The Strategic Management Cycle … Case Study
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Strategic Management Cycle
It is absolutely essential for Comcast to each and every strategic management tool at its disposal in this stage of its development. This is largely due to the fact that the cable and broadcast industries are in a volatile period with an uncertain future. The rapid advance of technology in the previous decade have given companies like Comcast a level of competition that they had not faced in previous generations. For instance, before the introduction of high-speed internet on a broad scale in the United States, cable companies virtually had monopoly power in the markets in which they operated.
As a result, many companies, including Comcast, often sacrificed customer service levels for profitability given the fact that consumers did not really have any other options in the market. However, in today's market, consumers have more choices than ever in regards to being able to consume different types of media on demand through broadband connections with services such as Netflix. Although cable is still popular among most Americans, it is beginning to lose market share to alternatives to cable and this trend could easily continue -- even accelerate rapidly if competitors introduce some disruptive new technology in the broadcast industry.
However, it is not only through increased competition that Comcast could see diminishing revenues in the near future. There are also many other external factors that would be identified in strategic management models such as the PEST and Porter's 5 forces. For example, there are many political and regulatory developments that have the potential to disrupt Comcast's primary business model. Additionally, further technological innovations and social developments could also affect Comcast's ability to retain its market share. This case assignment will select the "political" category that is included in PEST strategic management decision making models to illustrate just how precarious Comcast's market position has become. Although this only represents one of many different categories that are included in the models, Comcast's political concerns clearly illustrate how the industry could change quickly and why Comcast must perpetually employ such methods to ensure it stays abreast with its external environment.
Since Comcast operates in a highly regulated industry, due to the fact that it requires massive investments in infrastructure that prohibits direct competition, Comcast is vulnerable to many political developments and policy changes due to its relationship with regulatory agencies. For example, just today it was announced by Federal Communications Commission (FCC) Chairman Tom Wheeler that he plans to give people more choices when it comes to buying or renting a cable box (James, 2016). The basic concept that is proposed by the Chairman of the FCC is that Americans spend an unfair amount, an estimated $20 billion a year, renting one or more set-top boxes from their cable and satellite TV providers.
This represents revenue that the FCC said dramatically exceeds the cost of providing the devices to pay-TV subscribers; while the costs of virtually every other type has dramatically fallen over the years (James, 2016).
"Lack of competition has meant few choices and high prices for consumers -- on average, $231 in rental fees annually for the average American household," Wheeler said in a statement (James, 2016)."
For many years, broadcast service providers have basically forced consumers to purchase their equipment and they have done so at very high profit margins. Standardizing the equipment is thought to be able to introduce competition into the industry to drive down consumer costs in a similar manner as when the FCC standardized the rotary phone and ended AT&T's ability to exploit consumers with a rental agreement.
The Federal Communications Commission was establish in 1934 as a standalone government agency that was created to regulate the communications capabilities of the United States. The role of the FCC has evolved over the years with the introduction of new technologies however many people feel that the FCC has not evolved quickly enough to manage the latest evolutions of technology in recent years. For example, the FCC has the power to regulate internet services, yet broadband deployment in the United States is falling behind world standards and has been doing so at least a decade.
According to OECD estimates, the U.S. ranks 15th among 30 OECD nations in subscribers per-capita, down from 4th in 2000 (Atkins, 2007). By comparison, virtually every other industrialized nation in the world has either fostered high levels of competition in the telecommunications industry and some have gone so far as to make internet service a public good that is provided for no cost through their federal governments. The fact that the U.S. is falling behind most other developed countries, coupled with the fact that Comcast has a poor reputation in regards to customer service, will likely make it an easy target for many politicians and regulators to try to improve telecommunications in the U.S.
However, interestingly, you do not have to look outside the United States to find examples of cities trying to create innovative solutions to the U.S.'s telecommunications issues. Several cities in the United States have already used a public funding model to lay municipal wireless networks that allow anyone to connect to the internet. One example is New York City that has implemented a creative plan to convert the city's old phone booths into hotspots; furthermore, the city also allows these spaces to be used by advertisers which helps fund the network (Alleven, 2014).
The project is referred to as LinkNYC and replaces aging payphones with "links" which are modern hubs that offer WiFi at gigabit speed, offer free VoIP phone calls, and can also serve as a charging station for tablets and phones (Kosoff, 2014). The first of supposedly 7,500 LinkNYC kiosks started to broadcast Wi-Fi just recently along 3rd Avenue in Manhattan, and PC Magazine called it the "fastest public Wi-Fi we've ever seen" and offered 93 Mbps down even 100 feet away (Segan, 2016). Furthermore, the system is free to the public because NYC used advertising dollars that are positioned on the booths to pay for the system. Many other cities have already implemented similar systems, such as Lincoln, NE, and Chattanooga, TN, and many more are planning to offer comparable systems in the future.
The political factors that are facing Comcast should definitely be a source of concern for the company. Given the fact that the company does not have the best customer service record and the private sector communications model in the United States is not stacking up to many other nations in the world, it is likely that the industry will go through many reforms. Given the fact that many other technologies and industry models, such as municipal wi-fi and streaming services, are coming more developed it is likely that Comcast will need to adapt its operating model to maintain its market share and stay competitive. Although this sectioned focused on the political sphere, it is likely that Comcast will identify many other areas of concern in the external environment utilizing a strategic management model.
Module 2 -- Current Event Blog 2
Tim Cook, Apple's CEO, recently reported that Apple achieved "all-time record" earnings in the last quarter "thanks to the world's most innovative products and all-time record sales of iPhone, Apple Watch, and Apple TV" (Oremus, 2016). Apple is currently considered the world's most valuable company and the company brought in some $76 billion in revenue and $18.4 billion in profits in the three-month period that ended in December which represents the biggest quarterly profit figure that has ever been reported by any company. Although these revenue streams are remarkable by any standard, many people are looking at the growth trajectory of those earnings and drawing conclusions such as the company is not the same innovative industry changer that it was in its former glory.
Figure 1 - Apple's Earnings Trajectory (Oremus, 2016)
Given the fact that Apple seems to have lost some of its momentum, some have speculated that Apple has already passed its peak which might have occurred in 2015 (Oremus, 2016). Others have suggested that Apple has changed from its revolutionary innovation successes of previous generations of Apple product breakthroughs, to one that is more evolutionary in nature; similar to the way that Toyota makes incremental product and service improvements over long periods of time (Kalb, 2016). Many of Apple's products, such as the iPhone 6S for example, did not meet the sales projections that Apple prepared in advance of this last quarter. Therefore, even though Apple had the highest nominal revenue of any company in history, many people are looking at the last quarter as evidence that Apple may be in trouble in a post Steve Jobs era.
It is not only a random set of newspaper article writers that have been critical of Apple's most recent quarterly performance -- the market also responded to the news. Shares of Apple Inc. took a dive the morning after the tech giant reported disappointing quarterly results that showed its revenue growth slowing dramatically and iPhone… [END OF PREVIEW]
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