Running head: AT&T: SWOT ANALYSIS AND BALANCED SCORECARD AT&T: SWOT Analysis and Balanced Scorecard Liberty

University Audrey Dodson April 14, 2013

AT&T AT&T: SWOT Analysis and Balanced Scorecard American Telephone and Telegraph, Inc. (AT&T) is the largest telecommunications company in the world based on revenue. AT&T provides products and services to consumers, small businesses, and corporations. AT&Ts portfolio of services and products includes broadband, international service plans, local search, mobile phones, retail, u-verse, wireless networks, and Wi-Fi. The company has the largest 4G network which covers over 275 million people; and is the largest wireless carrier internationally serving approximately 106 million

wireless customers. Wholesale services are also provided to carriers, wireless service providers, cable providers, systems integrators, internet service providers, and content providers (ATT Company Information, 2013). Based on AT&Ts revenues, product offerings, services, and customers, the company appears to be stable and profitable. To gain a more in depth view of the company a SWOT analysis can be performed. The SWOT analysis assesses the companys strengths, weaknesses, opportunities, and threats. The analysis allows the company to build on it strengths and make adjustments to weaknesses and internal and external threats (Blocher, Stout, Juras, & Cokins, 2013). Once the SWOT analysis has been performed AT&T is then able to use this information to create a balanced scorecard. A balanced scorecard will allow AT&T to align its vision and mission with its customer, internal processes, and learning and growth perspectives. This tool enables the company to align its daily operations with the long-term strategy and goals of the company. The balanced scorecard helps to identify company objectives and the measures that should be taken in order to achieve them (Chang, 2012).

AT&T The following charts SWOT Analysis and Balanced Scorecard-shows the strengths,

weaknesses, opportunities, and threats of AT&, and the objectives and measures used to balance financial and non-financial information to achieve the companys goals.

AMERICAN TELEPHONE AND TELEGRAPH COMPANY SWOT ANALYSIS STRENGTHS - Well known global brand - Multiple products, services, IPhone provider - Strong financials (wireless/wireline segment) - Company reach over 200 countries (100+ million customers) - Growth through acquisitions - Customer centrique strategy WEAKNESSES - Limited market share (wireless segment)

OPPORTUNITIES - Global expansion - Revenue growth (I-Phone and IPad) - Revenue growth (smart phones and 4G network)

THREATS - Economic slowdown - Government regulations - Legal issues over IP relay problems - Saturation of U.S. markets - Intense industry competition

(Blocher, Stout, Juras, & Cokins, 2013)

AT&T

AMERICAN TELEPHONE AND TELEGRAPH COMPANY'S BALANCED SCORECARD Critical Success Factors Financial

Objective

Measure

Target

Initiative New products/services New customers Pricing strategy Increase revenue productivity Reduce operating expenses Improve product mix Retain current sales agents Maintain relationships with customers, suppliers, and distributors Product/service offerings Brand image and reputation

Revenue growth Annual growth in sales + 15% fiscal year Market share by region end 2013 Markets and customers

Reduce Costs

Annual expenses Cost of production

- 15% fiscal year end 2013

Customer

Market share

Customer retention New customers

Reduce agent turnover by 20% end of fiscal 2013

Internal Process

Innovation

Customer needs New products

Cross-departmental 2 new products sharing fiscal year end 2014 of information Access to training materials Access to sufficient information Build relationships w/employees

Learning and Growth

Employee retention

Employee turnover

- 30% fiscal year end 2013

(Blocher, Stout, Juras, & Cokins, 2013)

AT&T Critical success factors (CSF) are variables and activities that have to be performed well in order for a company to achieve its objectives and goals. Identifying CSFs helps guide, direct, and measure the success of the company; and it informs all employees of the companys objectives and the initiatives and activities required to reach the companys target and ultimate achievement of goals. The CSFs of AT&T are revenue growth, costs reduction, market share, innovation, and employee retention (Blocher, Stout, Juras, & Cokins). Revenue growth is important to AT&T because it is indicative of how fast the company is growing or expanding. It shows the annual increase or decrease in sales growth. Revenue growth is also a performance measure that investors use to value the company. A continually growth in revenue means that AT&Ts net income will also grow proportionately to revenue growth (Brealey, Myers, & Marcus, 2012).

A reduction of expenses for AT& T will help stabilize or increase cash flow. Cash flow is a very important asset because it shows resources and uses of the companys cash. It is also a measure to identify cash deficits and opportunities. And it is useful in decision making as it relates to the profitability of the company, the companys financial condition, and how well the company is using its resources. AT&Ts reduction of costs directly impacts cash flow and will help the company determine its working capital requirements (Blocher, Stout, Juras, & Cokins). Market share is important to AT&T because it shows the percentage of the market that it holds, and it shows how well its products are being received in different regions. Market share also helps in determining consumer demand. By determining consumer demand, new consumer needs are identified which enables AT&T discover opportunities to fill new needs of consumers, and acquire more market share (Kotler & Keller, 2012).

