Introduction
Verizon Communications is one of the greatest leaders that provide wireless and broadband services to wholesale, government business and mass market, headquartered in New York the company boasts to be serving almost hundred million customers. Apart from being wireless network and Internet service provider Verizon Communications is also into the provision of communication, information and entertainment services which are provided through a huge fire optic network and is efficiently providing its services to both domestic and commercial markets across the world.
The company has grown by many folds since this is establishment on June 30, 2000 with a $ 52 billion merger of two of the world’s largest companies Bell Atlantic Corporation and GTE Corporation. If we talk about the workforce to deliver to such a huge market, the company employs around 200,000 people and generates revenue off almost $ 110 billion, as reported in the last financial year.
During the last decade of the 20th century there were various regulations and infrastructure cost hikes due to which there were a few major changes in the telecommunication industry. Due to these changes it became important for companies to unite together and work in order to opt in sustainable growth over time. Bell Atlantic Corp and GTE Corp were also one of the most well-known telecommunication giants and in order to sustain the changing market and develop their services on a global platform they marched together to form Verizon Communications. While Verizon Communications was formed due to this merger, there was another similar merger between the Bell Atlantic Corp and the Vodafone group from United Kingdom in order to form Verizon wireless and 55% stake was owned by Verizon Communications in this company and is majorly managed by both the partners of Verizon Communications.
If we consider the reach of the company according to the number of customers than after the acquisition of MCI in 2006 in a huge $ 8.6 billion deal, Verizon Communications became one of the largest providers of information technology solutions, platform provider to businesses and governments across the world and provider of advanced communications. Similarly there was another acquisition of Allitel Corp in early 2009 thus making Verizon wireless as one of the largest service providers of wireless technologies in the United States. Apart from simply providing technology services, Verizon Communications is also known to grow substantially through its smart investments made in technology and infrastructure and during the years 2003 to 2007 only there was an investment of 74 billion by the company in other telecom or cable service providers in America. Apart from the revenue growth gained through these investments the company also took help from these investments to support its maintenance, upgrades and technology expansion.
When the company started in the year 2000 the only vision of the company was to expand its services and gain potential growth through covering as much market as possible. However, as the company progressed there were some great milestones which were achieved due to which the mission and vision of the company gradually changed and from the concentration to expand the services and the reach to creation and addition of revenue models through smart and useful investments. With the change in time and the slowdown of revenue the company required several measures in order to improve their customer satisfaction, and Hans the level of innovation, create maximum network reliability and use all these to generate the required cash flow.
During the mid of the first decade of 21st-century, the company concentrated towards their entry into the 3G market and had to face a major competition with giants like AT&T. Once again, this was a new start however now Verizon Communications wasn't too much stronger position and was able to create an excellent platform of 3G network services which had been running successfully in the last few years. The company recently launched its 4G services and currently has a vision to become the largest service provider of 4G network in United States.
The Environment: An analysis
The American telecommunications market is highly competitive and with Verizon Communications operating in it only in the last 10 years while the telecommunication industry is more than hundred years old the company finds itself as a milestone. Few biggest changing trends were when there was a shift from analog to digital technology, the movement towards creating and using wireless platforms, and the ship that took place when the narrow bands were replaced by broadband services. There are lot of companies that have operated since decades in United States and have come through these changes and have learned, hence there is a need to stand against the giants like AT&T, T-Mobile and Sprint Nextel. Although, these may be one of the greatest competitors that Verizon Communications has in the telecom space, there are various submarket competitors as well like Metro PCS, US cellular and leap wireless. The unique selling point that Verizon Communications have overall its competitors is the fact that the wireless broadband network that has made available has the largest reach within the country. The consolidation of the US enterprise market serving large businesses and also the government sector has resulted in two major players remaining in this industry as AT&T and Verizon Communications.
The differentiation and value addition
Considering the high commoditization of the wireless networks, it becomes important for the Verizon Communications to have clearly demonstrated differentiators in order to acquire a specific market share and create its unique value. If we talk about the business environments, networks prove to be the most important aspect of a telecommunication company and this is one area that requires a major investment. Verizon Communications has provided a great 3G network based on CDMA technology and has an expanded the same to a major part of United States thus becoming the greatest service provider in terms of reach and customer satisfaction. With the changing trends, and the upcoming technology boom, the company plans to establish and enhance its 4G networks majorly across the country and to once again provide the services and gain market share similar to the one that was done during the application of the 3G network.
