Describes the factors AT&T Consumer Products managers considered in deciding whether to locate a new plant for telephone answering machines in the United States, Asia, or Mexico. Describes in depth the restructuring of AT&T during the 1980s, the competition facing its consumer products division, the division's overseas manufacturing strategy, the Mexican economy, and the country's macquilodora program. Encourages students to analyze where a company's and an executive's responsibilities lie in making a complex plant-siting decision involving overseas operations, and in making decisions about pay, benefits, bribery, gender-based hiring, waste disposal, and so forth in operating in developing countries.
Authors :: Joseph L. Badaracco Jr., Wilda L. White
Swot Analysis of "AT&T Consumer Products" written by Joseph L. Badaracco Jr., Wilda L. White includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Macquilodora Overseas facing as an external strategic factors. Some of the topics covered in AT&T Consumer Products case study are - Strategic Management Strategies, Competitive strategy, Economy, Ethics, Executive compensation, International business, Operations management, Reorganization and Technology & Operations.
Some of the macro environment factors that can be used to understand the AT&T Consumer Products casestudy better are - – talent flight as more people leaving formal jobs, digital marketing is dominated by two big players Facebook and Google, supply chains are disrupted by pandemic , cloud computing is disrupting traditional business models, increasing transportation and logistics costs, increasing commodity prices, customer relationship management is fast transforming because of increasing concerns over data privacy,
central banks are concerned over increasing inflation, increasing inequality as vast percentage of new income is going to the top 1%, etc
Introduction to SWOT Analysis of AT&T Consumer Products
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in AT&T Consumer Products case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Macquilodora Overseas, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Macquilodora Overseas operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of AT&T Consumer Products can be done for the following purposes –
1. Strategic planning using facts provided in AT&T Consumer Products case study
2. Improving business portfolio management of Macquilodora Overseas
3. Assessing feasibility of the new initiative in Technology & Operations field.
4. Making a Technology & Operations topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Macquilodora Overseas
Strengths AT&T Consumer Products | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Macquilodora Overseas in AT&T Consumer Products Harvard Business Review case study are -
Low bargaining power of suppliers
– Suppliers of Macquilodora Overseas in the sector have low bargaining power. AT&T Consumer Products has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Macquilodora Overseas to manage not only supply disruptions but also source products at highly competitive prices.
Strong track record of project management
– Macquilodora Overseas is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Organizational Resilience of Macquilodora Overseas
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Macquilodora Overseas does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Successful track record of launching new products
– Macquilodora Overseas has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Macquilodora Overseas has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Learning organization
- Macquilodora Overseas is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Macquilodora Overseas is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in AT&T Consumer Products Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Cross disciplinary teams
– Horizontal connected teams at the Macquilodora Overseas are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
High switching costs
– The high switching costs that Macquilodora Overseas has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Digital Transformation in Technology & Operations segment
- digital transformation varies from industry to industry. For Macquilodora Overseas digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Macquilodora Overseas has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Effective Research and Development (R&D)
– Macquilodora Overseas has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study AT&T Consumer Products - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Ability to recruit top talent
– Macquilodora Overseas is one of the leading recruiters in the industry. Managers in the AT&T Consumer Products are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
High brand equity
– Macquilodora Overseas has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Macquilodora Overseas to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Training and development
– Macquilodora Overseas has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in AT&T Consumer Products Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Weaknesses AT&T Consumer Products | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of AT&T Consumer Products are -
Lack of clear differentiation of Macquilodora Overseas products
– To increase the profitability and margins on the products, Macquilodora Overseas needs to provide more differentiated products than what it is currently offering in the marketplace.
High cash cycle compare to competitors
Macquilodora Overseas has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Skills based hiring
– The stress on hiring functional specialists at Macquilodora Overseas has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
No frontier risks strategy
– After analyzing the HBR case study AT&T Consumer Products, it seems that company is thinking about the frontier risks that can impact Technology & Operations strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study AT&T Consumer Products, in the dynamic environment Macquilodora Overseas has struggled to respond to the nimble upstart competition. Macquilodora Overseas has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Slow decision making process
– As mentioned earlier in the report, Macquilodora Overseas has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Macquilodora Overseas even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study AT&T Consumer Products, is just above the industry average. Macquilodora Overseas needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Increasing silos among functional specialists
– The organizational structure of Macquilodora Overseas is dominated by functional specialists. It is not different from other players in the Technology & Operations segment. Macquilodora Overseas needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Macquilodora Overseas to focus more on services rather than just following the product oriented approach.
Interest costs
– Compare to the competition, Macquilodora Overseas has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
High bargaining power of channel partners
– Because of the regulatory requirements, Joseph L. Badaracco Jr., Wilda L. White suggests that, Macquilodora Overseas is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
High operating costs
– Compare to the competitors, firm in the HBR case study AT&T Consumer Products has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Macquilodora Overseas 's lucrative customers.
Opportunities AT&T Consumer Products | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study AT&T Consumer Products are -
Low interest rates
– Even though inflation is raising its head in most developed economies, Macquilodora Overseas can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Macquilodora Overseas is facing challenges because of the dominance of functional experts in the organization. AT&T Consumer Products case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Developing new processes and practices
– Macquilodora Overseas can develop new processes and procedures in Technology & Operations industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Macquilodora Overseas can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Macquilodora Overseas in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Technology & Operations segment, and it will provide faster access to the consumers.
Buying journey improvements
– Macquilodora Overseas can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. AT&T Consumer Products suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Technology & Operations industry, but it has also influenced the consumer preferences. Macquilodora Overseas can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Macquilodora Overseas can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, AT&T Consumer Products, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Macquilodora Overseas to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Better consumer reach
– The expansion of the 5G network will help Macquilodora Overseas to increase its market reach. Macquilodora Overseas will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Macquilodora Overseas can use these opportunities to build new business models that can help the communities that Macquilodora Overseas operates in. Secondly it can use opportunities from government spending in Technology & Operations sector.
Building a culture of innovation
– managers at Macquilodora Overseas can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Technology & Operations segment.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Macquilodora Overseas can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Threats AT&T Consumer Products External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study AT&T Consumer Products are -
Environmental challenges
– Macquilodora Overseas needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Macquilodora Overseas can take advantage of this fund but it will also bring new competitors in the Technology & Operations industry.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Macquilodora Overseas in the Technology & Operations sector and impact the bottomline of the organization.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Macquilodora Overseas will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Regulatory challenges
– Macquilodora Overseas needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Technology & Operations industry regulations.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Macquilodora Overseas needs to understand the core reasons impacting the Technology & Operations industry. This will help it in building a better workplace.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Macquilodora Overseas business can come under increasing regulations regarding data privacy, data security, etc.
Easy access to finance
– Easy access to finance in Technology & Operations field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Macquilodora Overseas can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Macquilodora Overseas can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study AT&T Consumer Products .
Stagnating economy with rate increase
– Macquilodora Overseas can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Macquilodora Overseas with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study AT&T Consumer Products, Macquilodora Overseas may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Technology & Operations .
Consumer confidence and its impact on Macquilodora Overseas demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Weighted SWOT Analysis of AT&T Consumer Products Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study AT&T Consumer Products needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study AT&T Consumer Products is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study AT&T Consumer Products is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of AT&T Consumer Products is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Macquilodora Overseas needs to make to build a sustainable competitive advantage.