Term Paper on "Verizon Wireless"

Term Paper 14 pages (3815 words) Sources: 5 Style: MLA

[EXCERPT] . . . .

Verizon Wireless

The following pages focus on analyzing the situation of Verizon Wireless. Verizon is currently the leader on the wireless service providers market. The introductory section will provide a series of information regarding the company's history, activity, and current situation. Also, the company's outstanding financial performance will be presented in this section in order to provide a better and clearer image on the company's current situation.

This section is followed by an external analysis on the wireless industry. This section will provide information on the wireless market's evolution, current situation, and market trends. Also, Verizon's general position on this market will be mentioned.

The following section refers to Verizon's internal analysis. This section will provide a more detailed view on the company's activity and especially on the company's current situation. The most important aspects discussed in this section are the company's strengths, given the fact that the company's success relies on taking advantage on its strong points and adapting them to the opportunities provided by the wireless market. Another important topic discussed in this section refers to the risks that threaten to affect the company's current activity, unless Verizon implements a series of modifications in order to counteract these risks.

The section that refers to strategic options will discuss a series of strategic objectives and actions that are required for reaching these objectives. This section is followed by the implementation section that will focus on discussing the implementation of sales and distribution strategy.



Introduction

Verizon Wireless was established in 2000 and has managed to become the second largest wireless telecommunications network in the United States. The company is a joint venture between Verizon Communications (55%) and Vodafone Group (45%). This situation is likely to change in the future, given Verizon's intention of acquiring Vodafone Group's stock (Wikipedia, 2007). However, the company's history started in 1995, when Bell Atlantic Mobile merged with NYNEX Mobile Communications, forming Bell Atlantic - NYNEX Mobile. Later, in 1999, Vodafone AirTouch merged with Bell Atlantic, forming Verizon Wireless.

The company's activity is related to CDMA technology, Verizon being one of the seven national U.S. carriers. In addition to this, Verizon also supports AMPS network. The annual investment made by Verizon in order to maintain and to nationally expand the CDMA network is supposed to reach the value of $8 billion.

The company's products and services include: phones and accessories, cell phones, PDAs and SmartPhones, BlackBerry devices, push to talk phones, wireless PC cards. Verizon also provides voice services, 3G data services, like: wireless broadband based on EV-DO Rev a, text and picture messaging, over-the-air downloadable applications, content from Get it Now service, video on demand, and location-based services.

The company currently has 63.7 million wireless phone customers, 68,000 employees, 2,300 company operated stores and kiosks, and over 170 switching centers.

Verizon Wireless's financial performance proves the quality of the company's services, and the loyalty that its customers reward the company with. In the third quarter of 2007 Verizon's consolidated revenues increased by a 6% rate. Operating income has also increased by 18.5%. Diluted EPS from continuing operations valued at $0.63 have increased up 14.5%. Cash flow from continuing operations reached $18 billion, reporting a 5% increase. The total number of customers has also increased from 56.7 million in 2006 to 63.7 million at the present. Total service revenue increased up to 15%, retail service ARPU increased up to 2%, total data revenue increased up to 63%, and retail data service ARPU increased up to 43%.

The number of broadband subscribers has also increased with 20%, reaching 8 million. This situation determined a 30% increase in broadband revenue and a 67% growth in broadband and video revenues. The overall enterprise revenue reported a 2.4% growth. Wholesale revenues reported a 3.7% growth. International revenue however, has reported negative evolutions, declining up to 0.5%.

The Operating income margin has increased from 8.8% in 2006 to 9.4% currently. The company's experts have decided that all key growth areas of the business have performed well in this period. Margin expansion has been positively influenced by revenue growth and productivity initiatives. Also, wireline revenues and margin are expected to improve in the future as well (Verizon, 2007).

Verizon's 2006 revenues reached $38 billion. The total number of customers was of 59.1 million. The company has also reported the highest customer loyalty in the industry (Verizon, 2006).

External Analysis

The telecommunications industry has reached a value of $3.5 billion. In the United States, annual revenues account for approximately $1 trillion. Currently, there are over 2.3 billion cellular phone service subscribers worldwide, and over 239 million subscribers in the United States. Experts in this field estimate that the number of subscribers will increase up to 4 billion by the end of 2011 (Plunkett Research, 2007). This sector does not only provide tremendous revenues amounts, but it also involves a lot of workforce. For example, the United States market relies on approximately 1 million employees.

There is a series of factors that influence the direction that this market is following. One of these factors refers to mergers made by giant companies in this market, which are meant to grant more power to these companies. This situation constantly reconfigures the market's traits. Another factor that somehow resides from the previous one is related to competition in this sector that becomes tougher and tougher. Also, recent developments in Internet and wireless technologies contribute to a constant change in customer's preferences and their buying behavior. These changes determine wireless companies to adapt, to make changes of their own, changes that must be in accordance with their customers.

The wireless sector is constantly gaining more ground in spite of traditional telecommunications methods. Among the advantages that helped wireless companies to be more successful one may consider continuous and rapid developments, and lower costs and prices. As a consequence, the number of households and business that use wireless technologies has significantly increased, determining the number of wireless services providers to significantly increase as well, and certain wireless services providers to develop.

Internal Analysis

Verizon's success and continuous growth and development rely on a series of strengths that the company exploited. The most important strong point that Verizon presents is its market positioning. Verizon is the undisputable leader of the United States wireless services market. This statute can be found in the company's number of subscribers, network coverage, revenues and cash flow. Even more, the company offers its services in 49 of the 50 most populated metropolitan areas.

One of the reasons for which Verizon is so popular among wireless customers is the fact that the company provides flexible price plans on a national basis. High usage subscribers like large corporate accounts benefit from even better tariffs.

Aside good prices, the company offers good quality for its products and services as well. The company has managed to control call quality, reduce the reliance on roaming in order to be able to provide wireless services and to increase the company's network capacity.

The company has also implemented a series of innovations that helped Verizon to be favored by customers on the one hand, and by wireless data content and application providers, hardware manufacturers, service providers, and downloadable applications enablers.

The company is subject to future significant developments in areas like network and marketing, due to its tremendous amounts of revenues and to substantial cash flow amounts that can be invested in the areas mentioned above. Verizon's continuously increasing purchasing power can be best observed in the company's equipment. Verizon is one of the few wireless companies that are able to address various types of customers, ranging from individuals to national corporations due to the company's extensive network coverage.

Another strong point that helps Verizon to expand is superior digital technology. Among the benefits of this technology, Verizon notices: significantly increased network capacity, greater call clarity and privacy, enhanced services and features, lower operating costs, reduced susceptibility to fraud, and the opportunity to provide improved data transmissions.

Given the fact that the wireless market is at its beginning, there are several rapid and significant changes that influence customers, wireless companies, and the overall market. It is expected that the wireless market will suffer future transformations, forcing wireless companies to adapt to these changes in order to survive or to become more successful. Therefore, Verizon has managed to be well-positioned for these expected changes. This situation will help the company to provide new developed services, and to increase their speed.

Such a success could not have been attained without Verizon's experienced management team. Also, the company's success relies on great financial and operating strength. The company's outstanding financial situation has been discussed above.

The company's spectrum position is quite strong as well. Verizon's current licenses account for a significant amount of spectrum in areas covering 245 million subscribers. The company won the auction for 113 licenses in 2001 for 1900 MHz spectrum. This situation was later affected by a federal court ruling that ordered the re-auctioning of 67 of these licenses among which… READ MORE

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