Every now and then we have the pleasure to come across a company nothing short of a giant. Even Giant seems to be an understatement in the context of the rich history of the company and the sheer size and influence of its business. AT&T is one such company and in the following AT&T SWOT analysis, we will see why.
For those of you who don’t know, American Telephone and Telegraph Company (AT&T) is the world’s biggest telecom company! Not only that, it is a conglomerate which means that it holds a cluster of different businesses in different industries but they are mostly recognized for their telecommunication services.
Other than telecom, they are in the entertainment, mass media, and technology industries. The company was started in 1983 by none other than Alexander Graham Bell himself as “Bell Telephone Company” back in 1883. Thomas Watson and Gardiner Greene Hubbard were also co-founders. Over the years the company has gone through a myriad of changes to become what it is today.
At the moment, William Kennard serves as the executive chairman and John Stankey serves as the CEO. The company’s Headquarters are in Whitacre Tower, Dallas, Texas. The business caters to customers all around the world. As of 2021, the total number of employees working at the company is 230,000! A company with such an interesting history is surely deserving of conducting its SWOT analysis.
The objective is to understand where the company currently stands in light of the SWOT tool. Before we move on, the SWOT framework consists of four broad factors that when taken together tell us how the company is performing.
The strengths and weaknesses are the internal factors of the SWOT template whereas the opportunities and threats make up the external factors. There is a reason we classify it this way. Internal factors can be influenced and hence controlled by the internal stakeholders of the organization.
The external factors on the contrary are out of all possible influential control and occur in an unprecedented manner. So you see, if we say that AT&T is a financially stable company, this is a strength for it because the founders, employees, and key managers of the company have worked hard to achieve it; an internal factor.
If there is a new business that the company can venture into by either acquisition or starting from scratch, this is an opportunity for them to explore; an external factor. Hopefully, now you can see why we have internal and external classifications of the four factors. Let’s move on ahead and see how we can apply the SWOT model to AT&T.
A company as big as this one definitely has many strengths under its belt. If we start addressing every single one of them, we won’t have time to discuss the remaining factors. So to keep this topic precise, we will talk about the ones which are the most relevant and important. Here they are.
AT&T has a very strong brand value simply because of how it started and how it continued to perform. It is the biggest telecom company in the world and also has dabbled into other fruitful businesses. No major list that talks about successful conglomerates can go on without mentioning AT&T.
It is no secret that the telecom sector in any economy generates a lot of revenues and profits because connectivity services they offer are an absolute need in today’s world.
AT&T is the biggest telecom company in the world so naturally, money is a huge asset of the company. As of the third quarter of 2021, the company had a total of $168.9 billion in revenue.
The company has businesses in other sectors as well as we mentioned in the intro of the article. Diversification always helps businesses to stay strong in the face of unpredicted adversities.
To have eggs scattered in separate baskets is always a smart move because in case one income stream is affected because of some event there are others to make sure the business doesn’t falter.
Just as an example of how huge this company is, AT&T owns WarnerMedia which means it owns CNN, HBO, Cartoon Network, TBS, TNT, and the Warner Bros. studio!
Not many companies are able to enjoy the prestige of AT&T. In 2020, the company enjoyed being the 9th of the largest US corporations in the fortune 500 list of companies. They cater to customers all around the globe through all of their businesses.
Telecom companies have to invest a lot of resources in developing the needed infrastructure for their services. Because AT&T was the first of its kind, started by the man who invented and even patented the telephone himself, they have a huge first mover’s advantage.
In 2021 they started their plan on expanding this infrastructure to incorporate the much anticipated 5G services. They were working on raising 14 billion to make this possible.
What are some of the biggest weaknesses that AT&T has?
Despite the amazing strengths that the company can boast of, they unfortunately also have a few weaknesses as well which if not taken care of in an appropriate manner can be seriously damaging to the company. Here are some of the most relevant ones.
