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Bus 499

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Running head: BUSINESS-LEVEL AND CORPORATE-LEVEL STRATEGIES

Business-Level and Corporate-Level Strategies
Introduction
The company selected for this assignment is AT&T Mobility. AT&T was founded in 1875 by Alexander Graham Bell. He was funded by two financial institutions. In the following year, he invented telephone and patented it. Due to the uniqueness of the telephone invention, the company started an elaborate strategy of becoming monopoly. AT&T acquired Western Electric Company and this further entrenched its position in the market.
Following an antitrust lawsuit against the company by the United States government, AT&T divested in some areas and this loosened its stranglehold of the telephone and related markets. According to analysts, AT&T has wasted considerable amount of money running into billions of dollars in acquisitions and mergers that did not significantly improve its position in the market (Hitt & Ireland, 2008).
AT&T services
AT&T Mobility is a wholly owned subsidiary of AT&T Inc. The company has a total of 107 million customers in United States and Puerto Rico. It is the largest wireless communications provider by number of customers closely followed by Verizon wireless.
AT&T Mobility has the second largest digital coverage that cover close to 300 million people in North America using different wireless communication standards. The core communication standard the company uses to reach million is GSM. Over the last ten years AT&T Mobility adopted 3G wireless technology i.e. UMTS/HSPA to deliver data as well as voice. Customers can stream videos from handheld devices as well as desktops and laptops and tablets. In response to Verizon high speed data network, AT&T introduced HSDPA to provide high speed broadband network.
AT&T Mobility and its competitors are currently developing strategies for migrating from 3G to 4G platform under LTE. Once the company fully migrates into 4G, customers will experience download speeds of up to 100MBS and upload speeds of 50 MBS. The company hopes to reach the rural and outlying areas with high speed internet, something that will its number of customers and revenue from both voice and data.

Competitive environment
The biggest competitor is AT&T is Verizon, which also has more customers. Other competitors are Sprint, MetroPCS, Leap, ClearWire, and LightSquared.
Competitors are few due to barriers of entry into the industry. A new entrant is required to sink huge amount of resources to set-up infrastructure, such as national spectrum and network. Besides, a new entrant is likely to be a high cost operator and this further puts new entrants into disadvantage compared to established players (Crandall, 2005). All makes the industry unattractive to potential entrants.
Verizon is the most significant competitor of AT&T. Already, the company has more customers than the AT&T; however, in the long term, and AT&T will overtake Verizon. Verizon has a strategy of offering customer high speed broadband and charge them for that. AT&T, on the other hand, recognizes that customers will have to use the fast broadband to improve their lives and that is why it is developing services it will sell to customers with fast data speeds.
New communication standards emerge after every few years. 3G now appear slow in the face of LTE. AT&T is in fast cycle market. In a slow market cycle, Verizon would remain on top due to its large number of customers. The fast changes in the industry allow the most innovative and forward looking company to win in the long term.
Corporate level Strategy
Mergers and Acquisition
When the company approached Federal Communication Commission (FCC) on its intention to purchase T-Mobile, its argument was that the telecommunication industry is facing shortage of spectrum shortage. For a company the size of the AT&T mobility to expand, they need T-mobile licenses to plug in the short fall.
The spectrum that the company held at that time was being used quickly because the broadband in America is currently undergoing massive changes due to customer’s demand for ever increasing speeds to stream videos online and play internet games.
A typical AT&T customer consumes voice as well as data. This has placed a huge burden on the company’s network and the spectrum that was not optimized to transfer huge amount of data. The capacity constrains facing AT&T requires acquisition.
It is projected that most Americans will be owners of devices that consumes huge amount of data.
AT&T have acquired and merged with dozens of companies. In the early years, it was able to grow and get entrenched in the market primarily through acquisition. This slowed a bit after United States government sued it for violating antitrust laws. Because Spectrum is a limited resource, merging or acquiring competitors increases the company’s capability to provide voice and data to many customers. Currently, AT&T is migrating to LTE regime that allows it to carry more data at faster speeds to customers over larger geographical areas. Mergers and Acquisition strategy has allowed the company to reach more customers and made it more competitive In terms of data. At the same time, they have clarified its localization and business units.

