Strategic challenges in organizational contexts

Strategic Challenges:

Cingular-AT&T and Sprint

Strategic Challenges: Cingular-AT&T and Sprint

The telecommunications business industry has emerged in recent years as the fastest growing industry of the 21st century, as globalization has sparked a revolution in information and communication technology. Companies such as Cingular-AT&T and Sprint have set the industry standard for business models, revenue models, and core competencies, all the while simultaneously establishing a competitive advantage. Each of these companies have their own set of strategic challenges, including strong competitors, that they have overcome. Additionally, their business models are similar, and both companies offer phones that feature a host of applications that offer simple solutions for organizing hectic work and personal life schedules. This paper will compare and contrast Cingular-AT&T and Sprint, and will conclude with an examination of their strengths and weaknesses and major challenges, and will provide strategic recommendations that each company could implement.

Brief History of Cingular-AT&T and Sprint

The new Cingular-AT&T is the largest telecommunication company in the United States and one of the largest in the world (AT&T, 2006). Unlike other phone companies, Cingular-AT&T serves millions of customers around the world, including global, national, mid-size, regional and government customers. It is the largest mobile phone company in the United States and the second-largest in Puerto Rico, with more than 61 million subscribers. Cingular-AT&T has the largest digital voice and data network in the United States. Sprint Nextel operates the third largest wireless telecommunications network in the United States and is a global Tier 1 Internet carrier. Sprint currently offers cellular phone service and is a provider of landline, long distance, and business telecommunications.

Its sales and distribution efforts focuses on the needs of two distinct customer types: individuals, and businesses and government agencies. Its owns wireless networks and a global long distance Internet backbone, and also provides regulated local exchange telephone services to approximately 7.4 million access lines in its local service territories in 18 states.

Industry Analysis

The industry in which both Cingular-AT&T and Sprint compete in is the telecommunications industry, which is constantly growing with the new advances in technology. These companies are most known for cell phones; however, the Internet also dominates a large part of the telecommunications industry, and has come to serve as a bridge between cultures and countries.

This is because it is open to all at relatively low prices, and as a result, even some of the poorest countries have some spread access to the Internet. Research indicates that the Internet and digital communication are creating a dramatic change in the media and communication systems. Additionally, as the Internet becomes a commercial medium, the largest media firms are most likely to succeed. As all of the business models and competencies of the companies mentioned above indicate, the telecommunications industry is at the forefront of the information age- delivering voice, data, graphics and video at ever-increasing speeds and in an increasing number of ways.

The customers of the telecommunications industry varies from individuals purchasing home phones for personal use, cell phones for business, emergency and social use, and internet services for educational or corporate use. The customer preferences range depending on their particular use; for example, Sprint's customers prefer its push to talk feature, which simulates the half-duplex operation of a two-way radio. This service is available nation-wide, providing that both the sender and receiver are both in a service area. Cingular-AT&T and Sprint's suppliers are different; a large percent of Cingular-AT&T's supplier is U.S. based company Motorola. Sprint differs from Cingular AT&T in this aspect because Sprint relies on a large diverse amount of suppliers.

There are many competitors in this industry, but the larger ones carry the highest degree of rivalry. One of the largest competitors is Time Warner (formerly AOL Time Warner), with revenues of approximately $34.2 billion (America Online, 2005). Time Warner is the product of the 2001 merger of America Online with Time Warner. This company's reach extends across the vast properties of the two companies from which it originated. America Online brought its flagship online service, Netscape, and several interactive services to the merger. The threat of new competitors can be applied to the telecommunications industry in that new competitors will always emerge, as more companies are sure to be formed. The threat of substitutes can be applied to the medium of the Internet, because the cost of switching Internet providers and Internet service in general is very cheap. The presence of this type of substitute products can lower industry attractiveness and profitability because it can limit price levels. The bargaining power of buyers is greater in the telecommunications industry when there are few dominant buyers and products are standardized. Finally, the intensity of rivalry between competitors in the telecommunications industry is at an all-time high. This is a result of the structure of the telecommunications industry - since there are many equally sized competitors, as in the phone companies, the rivalry is more intense. It is in this instance where a company's success largely depends on its business plan, revenue models, core competencies, and competitive advantage.

Company Strengths and Weaknesses & Strategic Recommendations