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Verizon Company Analysis Essay


Company history

Verizon Communications Inc. was established in 2000 after a “merger between GTE Corp and Bell Atlantic Corp” (Kanur, 2010, p.6): the two world’s giant companies in the telecommunication industry. Infrastructure costs and government policies significantly controlled the development of the telecommunication industry, and this scenario pushed companies into mergers and acquisitions in a calculated bid to stay in the market (Kanur, 2010).

Over the time, Verizon has continued acquiring other companies in the telecommunication industry making it one of the dominant companies today in the industry. Between 2003 and 2007, the company invested about $74 billion in a project aimed at upgrading and expanding its technological infrastructures. Numerous factors have contributed to the current growth of Verizon Company (Kanur, 2010).

This analysis paper aims at exploring some of the factors that define Verizon’s unprecedented growth coupled with giving recommendations on what the company should do to enhance its growth.

Effects of company’s mission, vision, and stakeholders

An organization’s mission, vision, and stakeholders play significant roles in enhancing growth and development. A company’s mission and vision act as a guideline for all an organization’s activities. On the other hand, stakeholders contribute by chipping in ideas that could facilitate in the realization of the organizational vision.

Verizon Company’s mission is “to enable people and businesses to communicate with each other” (Kanur, 2010, p.9). On the other hand, the company’s vision is to be “America’s fastest, most reliable network” (Kanur, 2010, p.9). The mission and vision have significantly contributed to the current growth in the company. Verizon’s stakeholders include employees, managers, customers, suppliers, and investors among others.

All these stakeholders play a significant role in ensuring organizational success. The current success in the company is credited to strong managerial techniques utilized by the company’s management team. The team helps in making viable decisions and negotiating with other companies to enter into mergers and acquisitions, thus reducing competition in the industry (Kanur, 2010).

On their part, employees attend to their varied responsibilities, thus ensuring that a continued provision of products and services in the company. Without customers, it would be hard for Verizon Company to enjoy to the current success.

Five forces of competition

Michael Porter devised five forces that help organizations determine the possibility of a market yielding results. The forces are closely related to issues that determine how an organization deals with clients and creates revenue.

Whenever any of the forces is altered, an organization ought to re-assess the market environment to ensure that it does not affect its performance. These forces include three of new market entrants, buyers’ bargaining power, suppliers’ power, threat from substitute products, and competition from existing rival companies (Porter, 2008).

Competitive rivalry

The success of any organization is affected by the competition waged by rival companies. At times, the rival companies become aggressive making it hard for an organization to make a substantial profit. Moreover, rival companies may compete in a different dimension like marketing and innovation, thus rendering other companies less competitive (Porter, 2008).

Verizon operates in a highly competitive environment. Some of the rival companies in this industry include AT&T, Sprint Nextel, and T-Mobile. Competition waged by these companies has compelled Verizon to invest heavily on technology and infrastructure to help it stand out in the market.

Threats of substitute products

The existence of substitute products or services makes a company vulnerable to losing its existing customers. Some consumers have a high propensity to switching to substitute products (Porter, 2008). In spite of the telecommunication industry being over 100 years old, the industry continuously witnesses development of new telecommunication products.

People are increasingly switching to wireless technology and broadband services. These changes in technology have always kept Verizon alert, as the management strives at ensuring that the company updates its technological infrastructure. By 2007, the company had invested about $74 billion in infrastructural enhancement and expansion, as a way of countering the threat caused by changes in technology.

Buyers’ bargaining power

Buyers significantly influence market operations. Customers subject companies to constant pressure as they wish to relate only with organizations that offer quality products and services. Consumers are sensitive to prices and wish to relate with organizations that offer their products or services at favorable prices (Porter, 2008).

To retain customers, the company has tailored its pricing strategies to the needs of its varied customers. For instance, in 2010, the company established a streamlined structure that had messaging and unlimited minutes in order to give its consumers easy pricing options.

Suppliers’ bargaining power

Suppliers of services, components, and raw materials to an organization somewhat influence the operations within the organization. At times, the supplier may decline to work with the organization if it does not meet some conditions (Porter, 2008). Besides, the supplier may significantly influence the organization’s pricing strategies. Verizon works with some suppliers in offering its services.

