SWOT analysis of Comcast Cable Company

Comcast SWOT

Comcast is the largest cable provider in the United States. The company began life in 1963 in Tupelo, MS. It joined the NASDAQ in 1972. By the mid-1990s Comcast was in acquisition mode, picking up several media properties and increasing its cable presence. Today, Comcast operates in cable television, broadband Internet and telephone. Geographically they operate in 39 states and the District of Columbia. Comcast has 23.8 million cable subscribers, 15.7 million high-speed Internet customers and 7.4 million voice customers. It also owns a number of media and sports properties, and has a number of media joint ventures. The company has garnered multiple awards not only for its results but for the way in which it operates (Comcast.com, 2009). Comcast does not publish a mission or vision statement.

The first organizational strength is Comcast's established market position. The installed base of cable subscribers is the largest in the United States. This gives Comcast two key advantages -- economies of scale and the opportunity to cross-market other services. A recent "triple play" package of their top three offerings has spurred strong sales increases in Q3 2009 for example (Buckley, 2009). This is not a distinct competence, but rather results from them.

The second organizational strength is Comcast's profitability. The company has a gross margin of 60%, versus an industry average of 17%. Overall, Comcast is significantly more profitable than its industry peers. This allows the company to reinvest more in technological development. Profitability is both the result of distinctive competencies and facilitates the development of them.

The third organizational strength is its strong management team. This group has been able to find models to bring together disparate businesses (media and sports, for example) in profitable ways. They have developed Comcast to match modern technologies. This leadership is a distinctive competency.

One of Comcast's weaknesses is in customer service. The industry in general has a difficult time finding and retaining quality employees in customer service. This leads to high turnover and poor performance. It also leads to dissatisfied customers, who take their business elsewhere. Comcast can mitigate this in two ways. One is by inputting a second level of complaint resolution, such as their "Twitter" man (Reisner, 2009). The other is by improving the rewards and motivation system for service staff to encourage retention and skills development.

Another weakness is the company's liquidity position. The company's liquidity ratios are poor relative to those of the industry (Reuters, 2009). While the debt ratio is relatively healthy, the company has little financial flexibility with regards to its short-term liquidity. This can hamper its abilities with regards to investment and taking advantage of opportunities. Indeed, being cash poor can put a constraint on acquisitions. The best way for Comcast to address this is to increase the duration of their liabilities, freeing up short-term cash.

A third weakness is Comcast's lack of presence in wireless. The company's channels for product delivery -- cable and hardwire broadband -- are standard today. In the next decade, however, those channels could become anachronisms. Wireless growth is rapid and as technology matches consumer desire for wireless, firms without a presence in the sector could see their revenues decline sharply. Comcast can enter this business through acquisitions.

Where wireless is currently a weakness for Comcast, it is also a source of opportunity. With a captive installed base, if Comcast can acquire some capabilities in this area, they will be able to cross-market to their existing customer base to gain a foothold in the industry. This opportunity exists in the social environment, with the rapid adoption of wireless. The opportunity could result is massive changes to Comcast, especially if it needs to absorb a major wireless firm in order to enter the business.

Comcast has an opportunity to bring its properties together from the content side. As the computer replaces the television -- a social and technological environment phenomenon -- the flow of content through channels needs to keep pace. Only recently has the company begun exploring the possibilities in taking its cable properties to the online sphere (McClatchy-Tribune News Service, 2009). This may result in two distinct parts of the organization coming together to deliver multichannel solutions for Comcast's proprietary and licensed content.

Comcast also has an opportunity to expand geographically. The company operates in 39 states, meaning there are 11 more to be entered. This provides an excellent market opportunity for Comcast to grow without making substantive changes to its business model or product offerings.

Competition is the major threat to Comcast at present. The competitive environment is intense, with multiple competitors in each business line, many of whom are strong, well-capitalized competitors. The organization could see its market share shrink if their competitors are stronger.

The second key threat is represented in the technological dimension. The telecommunications business has been subject to rapid and profound shifts in recent years. Comcast must stay on top of those changes, or risk having its offerings become obsolete.

The third key threat is regulation. The telecommunications industry is heavily regulated. Changes in the regulatory/legal environment can reduce Comcast's competitiveness. Regulatory scrutiny has increased over the past three years (Comcast 2008 10-K), which has included the provision of advantages and relief to competitors at Comcast's expense. The company must pay increasing attention to regulatory issues, which distract the firm from its core tasks in technological development and marketing.

Strategies

Comcast appears to be following a differentiated strategy, oriented towards the provision of superior content. The company extracts premium prices, if its margins are any indication, and does so because of its integrated content offerings. There is little evidence to support the notion that Comcast is employing a cost leadership strategy. Furthermore, in the telecommunications industry the pace of technological change is driven by demand from the consumer side, necessitating constant R&D investment. These costs, and the fact that innovation is a demand driver, require Comcast to follow a differentiated strategy.