merger was the $45.5 billion acquisition of AT&T in 2001 that saw the prices of Comcast shares quadruple in value (United States, 2014). Mergers help both parties’ access new markets and increase the size of operations. Mergers also lower the cost of entering a new market since all the preliminary work is already done by the company that is being taken over. Another area of opportunity is the use of quadruple-play bundles that allows customers to purchase mobile bundles that will allow more people to access the internet from anywhere across the globe.
Threats
Regulatory developments have seen Comcast come under heavy criticism for deliberately slowing down connectivity with its peers (In McDonald & In Smith-Rowsey, 2016). Regulations such as net neutrality seem to spell major losses for large companies such as Comcast. Audience fragmentation is also a major threat; many consumers are going for low cost a la carte entertainment and leaving expensive services offered by Comcast behind (United States, 2016). Larger groups of consumers will soon lead to decreased market share for the company.
Summary of Internal Analysis
Comcast aims at improving value and cutting costs through the use of a limited number of suppliers who ensure quality and consistency. There is a great training program in place that allows for the improvement of workers’ skills as well as recruiting and training fresh high school graduates. The company has branches all over the country to ease access for the clients (Comcast, 2016). A SWOT analysis shows that the strength of the company lies in its large client base and revenue while some of its weaknesses include high cost of doing business and customer dissatisfaction.
D. Recommendations
Comcast is already a leader in the entertainment and internet industry with a large infrastructure capability that spans across the country. A good way of improving the quality of service offered to the clients would be to focus on customer satisfaction and employee well-being. The company has had many reports of customer complaints about its services; the sheer size of the company has made the company lenient in the customer service front (Marshak, 2015). A dedicated 24-hour customer service hotline, as well as customer, care social media platforms, should be set up and staffed to offer solutions to clients in need. Complaints such as slow internet speeds or a problem with a setup box can be addressed in the quickest time possible. This will increase customer satisfaction and give the company a competitive advantage.
Workers in Comcast should be provided with a proper channel for giving out suggestions and making complaints. A workforce that has the ears of the management feels more appreciated and work better (In Casademunt, 2016). The conditions of the workers in Comcast should be a top priority for the management which has a history of not supporting the formation of a workers' union. The company does not believe that a union is the best form of human resource management (Comcast Corporation, 2002). The company should, therefore, review its human resource department to ensure efficiency in dealing with complaints that may arise from its 15,000 employees across the country. Studies show that happy workforce increases efficiency lowers costs of complaints and helps an organization achieve its set goals.
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