Verizon Communications Inc.: Case Study

free essayVerizon Communications Inc. is an American telecommunication company that focuses on wireless and wireline Internet connections. The organization is one of the leading telecom companies in the world. It has succeeded in various areas of its operations and generated 10k reports over the period it has been operating (Petrova & Wang, 2011). Verizon is arguably one of the largest Internet solutions providers that cover the 50 states of America and a couple of subsidiaries around the world.

History and Growth of Verizon Communications

Verizon is a 21st-century communication firm that was created in the year 2000. The firm was formed via a merger of huge telecommunication companies, namely GTE and Bell Atlantic. The latter had a series of mergers since the invention of the telephones in the late 19th century that gave them the strength in the industry. The 1996 telecommunications law that directed a shift to more market-based policies encouraged the formation of Verizon (Petrova & Wang, 2011). The law promised a competitive market that became the driving force behind the formation of the company. Since its inception, its business in both wireline and wireless business has grown tremendously. The company has acquired other entities to grow its business and become one of the largest internet providers in the world. It invested in the expansion of the wireless network from 2009 to 2012 which was necessitated by the growing demand for mobile broadband network across the US (Petrova & Wang, 2011). By 2012, the company had already rolled out its 4G LTE, the fastest internet speed in the world, to more than 273 million people. The population is equivalent to 89% of the U.S. citizens in 476 markets. Verizon has recorded growth in its wireline business through investment in the fiber optic internet services (Fois) (Petrova & Wang, 2011, p. 6). The investment saw connections in almost 70% of the areas previously connected to the landline territory. The company can serve over 18 million customers in regions of operation (Petrova & Wang, 2011, p. 6). Moreover, it has shed off some of its non-performing business such as landline business in various states and subsidiaries outside the US. In addition, it has acquired other companies to ensure leadership in the industry.

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Strengths and Weaknesses

Verizon has various strengths and weaknesses that are internal to the company. Its strengths enable it to compete effectively in the telecommunication industry in the US and other markets. The shortcomings of the company hinder its ability to rival efficiently. The various strengths of the company include a broad geographical coverage. Verizon has its wireless and wireline connections, serving the majority of the U.S. citizens, namely over 80% and 70% of residents respectively (Faulhaber, Hahn & Singer, p319, 2011). The company boasts of high-speed wireless connection across the country. It rolled out fast and reliable to the customers 4G LTE network. Verizon has a strong financial performance that gives it a competitive edge over its competitors. It trades on the New York stock exchange and NASDAQ. The company’s strong brand also provides a competitive advantage. However, Verizon has its weaknesses that influence its trade negatively. The firm has a poor client service where clienteles protest about poor services from the client care desk. The customer care service is not present in many locations as compared to its competitors. In addition, Verizon products are costly as compared to those of competitors. Moreover, it has not taken advantage of markets beyond the US and Europe. Finally, the company has not achieved profitability growth of more than 4% since its inception (Faulhaber et al., 2011, p. 319).

External Environment

The telecommunication industry and other emerging markets in the US and Europe are still growing. Tapping in the market will ensure revenue growth for the company and other players. The firms in the industry have the opportunity to grow their businesses. Verizon faces competition from other players such as the AT&T and Sprint which are among the largest players in this market. Competition is also expected from other smaller players such as the T-Mobile, CenturyLink, and Frontier Communications among other players (Faulhaber et al., 2011).

The competitors have a lower pricing strategy that threatens Verizon revenues through product substitution. The smaller companies and new entrants pose a threat to Verizon. They have an opportunity to merge and form a stable company that will compete with the existing leaders. The wireline connection faces slow growth in the 21st century as compared to the wireless connection. The business units may not grow the revenues of the company in future. The customers bargaining power is relatively high because of the many players in the market. The substitution of products is relatively stable due to many service providers. On the other hand, companies in this industry have a strong bargaining power over their suppliers.