Limited Options to Change
Whereas being a conglomerate with such diversity is so important for the brand and is actually one of the biggest strengths, it can also serve as a big weakness when evolution comes into play.
See, the tech space and the telecom sector experience changes by the second. There is always something new happening in some parts of the world and the other parts need to catch up before they become obsolete in the race.
Having such a huge company with so many counterparts and subsidiaries dealing with different businesses makes it very hard to keep track of all the changes happening. It is very challenging to be able to adapt to emerging technologies and trends because the machine has to replace and adjust so many gears and pieces.
So keeping up to date with the other businesses becomes super difficult.
To sustain such large-scale operations AT&T has been known to take huge debts every now and then. Just recently they took a huge debt to finance the 5G rollout as mentioned above.
This does not put a good look on the company especially from an investor’s point of view as AT&T is a public company.
It is natural that when a company offers employment to hundreds and thousands many of them will be replaced constantly.
It is a weakness for bigger companies that the turnover rates are usually very high because there is no way to keep hold of so many people all at once. The number of employees hired and kept was reduced from 2019 to 2020.
At the moment, other than the diversification that they have, the business model being used and followed by the company is not unique or special in any way. It can easily be copied by other competitors.
As long as a company knows its opportunities and when to make the best use of them, the weaknesses can always be mitigated and strengths can be built upon. Here are the avenues that AT&T can explore.
5G Roll Out
As mentioned in this analysis, AT&T is very actively focusing on the 5G rollout plan. This serves as an excellent opportunity for the core business of the company because it is exactly the domain it operates in.
If they are able to successfully offer 5G services when they become available for public use they will be miles ahead of all of their competitors because they already have the size and the reach.
They have many businesses operating under the umbrella name but that doesn’t mean they can’t find strategic partners. Partnering up with mobile phone companies can be a very good opportunity for the company to explore because they do deal with the telecom sector.
Being a telecom company is not enough in today’s world where companies are evolving by the minute. AT&T has a big opportunity in becoming more experimental with the technology side of operations.
Even companies like AT&T are no match for the wrath of the mighty threats. This is the factor of the SWOT that keeps companies on their feet. Here are some of the biggest threats for AT&T.
Competition is usually the biggest threat to a company’s well-being in every industry. AT&T has huge competitors in the likes of T-Mobile and Verizon.
They also have smaller competitors who may not have the same reach as AT&T but they can target specific niches to convert them.
The telecom industry is very susceptible to price changes simply because of the availability of alternatives. If I as a consumer start feeling that AT&T for instance is too expensive, I have many other options to choose from which give me the exact same service at better rates.
So the market forces in this case can actually harm the company if they constantly have to adjust their prices. This is why the constant price adjustment serves as a live threat to the company.
Country Specific Policies
AT&T may be a very prosperous business in the states, but in other countries, it is prone to be affected by the specific laws and policies regarding telecommunication.
This makes it very hard for the company to enjoy a wider consumer base outside of the USA.
If you have read this far into the analysis, you now are both more informed on how SWOT works and on the company under discussion.
You can always look at other examples to understand SWOT and its application better, but in this discussion let’s round up some of the insights we have managed to gather.
AT&T is most definitely a very interesting company especially because of the way it started and for the way it has managed to evolve, grow and stay relevant all these years.
They have some amazing strengths that have done really well for the company’s success. Their diversification has done them many wonders, even though it is also a weakness. I still believe that having a diverse portfolio is worth the risk of keeping it updated especially when AT&T has coped up with the pressure so well.
They do have a few weaknesses that can harm their prosperity, but nothing that cannot be dealt with in a timely manner.
The threats that they have at the moment should be paid attention to. Competitors like T Mobile and Verizon are very strong and they have some amazing achievements in the telecom sector themselves.
They also need to come up with strategies to differentiate their product offering so they don’t fall into the trap of constant price wars.
All in all, it can be said that AT&T is a very impressive company and they have much more to show to the world.