It is hard for Verizon Company to enhance its innovation in mobile devices network since it relies on devices manufactured by other companies. However, the company has come up with an open development structure that helps companies working in mobile devices industry develop devices that are compatible with Verizon’s network. To avoid being tied to one device or product, the company is now working closely with suppliers to come up with devices compatible with its networks.

New Market entrants

Markets that yield high profits are likely to attract new competitors. The effect is the entrance of new companies in the market thus negatively affecting the profit of the existing companies (Porter, 2008). Unless the incumbent companies come up with strategies to block new entries, their profit rate declines to a competitive level.

One of the strategies used by Verizon Company to discourage new entrant in the markets is pricing strategy. The company has come up with a tailor-made strategy that caters for the need of different clients. Besides, the company uses mergers and acquisition as a way of discouraging rival companies from entering its markets. Since its inception, the company has acquired numerous firms dealing in the telecommunication industry thus minimizing chances of new entrants into its markets.

SWOT analysis

Strengths

Strong brand

Good relationship with other industries

Access to investment funding

Economies of scale

Ability to adopt to emerging technology

Weaknesses

Limited influence in device and standard invention

Reliance on other companies devices

Absence of the company in international market

Limited number of customer care centers

Opportunities

International promotion of wireless usage

New global market

Collaboration with Apple Company

Threats

Stiff competition

Rapid technological change

High investment requirement

High concentration

Strategy to enhance organizational performance

Verizon Company stands solid chances of reaping from its prevailing strengths and opportunities. The company has a strong brand implying that, its products are well known in the market. As the company has access to investment fund, it should use the fund in investing in capital expenditure.

Investing in capital expenditure would help it galvanize its position as the major provider of wireless services (Verizon Wireless.com, 2011). After being in the telecommunication industry for a long time, Verizon Company is capable of adopting and using emerging technologies with limited challenges. The company ought to work with other companies in coming up with devices that are compatible with emerging technology.

Currently, the company is working on developing cloud-based technology to help small businesses access their crucial data. Verizon Company in collaboration with Microsoft Corporation has come up with Microsoft® Office 365, which helps small business maintain agile and productive employee base. The technology dubbed ‘Small Business Essentials with Microsoft® Office 365’ is run on Verizon’s 4G LTE platforms.

Moreover, the company provides technological support thus enhancing collaboration in business institutions that have mobile employees. This technology is currently in high demand as most of the small business institutions struggle to expend their operations. Apart from this, the company is working on collaboration with companies like Samsung to establish the latest phones like galaxy mini and tablets (Verizon Wireless.com, 2011).

Competitiveness and profit maximization

To maximize on profit and enhance competitiveness, Verizon Company can use varied strategies. The strategies include pricing, production, and distribution strategies (Verizon Wireless.com, 2011). Pricing plays a significant role in enhancing competitiveness in the telecommunication industry.

The company has to come up with a pricing strategy that caters for varied voice and data requirements of its consumers. The company should come up with a pricing mechanism that meets the needs of every customer (Verizon Wireless.com, 2011). Verizon Company mainly distributes its products through direct channels. The company depends on chain stores in distributing its products. In addition, it uses indirect stores like Costco, Wal-Mart, and Best Buy to sell its products and services.

To enhance competitiveness and profitability, the company should invest on online marketing. This will help it reach the global market at limited cost thus increase its sales volume. Currently, the company should do away with unproductive wireline segments and invest heavily on Smartphone and other technological devices.

Verizon Company has to liaise with companies like Google in coming up with products that are capable of serving a wide range of customers concurrently. One of the factors that make consumers refrain from using certain networks is network overcrowding and holdup time.

To ensure that its network is not affected by these problems, Verizon should work with other companies like Google in coming up with operating systems capable of solving the problem. This will facilitate in increasing its sales volume thus boosting its profitability and competitiveness.

Communication plan

For the company to achieve the above strategies, it has to ensure that all stakeholders have the relevant information. The stakeholders include the employees, suppliers, and customers. There is a need for a smooth communication strategy in Verizon Company to ensure that all these stakeholders help in realizing organizational goals (Kanur, 2010).

