Strategic challenges facing Cingular-AT&T and Sprint

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.

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

Both Cingular-AT&T and Sprint have their own strengths and weaknesses. For example, a strength of Cingular AT&T lies in their marketing and ability to be flexible and adapt to what the customer wants and needs. An example of this is illustrated in the Cingular-AT&T's "Rollover" service, a service which allows customers to keep unused minutes from month to month on a twelve-month rolling cycle on its popular "Nation" nationwide plans. This was a service change that was implemented in response to customer's needs. However, Cingular-AT&T faces negative complaints from consumers, that make up its major challenge. For example, in 2005 Cingular-AT&T was removed from the New York Better Business Bureau because of a large number of complaints that were not handled in a timely manner. A strategic recommendation for the company is to restructure its customer care procedures, and respond immediately to all complaints. The most common complaints against Cingular-AT&T include number portability issues, over-billing, poor customer support and network reliability. Another strategic recommendation for this company would be for them to expand their customer service sector, and efficiently train individuals to lower the number of complaints and prevent future complaints.

Sprint has several strengths, including major sponsorships, that have increased the company's revenue greatly. Sprint is the major title sponsor of NASCAR's top racing series, called the Nextel Cup, is the official wireless sponsor of the United States National Football League, and is one of the corporate sponsors of the Las Vegas Monorail. Its weakness lies in the area of mobile phones; it cannot keep up with Cingular-AT&T, and does not have nearly as many customers. However, Sprint's Internet service is a Tier 1 service available everywhere, so a strategic recommendation for Sprint would be to increase its mobile phone sector to match that of its Internet reach, and increase the number of customers. Finally, an examination of both of these companies clearly illustrates the competitive challenges Cingular-AT&T and Sprint face, and their strategic strengths and weaknesses.