Group 2 Members: 許偉容、吳雅筑、李泓儒
內部因素跟 Verizon 比較
Company: AT&T
外部因素跟交通產業做比較
Internal Strategic Position
External Strategic Position
Financial Strength(FS)
Value (+)
Environmental Stability (ES)
Value (-)
EPS
5
Technological changes
-2
Leverage
5
Rate of inflation
-2
Liquidity
3
Barriers to entry
-3
Working capital
2
Competitive pressure
-4
Cash flow
3
Price elasticity of demand
-4
Average
3.6
Average
-3
Internal Strategic Position
External Strategic Position
Competitive Advantage (CA) Value (-)
Industry Strength (IS)
Value (+)
Market share
-3
Growth potential
5
Product quality
-2
Profit potential
5
Product life cycle
-3
Financial stability
4
Customer loyalty
-2
Technological skills
3
Control over suppliers &
distributors
-2
Ease of entry into market
3
Average
-2.4
Average
4
How we rate these factors:
1. Financial Strength (FS)
We compare AT&T and Verizon.
Return on investment:
EPS Growth
Verizon
AT&T
2011
-5.69%
-80.36%
2012
-63.60%
89.39%
2013
1213.94%
171.20%
The growth rate of EPS of AT&T is quite stable.
Leverage:
Debt to Total Assets Ratio
Verizon
AT&T
2011
24.00%
23.94%
2012
23.00%
25.65%
2013
34.00%
26.92%
Debt to Total Assets Ratio of AT&T is stable, but that of Verizon may be more
attractive.
Liquidity:
Current Ratio
Verizon
AT&T
2011
1.01
.74
2012
.79
.71
2013
2.63
.66
More stable than Verizon. But it may reveal that AT&T has less operating funds.
Working capital:
(Current Assets) - (Current
Liabilities)
Verizon
AT&T
2011
178
-7907
2012
-5721
-9081
2013
43944
-11799
Obviously, AT&T has negative working capital.
Cash flow:
Cash and cash equivalents, end of
period
Verizon
AT&T
2011
13362
3045
2012
3093
4868
2013
53528
3339
AT&T has less cash. We think AT&T makes lots of investment and it is still
positive, so it is rated 3.
2. Environmental Stability (ES)
We compare telecom with transportation industry.
Explanation
Technological changes
To telecom, a slightly late start of following new
trend is serious, while to transportation it takes much
more time to conduct a project.
Rate of inflation
Neither of them would be seriously affected by
inflation, since they are daily necessities.
Barriers to entry
Both of them take large initial investment which
most companies can’t provide.
Rated average -3.
Competitive pressure
Sometimes people have no choice for transportation
because of time, distance, routes, and etc.
However, even telecom industry is somehow under
oligopoly, because all services are so similar,
consumers may shift to other carriers when others
have lower price.
Price elasticity of
demand
The same as those mentioned in “Competitive
pressure”.
3. Competitive Advantage (CA)
We compare AT&T with Verizon.
Variables
Market share
Explanation
Product quality
We think AT&Ts’ product quality is not
so good as Verizon’s, but better than
average, so we give it -2.
Product life cycle
AT&T’s product life cycle is equal to
Verizon’s as their contracts with
customers always are one or two years.
Customer loyalty
AT&T’s churn rate is low, but Verizon is
We think AT&T’s market share is as big
as Verizon’s, so we give it -3.
lower than it. So, we give AT&T -2.
Control over suppliers &
distributors
Both AT&T and Verizon can control
suppliers and distributors because they
all do the vertical integration.
4. Industry Strength (IS)
We compare telecom industry to transportation industry.
Variables
Growth potential
Explanation
Due to the development of 4G and
IOT, telecom industry has more space
to growth.
Profit potential
Transport industry needs
government’s subsidiary to cover its
loss, so we think telecom industry
perform well.
Financial stability
Both of them have low elastic
demand, so their financial situation is
quite stable.
Technological skills
Both of them have to own some
specific skills to do the work, so we
give it 3.
Ease of entry into market
Both of them have high entry barrier,
so we give it 3.