The company needs to make use of its departmental managers to enlighten its employees on what they have to do to improve on production quality. Besides, the company should establish a close relationship with partner companies like Google. To ensure regular communication between the two companies, Verizon can outsource its production work to Google Company and only send its representatives to oversee the process.

Besides, the company ought to maintain regular feedback between the company and customers to ensure that employees work on areas that customers feel that they need improvement. This can be achieved by establishing a social site where customers can give their opinions about the products and services (Masdoor, 2011). To communicate the pricing strategy to consumers, Verizon Company should come up with an advertisement that educates customers on the benefits of using its products and how the products work.

Corporate governance mechanisms

Governance mechanism refers to mechanisms in an organization that align interests and coordinates activities. The corporate governance mechanisms include board of directors, audits, and balance of power (Young, & Lewis, 2012). Verizon Company exercises administrative controls through its board of directors.

Besides, the company practices balance of power. The board of directors controls all the crucial decisions made in the company. For instance, the board is consulted when the company wishes to make a decision on matters touching on capital projects, mergers, and acquisitions. The board of director has been effective in controlling managerial actions helping in acquisition of numerous companies in the telecommunication industry (Verizon Wireless.com, 2011).

On the other hand, the company exercises balance of power. This makes sure that no single board member overextends resources (Verizon Wireless.com, 2011). The company splits duties between the various managers based on their areas of specialization. By exercising balance of power, the company is capable of making productive decisions with respect to product development and distribution. It is hard for a single employee to use his or her powers to meet personal interests.

Effectiveness of leadership within Verizon Company

Verizon Company’s leadership has effectively helped in bringing the company to the limelight in the telecommunication industry. The leadership has over the time focused on trainings that would help the company enhance its business objectives. Currently, the company is second from AT&T in the telecommunication industry.

Verizon’s leadership has helped the company acquire and merger with numerous companies in the telecommunication industry thus galvanizing its position in the industry. Besides, it has helped the company liaise with other companies in developing its products. For instance, the leadership has collaborated with Samsung Company in development of tablets and Galaxy phones that work on 4G LTE network (Verizon.com, 2011).

The leadership has not only helped the company emerge as one of the iconic technology companies, but has also helped it improve on its shareholder value. To enhance organizational performance, the company has to invest on training its employees on how to develop mobile devices. This will save it from relying on other companies that deal with development of mobile devices.

Efforts to be a responsible corporate citizen

Verizon Company is making an effort to become a responsible corporate citizen. The company is working towards environmental conservation. As people continue being environmental conscious, they are only likely to associate with organizations that engage in environmental friendly activities (Young, & Lewis, 2012).

Failure to conserve environment may lead to the company losing environmental conscious clients to rival companies. In 2008, the company cut down on its rate of paper usage by approximately 2,154 tons. This in return saved at least 52, 000 trees. Verizon is one of the telecommunication companies that cater for people with disabilities. For instance, it has remote controlled phones for physically impaired people. This has helped in company improve its reputation and popularity.

Conclusion

Verizon Company has managed to position itself in the telecommunication industry. To overcome competition waged by rival companies, the company has used numerous strategies. Verizon Company has worked with mobile companies to come up with network platform compatible with the available mobile devices. Besides, it has established a network pricing mechanism that caters for different needs of its clients. The company’s leadership has significantly contributed to the realization of the current success enjoyed by Verizon Company.

References

Kanur, P. (2010). Will calling on Verizon bring stalled iPhone sale up again? Advertising Age, 81 (36), 3-15.

Masdoor, K. A. (2011). Ethical Theories of Corporate Governance. International Journal of Governance, 1 (2), 484-492.

Porter, M. E. (2008). The Five Competitive Forces that Shape Strategy. Harvard business Review, 34 (5), 78-93.

. (2011). Small Business Essentials with Microsoft® Office 365: do business better in the cloud.

Verizon.com. (2011). Financial and corporate responsibility performance. 2011 Annual Report.

Young, R., & Lewis, D. (2012). . Verizon.

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