Strategic Management in Technology

Strategic Planning & Strategy Formulation

Case: Strategic Planning & Strategy Formulation

Case Assignment -- Comcast

Comcast's Current Strategy

Current Event Blog

Discussion Question: Strategy Planning and Formulation

Case

Strategy Implementation & Evaluation

Current Event Blog 4 -- Strategy Implementation & Evaluation

Discussion Question: Strategy Implementation and Evaluation

Reflective Discussion

Case: Strategic Planning & Strategy Formulation

Case Assignment -- Comcast

Comcast's Current Strategy

Comcast has developed a current business strategy that is completely focused on the customer. The company has positioned itself at the "intersection of media and technology" (Corporate.comcast.com, 2016). The company seems to be doing well and in 2015 the company had raised their dividend by 10%, for the eighth consecutive year.

The present strategy of the company is to focus on innovation and enhancing of customer experience and being innovative at the same time. The company claims that this strategy has paid off well for them. In fact, this business strategy of the company was adopted less than a year ago in May. To give their customers a unique experience when they deal with the company, Comcast started off by announcing hiring 5,500 new customer service executive over the next three years. The company also incorporated the customer service courteousness and helpfulness that us visible in the hospitality industry. Historically, Comcast is not very well-known for its customer service and its rivals like AT&T U-verse, Verizon FiOS and Century Link Prism were better known for their after sales, service, and customer handling professionalism. Hence this was a significant strategic change by the company.

As part of the enhanced customer service facilities and reduction of customer complaints, the company introduced a system where a customer can simply leave a message and an agent would call back the customer within a 15-minute time frame. The company has upgraded the communications system and call waiting has reduced by a staggering 18 times.

Increased remote monitoring the proper functioning of the set-top boxes and its routers has helped the company to keep the call volume under manageable limits even with a customer base of over 23 million. This customer centric strategy of the company has helped it to reduce customer complaints and increase customer satisfaction. An example is that the remote monitoring and control has enabled the company to solve problems before they happen as the company is able to know about the problem before it is about to happen. Another example is the targeting of tardy technicians so that they do not arrive even a minute late which draws a fine of $20 subtracted from the office where the technician works. This has reduced late appointments by 29%. The company also has equipped many of the trucks of technicians with GPS (Carter, 2016).

The company has been able to achieve healthy operational metrics and added 666,000 customer relationships which is 86% more compared to a year earlier (Corporate.comcast.com, 2016). The company also managed to achieve lower repeat tech visits and faster answering of phone calls. This strategy has helped the company to make gains in customer support and service in almost all the segments of video and internet.

Another strategic customer centric change is the forceful implementation of X1 service which is a cloud-based service and the company is hence able to easily and quickly update the platform to incorporate new features and enhancements.

To enhance the experience of the customers, the company recently introduced the Xfinity TV app that allows customers to turn their devices -- laptops, mobile or tablets, into TVs. Hence customers are able to view nearly the entire channel line-up on their devices. Even while customers are outside their homes, they are able to watch approximately 100 streamed live TV networks and get access to their DVR recordings.

The results were visible in the internet customer number where 1.4 million new high speed data customers were added in 2015 alone and was the best in the last 8 years. As a result of the above strategy the company claims that it has managed to drive growth of the company and increase revenue by 20% in 2015.

Analysis of the Current Strategy

The capability of an organization to anticipate and then adjust to the environmental changes is referred to as strategy or strategic change and is based on an open system of models. The preparation and how to respond to environmental changes in the future is the essence of strategic change and strategy (Collins & Winrow, 2010). The optimal use of the resources available with the company and the internal and external environment that the company is functioning and competing in and the process of formulation and implementation of the company objectives and goals are fundamental to strategy formulation and strategic management.

With respect to Comcast, the company has followed the classic definition of strategic management and strategy formation. With the rivals seemingly doing good in terms of customer satisfaction, the company chose to strategize its operations with customer satisfaction at the ore. The company formulated strategies and means so that they are able to serve customers better and reduce customer complaints ("Strategic business planning: a dynamic system for improving performance & competitive advantage," 2003).

