Running head: environmental forces… Environmental Forces and their Effect

On Telecommunications and AT&T

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Abstract

Industries are affected by environmental forces, such as demographics, culture, population trends, economy, regulation and competition. Understanding these forces and predicting possible changes can help organizations continue meeting the needs and expectations of the market they cater to. AT&T’s history of successful adaption, and an analysis of how it can adapt based on upcoming changes in the environmental forces, can help it continue to hold its position as one of the leading organizations in the telecommunication industry.

The telecommunications industry refers to all organizations that provide services related to telephone, television, internet, and other voice and video communication services (Telecommunications, 2010). AT&T (American Telephone and Telegraph Company) is one of the leading organizations in the telecommunication industry. According to the AT&T website, the company’s roots “stretch back to 1875, with founder Alexander Graham Bell's invention of the telephone” (The History of AT&T, 2010). In the 1900s, AT&T developed Bell and became the U.S. telephone monopoly until 1984, when the system was divided into several companies as a result of an agreement with the U.S. Department of Justice (The History of AT&T, 2010). AT&T continued to be the leader in telecommunications, succeeding even under the new condition of competition. Now, AT&T is also a leader in the networking industry, providing IP services as well as phone services (The History of AT&T, 2010). AT&T has remained so successful over the years in spite of a changing market and changing environment due to its ability to adapt to the changes. The industry and minor changes in AT&T’s participation in it over the next few years can therefore be predicted based on environmental forces.

An environmental scan, over overall understanding of current changes affecting environmental forces is necessary in order to understand how such changes could, in turn, affect an industry and organization, such as AT&T. Based on an environmental scan targeting the U.S. and executed during this decade to predict changes in the beginning of this new millennium, changes are taking place in the social, economic, technological, competitive and regulatory dimensions of the environment (Environmental Scanning in the New Millennium, 2010). An analysis of this document leads to several conclusions. Socially speaking, trends are leading toward a movement toward health, a growing number of Hispanic Americans, an increased suburban population, an aging demographic population, an increased number of single parent households, increased racial and ethnic diversity, the tendency to move around every six years, and a preference for marketing plans that target specific areas. Culturally speaking, the equal role of women and equality of gender specific products is increasing; families are relying more on having both parents work, which is leading to less time for family; value trends are tending toward protecting the family, upholding honesty, and maintaining self-esteem, friendship, and good health; and market trends are divided between those interested in new, creative products, those upholding traditional beliefs, and the modernists who value consumerism, success and materialism. The economy is facing an increase in income and the standard of living, slow economic and stock growth, macroeconomic tendencies, and consumer tendencies that are affected by levels of disposable and discretionary income. Technology is facing increased use of wireless services, advancement, but at a decreased pace due to focus on short term profit and decreased risk taking, decreasing prices, and an increased focus on quality. Competition is placing greater pressure on organizations and workers to improve their performance, leading to a higher number of competitors, and increased international competition. Regulatory forces are also evolving, leading to increased legislation regarding intellectual property rights and digital copyrights, focus on privacy in terms of information collection, and emerging laws about spam, domains, and internet use.

These forces will have an impact on AT&T, its customers and services. AT&T has already positioned itself to continue succeeding by incorporating wireless services and internet services into its landscape. It must now prepare to provide products and services that respond to the different demands of generations that are coming with specific needs and expectations, including the elderly, the baby boom generation, which continues accounting for over half of all purchases, the “X” generation following the baby boomers, which is more conservative and less likely to make extravagant purchases, and the “Y” generation, which is again focused on consumerism. Since there is a growing population of the elderly, who are less likely to try new and complicated products, AT&T must focus on providing simpler, basic services and products as well, that cater to the elderly. Devices with large buttons and screens, or phones that respond to vocal commands in addition to pressing buttons, for example, could encourage the elderly to continue using AT&T. As a result, AT&T needs to have programs that appeal to those who are financially conservative, as well as to those who are spenders. It also needs to anticipate the demographic changes in population and location, arranging its services to focus on an increasing suburban population, researching into telecommunication needs by region, and offering area specific plans. Since families have less time together and an increasing number of families have both parents working, it can be expected that more customers at a younger age will begin relying on personal telephones, in order to communicate with their parents; as a result, AT&T can expect an increase in customers from that sector of society, and provide some devices catering to the young. The increasing demand for products to meet consumer expectations will also have an effect on AT&T and similar organizations. AT&T must focus on making sure it meets these expectations and, through effective marketing, create expectations that it will then meet, thus retaining its leading status in the telecommunication industry.

In addition the impact of general environmental forces, including but not limited to the ones mentioned above, AT&T must be prepared to respond to task environment forces as well. These forces include competitors and potential competitors, suppliers, possible substitutes, and buyers. Some of these forces have already been incorporated into the environmental forces discussed above, such as the changing expectations of buyers, and an expanding variety of market. In terms of competitors, AT&T can expect an increasing number of competitors, as the price of production for telecommunication technology decreases. Nevertheless, many competitors remain local and do not seriously threaten leading organizations like AT&T. It should, however, carefully research into competitors and make sure it is always offering better products, services and prices to attract customers to AT&T rather than to competitors. As there is a rising international competitive market, AT&T should also carefully examine its international stakes and adjust international services accordingly. AT&T anticipated the substitutes to the telephone in advance, and invested in providing wireless, internet and network services as well. Since advances in the field of technology are not as rapid as they previously were, there doesn’t seem to be any other significant substitute that is being developed at the moment.

In conclusion, AT&T can maintain its position of leadership and history of customer satisfaction by being aware of environmental trends, and their effect on the telecommunication industry. AT&T has shown itself to be capable of this in the past, successfully adapting and expanding its telegraph and telephone services to meet growing demands and include wireless and network services as well. The environmental scan shows that the most significant changes over the next few years will affect demographics, leading to an aging population, generations that have distinct consumer expectations, and regional and suburban markets that look for specialized services. If AT&T continues to predict and meet changing needs as it has in the past, it can be assumed that AT&T will continue to be a successful leader in the telecommunication industry three years from now and into the future.

References

Environmental Scanning in the New Millennium. (2010). Retrieved from

http://www-rohan.sdsu.edu/~renglish/370/notes/chapt03/index.htm

Telecommunications. (2010). Bureau of Labor Statistics. Retrieved from

http://www.bls.gov/oco/cg/CGS020.htm