Business Unit Level Strategy

Strategic formulation as the business levels aims to position against rivals, adjusting strategies to accommodate new changes, and influencing the nature of competition.
According to recent reports, fewer numbers of Americans are willing to pay AT&T prices for smart phones and wireless service plans (Hill & Jones, 2008). New revenue sources in future will depend largely from data and new types of wireless communications.
Last year, AT&T fell behind considerable in subscriber numbers compared to its chief rival, Verizon. The demand for Apple IPhone was less than supply although the company subsidizes the phone. But even with the slowdown in the number of takers of iPhone, the company has the highest number of iPhone owners in its network. This dependent on apple means that customers numbers have not increased in line with slowing demand for iPhone with the advent on new type of phone that are as good as iPhone but cheaper.
Revenue was however good in 2012 driven by usage-limited and family share plans. Profits were also driven by fewer numbers of customers who took subsidized phones and therefore the company paid fewer subsidies. Other decisions that improved the company’s bottom-line include debt refinancing, share buybacks and tax savings.
A good number of its customers, almost 70%, are on usage-based pricing plans. This number has risen from less than 10 million 2 years ago. When AT&T introduced mobile share plans, the number of customer rose by 5 million within five weeks. Instead of unlimited data plan, customers prefer an arrangement where they are given10Gb of data for 150 dollars with unlimited talk and text time.
The company’s merger strategy is aimed at improving its ability to offer customers more data. Experts believe that the next big revenue source for Telcos is data. 4G will allows telcos to reach rural areas with high speed internet encouraging more consumption of data and consequently more revenues.
According to the company’s strategy, Digitize Plan the company will add services to the gadget that are able to access data at high speed. The company will offer services that allow customers to monitor the security of their home through their smart phones. The company also foresees a situation where it provides customers with services that allow them to connect their entertainment services with the car.
Services that increase interconnectedness will be the revenue drivers and not acquiring new clients per se. the in last few years, the number of customer increase has not be very promising. This suggests that increase in the number of customers has almost reached a plateau. The growth in customer numbers will depend on offer more services around their 3G gadgets. There are applications online that allow customers to monitor traffic or commodity prices in the market. Using this applications increases per capita consumption of data and revenue per user. AT&T, with its mastery of engineering, electronics, and telecommunications can create products that customers would be willing to pay for.
Although some competitors have been offering cheaper voice and data, most have in recent year have adjusted upwards to match AT&T and Verizon. Profitable mobile pricing in the market closely mirror the trend set by the biggest players in the market i.e. AT&T and Verizon. Mobile sharing plans have proved a hit in the market and all players are offering sharing plans of their own.
Most customers prefer higher priced plans. By giving customers illusion of more free data and voice by paying a certain fixed amount, customers are willing to pay more. Data from the industry shows that customers rarely exhaust the data and voice bundled in their plans. This allows customers to charge more for less without customers thinking there are being overcharged (DePamphilis, 2010). The problem however is customers who rarely exhaust to the maximum the services for which they pay a lot.
At the business level, AT&T developed a subsidy plans for smart-phones. Buyers were however restricted to using AT&T network. Currently, majority of iPhone owners are on AT&T network. A good number of iPhone owners consume a lot of data and voice. This has allowed the company to increase sales by roping in consumers who spend a lot on their phones.
Shared pricing plans that the company developed last year won the company more than 5 million customers within the first few weeks of introduction. Competitors have started to offer plans of their own. AT&T is therefore able to read the market and discern what the customers really want.
AT&T projects that customers will “mobilize” their data to connect every part of their life. They will want to save a movie in the cloud, for instance, using their laptop at home and watch it in the workplace or in school through their smart phones. Customers will also be willing to use applications that will add value to their life. Data consumption will therefore increase tremendously. To prepare for that, the company is in the process of developing services that customers will want to buy and use.
AT&T is also investing millions in LTE that will enable it to give customer high internet speed even in rural areas.

Differentiation and focus strategy
The telecom industry generally lacks differentiation because the products offered are essentially the same. However, by offering the services around high data usage, AT&T will be able to differentiate. Also, investment in offering data will give the company the focus on that growth area.

Recommended corporate level strategy
The company should invest in its ability to provide customers with more data at faster speeds. Due to explosion of gadget with 3G and 4G capabilities, customers will be using more money on data than voice. This strategy will also allow the company to differentiate along offering services that consume more data.

References
Crandall, R. W. (2005). Competition and chaos U.S. telecommunications since the 1996 Telecom Act. Washington, D.C.: Brookings Institution Press.
DePamphilis, D. M. (2010). Mergers, acquisitions, and other restructuring activities an integrated approach to process, tools, cases, and solutions (5th ed.). London: Academic.
Hill, C. W., & Jones, G. R. (2008). Strategic management: an integrated approach (8th ed.). Boston: Houghton Mifflin.
Hitt, M. A., & Ireland, R. D. (2008). Strategic management: competitiveness and globalization (8th ed.). Mason, Ohio: South-Western ;.

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