For this purpose, the company chose to be innovative. Realizing that satisfying customers was the ultimate in the cable business, the company adopted the strategy less than a year ago and claims to be successful in the results it got. While the revenues increased, customer calls became manageable and customers are reportedly more satisfied.

In any form of business, customers are the ultimate deciders. Customers are the ones who purchase products and services and help companies and firms to generate revenues. In competitive markets and industries, the companies and firms that can attract and hold on to customers more than other succeed and attain sustainability compared to those who cannot do so. Customers are the ones who help create or damage brand image and company reputation. In competitive environments and industries, creating a loyal band of customers is very critical and goes a long way in establishing companies financially (Jeyarathnam, 2008). A prime example is Apple whose loyal band of customers has kept the company at the top of the smart phone industry.

Hence to succeed in the highly competitive U.S. cable and entertainment industry, Comcast's decision to adopt a complete customer centric strategy is apt. the company has also sought to be innovative in attaining this. Apart from hiring 5,500 customer care executives, the company has undertaken a number of innovative strategies. The remote monitoring and control of set top boxes and routers and the solving of problems even before they occur to ensure reduced customer complaints and calls is an example of innovation. Another innovative step is the installation of GPS in the tech's trucks so that they can be monitored and ensure 100% call time adherence.

Recommendation

From the above discussions it is clear that the latest business process strategy adopted by Comcast is apt for the competitive U.S. cable industry. The strategy adopted by the company would go a long way in reestablishing its market share and lapping up more customers. It is advised that the company continue with the present strategy and conjure up more innovative solutions for the satisfaction of customers.

Current Event Blog 3

For this part of the question we select the news of the merger of Pfizer and Allergan which appeared in an article titled "Pfizer, Allergan Agree on Historic Merger Deal" in The Wall Street Journal on November 22, 2015. The article talks about the merger to two pharma companies Pfizer and Allergan and the value of the deal was more than $150 billion. The merger which is to be completed in 2016 would end up creating the world's biggest drug making company maker (Rockoff & Mattioli, 2015)

The deal between the two companies is very strategic. Pfizer is one of the larger pharma companies that is based in the U.S. In comparison Allergan is a smaller company and is based in Dublin in Ireland. This deal is what analysts call a reverse merger where the smaller company buys out the larger company 0- in this case Allergen buys out Pfizer. While this might sound somewhat surprising for many, this is one of the trends in modern business and a very strategic business move. Though technically the smaller company buys out the larger one, in truth the reigns of the new company formed by the merger or the takeover remains at the hands of the bigger company -- in this case Pfizer (Cooper & Finkelstein, 2009).

The strategic reason for the move by the American company Pfizer is to save taxes. Through the merger with Allergan, Pfizer would be able to move abroad and out of the U.S. and take advantage of the lower rates of corporate tax overseas. In this case the headquarters of the new company would be based in Dublin where the rates of corporate taxes are significantly lower than that in the U.S. The strategy by the U.S. company is to be able to save taxes and thereby generate more profits.

In the article, Pfizer Chief Executive Ian Read has been quoted to be saying that the high rates of corporate tax in the U.S. has put the American companies in a position of competitive disadvantage compared to international rival pharma companies. The corporate tax rate for Pfizer in the U.S. is 25% and is among the highest in eh global pharma industry. As a result, the company had been making consistently reduced profits in comparison to its competitors based in other countries which included some U.S. companies which had moved abroad. Since the company was making lesser profits, it could only devote limited money and finances for research and development as well as for expansion projects. Thus the higher tax rates were proving to be an impediment to some of the other strategic programs of the company. The merger with Allergan would reduce the corporate tax rate for the company to less than 20%.

Apart from this another strategic reason for Pfizer for the merger is that the deal would provide the company access to top-selling products that includes anti-wrinkle treatment Botox of Alllergan. The combined range of drugs and vaccines would cover a significantly larger range of diseases compared to the coverage singularly available to the companies. another strategic advantage for Pfizer is the high growth rate of Allergan as well as the combined huge R&D budget for the new merged company that would become available. The combined company will have more resources to devote to drug research and development (Vivas Lopez, 2005). This deal would also give Pfizer greater leverage while it negotiates with health plans, drug benefit manager and hospitals in relation to prices of medicines (Rockoff & Mattioli, 2015).

