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Strategic Analysis: AT&T Inc.

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Strategic Analysis: AT&T Inc.

 

Table of Contents

Cover Page. 1

PART A: 3

Financial Analysis. 3

Liquidity Ratio. 3

Activity Ratio. 3

Profitability Ratio. 3

Leverage Ratio. 4

PART B: 4

Organizational Structure. 4

Reorganization of AT&T.. 5

PART C.. 7

Internal Factor Evaluation (IFE). 7

References. 8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PART A:

Financial Analysis

Liquidity Ratio

Current Ratio = Current Assets

                        Current Liabilities

                        = 54,761

                          68,911

                        = 0.79

It implies that AT&T can pay its current liabilities 0.76 times using cash and cash equivalent only. With a less amount of 1, it implies that AT&T has inadequate current assets to settle its current liabilities and thus generally not a favorable sign of the corporation.  

Activity Ratio

Asset Turnover Ratio = Revenue

                                    Total Assets

                                    = 181,193

                                      551,669

                                    = 0.33

This implies that for every dollar of asset, AT&T generates 0.33 cents. It shows how AT&T efficiently uses its assets to generate revenues. With a ratio of 0.33, which is lower than the industry ratio of 0.5, it implies that AT&T is not optimizing its assets in revenue generation.

Profitability Ratio

Net Profit Margin = Net Profit                                                              

                                     Revenue

                               = 14,975

                                 181,193

                             = 0.08

This implies that AT&T has 0.08 dollars for every sales dollar. It implies that AT&T is not doing well in managing its expenses. However, it is essential to compare with the industry ratio as the benchmark before making any conclusions.

Leverage Ratio

Debt to Equity = Total Debt

                           Shareholders’ Equity

                        =353,735

                          201,934

                        =1.75

This implies that AT&T debt is 1.75 times more than the shareholder’s equity. Generally, corporations with high equity and ratio are considered riskier to invest and give credits as high debt financing requires debt servicing or regular interest payment, and it is far expensive than financing than equity financing.

PART B:

Organizational Structure

            In AT&T,  two primary management methods exist. The first management method pertains to the output of the teams which places the management priorities on the actual corporation’s targets. It is required of those in the management position to closely adhere to those in the set goals with specific results. It implies that the output is seen as more important as the indented means to achieve the desired outcomes. Therefore, it implies that the corporation’s teams have a considerable magnitude of independence when it comes to the methods used in realizing their predetermined objectives.

 The other management method is candid through the written explicit understanding of the organization. According to Durant and Warber (2001), the management method includes the policies and procedures as well as the goals and rules which posits the particular manner in which objectives should be performed. Nevertheless, the current departmentalization in AT&T is manifested through the decentralization of decision making as well as the division of labor assigned to teams implies that these initial rules, procedures, policies, and regulations are just directory in nature. 

            Note: Data from Sepehrifar (2016). AT&T Strategy Analysis

 

 

Reorganization of AT&T

            While the current organization structure looks superb to carry out the corporation’s mission, the inter-business units’ relations need to be strengthened to carry out their mandates specifically on research practices and interactions. The contemporary telecommunication business is fast-changing. Therefore, according to the National Research Council (2012), there is a need for AT&T to be a leader and expert in research. Additionally, reviewing the AT&T organization’s structure makes one realize while the corporation might be doing a broad range of research in the development field, most of the areas under research are not as relevant as they used to be. The company has faced the challenge since its divestiture. While most of the company’s research areas are science-oriented and probably dominated by research on the various types of hardware, it is more academic than it should be. Consequently, AT&T should decrease its physical science efforts considerably and focus on specific business units.

 The corporation should establish extensive connections between the business units in several ways. First, AT&T should institute a process of business unit contracts, with each research manager with a business unit group. The research manager should ensure the interactions are smooth, efficient, and healthy performing what the business unit is expected. The research manager should be expected to meet the business unit members regularly to understand the operational needs of the specific unit. 

            Secondly, the business units should be subdivided into subgroups and individuals from the subgroups assigned specific tasks and meet regularly within the larger business units. There should be no bargain on this as if any business fails to work closely, they generally are ineffective in their operations. As for the photonic section, of which the CEO has a larger role, the corporation should essentially provide the glue on the smaller business units. It should look at the future of the system and try to formulate how the systems should look like and employ them to the smaller business units.  

PART C

Internal Factor Evaluation (IFE)   

 

With a total weighted score of 2.43, which is lower than the average score of 2.50, it indicates that AT&T Inc. strategies are not well designed to maximize strengths and minimize the weaknesses and thus the company is slightly week against its competitors (David, F. R., & David, F. R., 2013)

 

References

David, F. R., & David, F. R. (2013). Strategic management: Concepts and cases: A competitive advantage approach. Pearson.

Durant, R. F., & Warber, A. L. (2001). Networking in the shadow of hierarchy: Public policy, the administrative presidency, and the new administrative state. Presidential Studies Quarterly31(2), 221-244.

National Research Council. (2012). The national weather service modernization and associated restructuring: A Retrospective Assessment. National Academies Press.

Sepehrifar, T. (2016). AT&T Strategy Analysis. Retrieved 19 July 2020, from https://www.slideshare.net/TinaSepehrifar/att-strategy-analysis

 

 

 

 

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