AT&T Innovation is important to AT&T because the telecommunications industry is very competitive with opportunities for global expansion. Because of advanced technology, consumers are demanding new features, better services, and lower prices. Revenue growth is dependent on sales; therefore AT&T must create value for customers by creating new products and increasing or amending product lines and services (Kotler & Keller, 2012). Employee retention is vital to AT&T because it lowers expenses, helps attract quality new hires, and it enhances productivity and employee morale. High employee turnover increases recruitment and training expenses of the company. Employee retention also boosts the image and brand of the company (Brealey, Myers, & Marcus). Financial Perspective

Under the financial perspective revenue growth and reduction of costs are objectives that AT&T felt would help them reach their goals of growth and sustainability. Accomplishing these objectives is contingent on accomplishing the objectives in the customer, internal process, and learning and growth perspectives. Revenue growth is dependent on sales, and sales are dependent on customer satisfaction. Customer satisfaction is directly related to customer retention. By retaining current customers and acquiring new customers, AT&T is able to increase revenue. By reducing the costs of expenses, AT&T is able to allocate additional cash flow to research and development to create new products or amend product lines based on customer demand (Jamshidinavid, Chavoshani, & Mrzae, 2012). Customer Perspective Customers are key in accomplishing the goals of increasing revenue and reducing costs. Customer satisfaction is directly related to revenue growth. To kept customers satisfied, AT&T has to build relationships with customers, suppliers, and distributors. It is important to revenue

AT&T growth for AT&T to retain its current customers and attract new ones. Customer retention and acquisition of new customers are necessary to increase market share and increase revenue. AT&Ts revenue growth is an indicator of customer satisfaction. Satisfied customers will continue purchasing AT&Ts products and services (Jamshidinavid, Chavoshani, & Mrzae, 2012). Internal Process Perspective The internal control perspective helps management to see how well the business is operating and whether their product offerings and service offerings meet customer demands. AT&Ts innovation objective ties in with this perspective because the creation of new products and services is the result of understanding consumer needs and satisfying those needs. Innovation for AT&T is enhanced by the sharing of information cross-departmentally. The entire organization understands the objectives and the measures needed to achieve goals (Chang). Learning and Growth Perspective The sharing of cross-departmental information allows employees to have access to pertinent information needed to perform jobs and increase productivity. It is also an enabler of employee retention and satisfaction. Employees are an important resource for revenue growth. Satisfied employees will be more productive. AT&Ts revenue growth is a testament to the satisfaction and productivity of their employees (Chang). Conclusion The SWOT analysis for AT&T is a method for sorting out its internal strengths and weaknesses and the impact of external factors as opportunities and threats. It allows the

AT&T company to use its strengths to increase its competitive advantage, make adjustments or corrections for weaknesses, to take advantage of opportunities, and to alleviate or deter threats. AT&Ts balanced scorecard allows the company to use financial and non-financial information to align and balance internal and external measures, objective and subjective measures, and performance and drivers of performance. It shows the connection between the financial perspective and customer, internal process, and learning and growth perspectives. The balanced

scorecard is an asset that allows AT&T to clarify its strategy, communicate its strategy, and plan and set targets (Blocher, Stout, Juras, & Cokins).

AT&T References AT&T Company Information. (2013). Retrieved from att.com: http://www.att.com/gen/investorrelations?pid=5711

Blocher, E., Stout, D., Juras, P., & Cokins, G. (2013). Cost management: A strategic emphasis (6 ed.). New York: McGraw-Hill/Irwin. Brealey, R., Myers, S., & Marcus, J. (2012). Fundamentals of corporate finance (7th ed.). New York, NY: McGraw-Hill/Irwin. Chang, C. (2012). Verification of the effects of balance scorecard implementation on a company's financial performance: Using intellectual capital accumulation as the mediator. Journal of Global Business Management, 8(2), 28-39. Retrieved from http://search.proquest.com/docview/1312295482?accountid=12085 Jamshidinavid, B., Chavoshani, M., & Mrzae, K. (2012). A performance evaluation of telecommunications company in Province of Elam based on balanced scorecard (BSC) from 2006 to 2011. Journal of Advanced Social Research, 2(4), 202-214. Retrieved from http://search.proquest.com/docview/1312295482?accountid=12085 Kotler, P., & Keller, K. L. (2012). Marketing Management (14 ed.). Upper Saddle River, NJ: Prentice Hall.