Discussion Question: Strategy Planning and Formulation

Cell phone manufacturing industry is one of the most competitive industries. There are a large number of manufacturers in this industry spread across the world. There are also a large number of models and features for available in cell phones and smart phones. Yet here are some companies that are leaders and way ahead in terms of popularity, turnover, market share and profits than most others in this industry.

South Korean company Samsung and U.S. based company Apple are among the top two companies in this industry. Both these companies have some of the most unique strategies in terms of product creation and marketing. One of the most significant aspects of their strategy is customer focus. Both these companies have intensive market research and customer feedback strategies as well as marketing strategies that distinguish them from other companies.

For Apple, the creation of a loyal band of customers has been one the prime strategies for the company over the years. The company has taken up a strategy to offer products that are of the best quality with unique features. The company is also very sensitive towards customer complaints and customer feedback. The company is also in the habit of offering upgrades to existing products and brands continuously. With a focus on research and development the companies set aside a sizeable amount of money for this purpose every year.

This strategy is very similar to what the top companies in the cell phone manufacturing industry follow including Samsung -- the biggest cell phone producer of the world in terms of shipped units. Most of the products of the top companies in the industry have some unique feature or the other. The products tend to be unique and different from the competitors and thus are able to get customer attraction. Having created such a history of innovative products, companies like Apple and Samsung and a few of the other top companies in cell manufacturing, have been able to create a niche for themselves.

Thus the technological strategy of innovation and the marketing strategy of being customer centric are the recipe for success of the top companies in the cell manufacturing industry.

Module 4 -- Case Assignment

Strategy Implementation & Evaluation

The thesis statement for this question is as follows:

"The successful implementation of the strategic management plan in a large corporation like Comcast is highly reliant on measurement and evaluation efforts during and after the implementation phase."

Discussion

I agree to the thesis that every strategy, despite how marvelous it is and how innovative it is, requires proper execution. While properly executing a strategy, it is also important that the strategy is monitored on a regular basis and evaluated at regular intervals to measure the success of the strategy implementation.

The significance of the evaluation of strategy is to be linked to the ability of the company to co-ordinate the tasks that are performed by managers, groups and departments under an ambience of control of performance. Development of inputs for fresh strategies, importance of gaining feedback, appraisal and rewards, developing of a process of strategic management and evaluating the validity of a strategic choice are among the factors that lend importance to strategic evaluation and monitoring (Sadler, 2003).

For a successful process of strategy implementation companies need to first set benchmarks for performance. Setting of benchmark allows companies to set levels and goals, generally in the short-term, that the company wants to achieve. This also sets the goal that the company intends to achieve at the end of the time period of new strategy implementation. Benchmarking also ascertains the how the company intends to achieve the goals. The special requirements that are necessary for performing the main task of the strategy has to be identified as well as the indicator of performance that judges the evaluation of success. The assessment of performance is done using quantitative as well as qualitative criteria. On the quantitative criteria indicators like net profit, earning per share, ROI, rate of employee turnover, cost of production, etc. are benchmarked. Aspects like skills and competencies, flexibility, risk taking potential, etc. are the qualitative factors for evaluation of strategic implementation.

Measurement of performance is necessary for any company implementing a strategy or a strategic change. The system of reporting and communication within the company helps in performance measurement. Performance measurement is generally done by comparing actual performance to the benchmarked levels of performance. Strategy evaluation is made easier by the availability of appropriate means for the measurement of performance and proper setting of standards in the right manner (Harris, 2011).

Strategy implementation also requires to take into consideration the possibility of corrective measures after measurement and evaluation. This corrective actions need to be taken with respect to the difference between the actual performance and the benchmarked performance so that the ultimate goal of the strategy is achieved. In this case the organizational potential of the company is considered and if it is found that benchmarks are not reached despite the organization performing to full capacity then the benchmark needs to be lowered (Farzad, 2014).