The company also has the highest in providing one of the best customer service experiences, among all the network and telecommunications companies in United States. The company initially only concentrated on its own innovation and service provisions however it was not until 2009 that the company decided to concentrate on gaining competitive advantage and the first initiative was to create a collaboration with Apple in order to equip the iPhone 4, with 4G services provided by Verizon Communications. There was a similar collaboration related to the 3G services with AT&T in the past and this was one of the major areas where AT&T stood ahead of Verizon Communications.
Issues and Concerns: Operations
A 4G LTE network of my Verizon Communications that spread across many cities and major airports across United States, however still there is a lot of potential in this area considering the fact that the company has invested majorly in this area and have promoted the quality of their wireless services due to which a return is highly required from this particular domain. Secondly, the mobile broadband and USB modems that are being provided by the company are priced in two tiers, and there is a strong capping on the data limits being used by the users to avoid any kind of congestion. This impacts the data speeds and attacks the overall customer experience. In order to stand the competition, and make a similar story as AT&T the companies choosing to enter the iPhone market with low prices however considering the brand equity of the company as compared to AT&T this step may not be beneficial in the long run. Although, the company is concentrating on its development of services however it should not lose out on any new entries to the market like the use of networks for communication between home appliances in energy management system, which means that there must be sufficient concentration towards innovation and new technology and other areas which may not directly be related to networking and telecommunications.
The company Financials
Verizon Communications announces its financial performance and operating revenue each year for its segment. The revenue primarily comes from equipment sales, broadband and Internet services, activation fees for products and paper usage billing for voice, video and data services. The company is quite similar to AT&T in terms of financial performance and the average return of equity for the company has been around 10% which is slightly less than AT&T. The acquisition of Alltel and the provision of 3G services led to a great increase in the company revenues. The company has regularly paid dividends to the shareholders and has an average of 17 billion on capital expenditures each year. The company has sound financials and with good returns of various investments that it has made it has been quite strong in terms of its financial performance.
The Value Chain Analysis
If we look at the value chain from human resource, technology, procurement and operations point of view it would be a great way to understand the implemented solutions in the past few years. The company has shown great recruitment and training initiatives in their operations, marketing and sales departments. The technology has definitely improved and marketing areas primarily include wireless devices, supplier innovation and market research, the operations has evolved with the inclusion of 4G network, energy management, open development and collaboration. On the procurement side there was few great improvements in terms of supply relationships, new wireless devices and transportation. The company also procures energy, network equipments, and network parts and is regularly trying to paint device subsidies and conduct supplier promotions. In order to develop value in the urban areas the company has created QA checkpoints and has been maintaining a strong quality inspection and inventory management system. Supply chain is an important aspect of the company and therefore there are recent collaborations and coordination is which shipment companies to ensure effective market reach.
Brand Value analysis as shown above explains the performance of Verizon Communications in terms of credibility, stretch, differentiation and relevance. The company has contributed a lot towards its credibility through excellent customer satisfaction and becoming one of the best and recommended service providers in the industry. Stretch is the unique selling point of the company and it has definitely shown the result in this area by providing the largest 3G network cross United States. The company has shown differentiation by providing the largest network, being the first major merger in terms of telecommunications and being one of the largest investor in to network and technology. The relevance of the company can be explained by day-to-day connection with people, the services of mobile and Internet that make life so easy for both domestic and commercial environments.
Recommendations and Conclusions
he company should invest more in terms of capital expenditures in order to achieve better quality of wireless services in order to further enhance their customer experience. The data limitation of 4G network is acting as one of the drawbacks and therefore the limits must be increased to improve the customer satisfaction. Verizon must not highly negotiate on pricing in contract negotiations as they have good brand equity and they must utilize it to get better prices for services like that provided to iPhone. Moreover, now that the company has a great reputation as a broadband and Internet service provider, looking at the declination in the wireline segments, the company must seek further business in FiOS which is a growing domain. This case study presented few important aspects of the company and there is no doubt in the fact that Verizon Communications has great potential to develop itself as a global leader in the telecommunications and wireless technology domain.
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