Analysis

Verizon can compete effectively in the market for a foreseeable future. However, various measures need to be put in place to ensure that the business competes effectively in future. The company enjoys a strong brand in the market that helps it compete with its peers in the industry. It has also expanded its business in areas such as TV connection as well as the video advertising to supplement its earnings. The large geographical coverage of the entity is concentrated in the US and Europe which requires expansion in other areas in order to benefit from the strength. Moreover, the company poor customer service can affect its performance hence giving an advantage to the competitors (Faulhaber et al., 2011).

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Corporate Level Strategy

Verizon communication has a corporate strategy for continued growth and profitability. The company envisages being recognized as a great organization that focuses on the customers and producing solid returns to its shareholders. Verizon’s mission reiterates its commitment to its customers through provision of excellent communication services and experiences. Its three-tier strategy entails the provision of wireless and wireline services over their superior networks to develop new businesses that target the Internet of Things and video platforms and a creation of increased revenue opportunities through applications and content. Verizon’s wireless business is currently performing well in the market. Verizon communication’s wireless business provides high-speed 4GLTE network to its customers (Brunell, 2012). The company intends to introduce the 5G LTE network to ensure its market leadership position (Faulhaber et al., 2011). Moreover, the wireline business has provided fast FioS to its customers who are mainly households. The company has launched Internet TV service to boost its revenue in this business. Verizon acquired Vodafone in 2014 as a strategy to serve more customers. It entered into joint ventures with companies such as Terremark Worldwide Inc. and CloudSwitch Inc. to reach more customers (Brunell, 2012). While Verizon has its services reaching more customers in the US and Europe, it has not tapped in the emerging markets which offer great opportunities for revenue growth. The company has a dense network of subsidiaries. Some of the subsidiaries include GTE Corporation, Verizon New York Inc., Bell Atlantic Mobile Systems LLC, Verizon California Inc., and Verizon Delaware Inc. among many others. Verizon’s strategy enables it reaching out to many customers as well as offering excellent services. However, the diverse network of subsidiaries has led to lack of a unified customer service.

Business Level Strategy

Verizon adopts a global differentiation marketing and competitive strategy at the business level. The company aims at providing unmatched services in the wireless and wireline segments. They provide superior quality services that ensure customer satisfaction. Through the differentiation strategy, the company has developed a strong brand name in the market (Faulhaber et al., 2011). Despite the high pricing of the services, Verizon serves numerous customers. It focuses on implementing new products and services to its customers. Investment in the upgrade of its network ensures that it maintains its leadership position in the market. It has invested heavily in the customer relationships management as well as the supply chain management to improve its services.

Implementations

Verizon Communications Inc. has adopted a functional organizational structure, which includes departments where employees are assigned to oversee the functions and perform the duties in that office (Petrova & Wang, 2011). The categorizing of the departments ensures low costs and creates efficiency within the company. Verizon has continually reorganized its business over the years to cut operational costs as well as increase efficiency. Recently, the company reduced its offices from 20 to 6 in a move to consolidate its wireless business. Verizon has its CEO and chairman as the president and the heads of various departments as vice presidents. The company offers its employees competitive remuneration and other benefits such as discounts on wireless and fiber optic Internet services in their homes besides comprehensive health cover. In addition, it provides tuition assistance to employees. Verizon solves conflicts through arbitration and mediation as well as bargaining (Petrova & Wang, 2011).

Recommendations

Verizon Communication Inc. needs to work on various areas to ensure its position in the market. The company needs to take advantage of the emerging markets to increase its revenues and geographical coverage. Verizon should also consider revising its pricing strategy to compete effectively with existing and new competitors. Furthermore, it needs to increase its customer care services units and improve the service quality. Moreover, the company should consider acquiring more businesses and enter into joint ventures with others in order to reach more customers across the globe. The move will ensure its presence in wider geographical areas and strengthening of its brand name thus giving it a competitive edge over its competitors.