Taking into account the above discussion, we can analyze how Comcast set strategies and how the company managed to implement the strategy either successfully or unsuccessfully. We consider two strategies that bear two different results for the company:

The first is the proposed mega merger deal between Comcast and Time Warner Cable. The deal which was worth $45 billion did not happen despite both the companies deciding to get together for business advantages. However, there were severe external pressures from within the industry as well as the regulatory bodies that forced the scrapping of the deal.

The primary opposition to the deal had come from the regulators who were against the deal. The reason for this was that the regulators felt that the new company that would have been formed by the merger of the two of the largest companies in the industry would have violated the principles of fair trade though the creation of an entity that would have the power and incentive that could have affected the future of video streaming in their favor. The mega merger would have created a customer base for the new company that would have amounted to over 30 million which was just around under 30% of the total number of customer of the U.S. pay television market (Farzad, 2014).

This is a classic case where the strategy of a company for market expansion and through merger failed due to improper planning and execution. While forming the strategy and the plans to merge the two companies, Comcast did not take into account the possible reactions that could have emerged in the business environment due to the proposed merger. There was severe opposition from various sections of the government authorities, the business rivals and the society against the deal (Kessenides, 2014).

Secondly, Comcast did not follow up adequately one the post proposal for merger with reconciliatory steps and measures to communicate effectively with all the concerned stakeholders that would ensure that there was no threat to the market from the merger. There were heightened concerns about monopoly resulting from the merger as the new merged company would have control of more around 30% of the market for streaming video. There was also concerns that the aggressth3 ive marketing techniques that the two companies follow would create more customers and soon enough the new single company could control the entire market. There were fears that in the future the merged company would have had the power to control the content of video streaming and command as much money as they wanted as they would have had control over the majority of the market. Study into the articles and literature that appeared throughout 2015 about the issue showed that Comcast made very few efforts to effectively communicate their side of the story to the concerned stakeholders.

It is clearly evident that the major roadblocks to the proposed deal were the market regulators and a section of the customers. This aspect was clearly not properly evaluated by Comcast while the strategy for the merger was drawn up. The Department of Justice (DoJ) was one of the major road block to the strategy. It was in fact opposition from the DoJ that was even ready to challenge the proposed deal in a court of law. Comcast had not made proper evaluation of this aspect of the deal strategy and hence the deal failed to materialize. And it was not hard for Comcast to have anticipated the reaction of the DoJ as it had earlier blocked proposed takeover bid of T-Mobile by AT&T in 2011 and that of the merger of tax preparer H&R Block and TaxAct. Therefore, it was the inability in the strategy planning as well as in the evaluation of the deal that did not allow Comcast to be successful with the deal which would have been very beneficial for them business wise.

A section of 'buyers' too were against this merger as there were concerns about the reduction of buyer power following the merger. The deal would have created the largest company with the largest share of the market. This coupled with the potential for Comcast to grow, would have given the potential to Comcast to control the streaming content and the pricing of the content. This would not have been ideal in terms of fair business from the buyers' perspective. And thus there was opposition to the deal. Comcast o their part also did not properly evaluate the reaction of the buyers' from the merger and did not take steps to negotiate the potential opposition of the deal by the buyers.

This lack of initiative and evaluation by Comcast is evident from various articles and one in particular published in 'USA Today' under the title "How Comcast, Time Warner Cable deal unraveled" on April 25, 2015. The article states that the executives from Comcast met up with the officials of DoJ and the Federal Communications Commission not until the last days when the deal was nearly written off by the regulatory authorities. The article points out that the executives of Comcast were convinced that the deal would pass through "despite the loud and determined opposition from consumers and advocacy groups" (USA TODAY, 2015). However when the company started to hastily react to the situation to save the deal and implement the strategy, it was almost too late. Hence this can be considered to be a case where Comcast did not manage to implement a strategy due to lack of evaluation and improper management of the implementing process.

