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Environmental Analysis

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Environmental scanning is a strategy that the companies need to use in order to analyze new opportunities and changes. The information sources of environmental analysis data allow the companies to anticipate to events and plan for the future and anticipate changes. Comcast needs to understand the three main external environment components comprised of the remote , industry and the operating environment. The remote environment is made of external factors where these factors have a lot of control over the cable industry but where the company has little control over them. The factors can be macroeconomic variables including GDP, unemployment, inflation , interest rates. The industry environment component allows Comcast to analyze the growth in the industry’s sales during a period, the demand of the industry’s products , stage of development of the industry’s producst and the operating environments will permit to evaluate variables such as competitor’s prices, customer’s demands , preferences, buying habits, the company’s management capabilities, and availability of workforce

Telecommunication industry вЂ" Cable Companies

Comcast is one of the largest cable company in the USA . The main three segments include cable, programming and corporate. Comcast’s cable segment manages and operates broadcast cable systems which include video on demand, high definition television (HDTV), digital video recorder (DVR), premium channel programming and pay-per view programming. The cable segment covers around 45.7 million homes in the US.

The company recorded revenues of $24,966 million during the fiscal year ended December 2006, an increase of 18.5% over 2005 . Out of the total revenue of the company, the cable division recorded revenues of $24,100 million, which there is an increase of 20.6% over 2005 (DataMonitor, 2007).

Macroeconomic variables that affect cable’s industry

The cable industry can be analyzed in terms of the growth in real output and prices. The contribution of the growth to GDP price The cable TV market in the Unites States has posted low but there is a positive growth rates in recent years. The source of revenue in the cable industry is the subscription and advertising without the injection of public funds in contrast with European markets. “The United States broadcasting & cable TV market generated total revenues of $120.4 billion in 2005, this representing a compound annual growth rate (CAGR) of 3.2% for the five-year period spanning 2001-2005.” (MarketLine, 2007).

Employment is an indicator related to the business spending on capital goods. During a period 2002-2005 the employment rate in the telecommunications sector declined showing that the telecom industry is hiring in a more slowly rate. Negative employment means questionable expenditure and lower levels of economic output and growth from a market view. Additionally mergers restructure the Telecom industry, having a negative impact on the employment. After the AT&T acquisition SBC announced that it will cut about 13,000 jobs through attrition this

year, while AT&T workforce is expected to decrease. (Market Line,2007)

Year Employment Telecom Industry

2002 1514

2003 1403

2004 1354

2005 1320

Figure 1: The percentage change of Telecom employment during 2002-2005. Source: Bureau of Economic analysis

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Another macroeconomic variable is deflation, when there is a declined in the price levels the reason is due to a reduction in the supply of money or credit, or in government, personal, or investment spending. Deflation distorts resource allocation, and involves distributional consequences. It brings financial uncertainty in the business and the investments. The risk factors that can affect an investment are currency exchange rates, default by borrowers, and interest rate fluctuation. The deflation is also a result of the decrease in the employment sector (Figure 1), which lowers the level of demand in the economy. Hence, the Telecom economy looks bad and the companies lose their pricing power. The deflation does not allow the industry to grow. Moreover the financial uncertainty turns the industry

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