On the other hand, another strategy by Comcast to shift its business focus and policy to become customer centric in 2015 seems to be paying rich dividends. In May of 2015, the company announced that all its policies and business processes would now be customer oriented. The company would have the customer at the core of all the policies and decision it takes in the future.

And the company did not only stop at making the announcement. The company announced the hiring of 5,500 executives for customer care. These customer care agents would cater to the phone calls and complaints of customers and ensure that the problems are seedily disposed of. The company had made immediate recruitment of such customer care personnel and placed them at their offices throughout the U.S. The company also began special training of the existing staff members to deal better with customers. The company announced that it attempts to attain the courteousness and warmth of customer care as is seen in the hospitality industry. Comcast also introduced innovative measures such as equipping the tech's vas with GPS so that they do not land up even a minute late for calls.

The company had taken constant evaluation measures to measure the success of the strategy. This they did with measuring the number of complaints calls and the number of repeat calls for technical faults. The company also measured from time to time the number of upgrades to software for applications. According to the annual report of the company for 2015, it claims that the customer centric strategy with special focus on addressing the customer complaints has helped in reducing customer calls by 20%. This is an example where the company has used evaluation and monitoring to effectively implement a strategy.

Current Event Blog 4 -- Strategy Implementation & Evaluation

Discussions

As the industry says it - a la carte will usher in an era of survival of the fittest. This is the latest trend that TV cable companies in the U.S. are starting believe in more and more as the taste and demands of the customers' change. Today a large section of the customers are not ready to pay for hundreds of bundled channels most of which they do not want to watch. Instead, since the last few years, customers are preferring to switch on to streaming video services where they can choose the channels and programs that they want to watch. This is what is termed as 'a la carte' package.

However, it is also a fact that most of the major cable channels have for long, tried to resist the "a la carte" approach which allows customers to pick and choose channels which they want to watch and are willing to pay for instead of paying for a 300+ bundle of channels. The primary premise for resisting 'a la carte' approach was that the approach would have an increased bill for customers with limited diversity in channels to watch. However, while this is sometimes true for cable television, it is accepted that the approach is fast catching on for the internet video streaming services -- Netflix is a bright example of such an approach that has been successful (Heuman, 2011).

With rumors that tech companies like Apple are ready to roll out their digital TV services based on 'a la carte' approach, it has created pressures on the traditional cable TV companies offering broadband services and cable TV. The competition is getting tough and rumors are that Apple's TV service would have a 25-channel "small" bundle but with major broadcasters such as ABC, CBS, Fox, and also FX and ESPN at $30 to $40. However, there has not been any confirmation from Apple (Gizmodo.com, 2015).

Despite this, traditional cable channels have been put under pressure and are finding it tough to hold on to customers as more and more customers are willing to cut their cable connection for online video streaming services. There are also rumors that many more companies want to get involved and provide patchwork (Rennhoff & Serfes, n.d.). This has forced cable companies Comcast to start offering TV programs on a la carte basis to customers both for cable TV as well as for internet video streaming services. There were reports in 2015 that the company - the largest cable company in the U.S., will start a streaming TV service some time in 2016. This service would be available to the internet customers of the company which would also include DVR storage on cloud networks for as low as $15 a month.

An article written by Jeff Kagant titles "Comcast Bucks Negative Cable TV Trend" published in renowned online magazine and advanced financial data portal "Equities.com" published on February 8, 2016, states that despite Comcast doing good in 20155, it is necessary that the company slowly shift to 'a la carte' approach. One of the reasons of success for the company amidst a generally slowing cable TV industry is the offering of smaller bundles of channels for the customers by Comcast.

The articles says: "Today, Comcast is winning with smaller bundles, but they would win even more if they give customers the ability to create their own bundle or a-la-carte. Will they move in this new direction since this is the new direction the industry is heading in? That's the million-dollar question" (Trend, 2016). This clearly indicates that Comcast has realized the threat from online a la carte channel offerings and its rising popularity. To this respect, the company been preparing for to meet this challenge offered by the business environment and the changing tastes and demands of customers and has been slimming the product offerings in terms of the number of channels as well as the price.