Verizon Communication Telecommunication Industry Is One of SWOT
- Length: 8 pages
- Sources: 6
- Subject: Business
- Type: SWOT
- Paper: #95672105
Excerpt from SWOT :
Telecommunication industry is one of the fastest growing industries in the world, with advancement in internet technology, advancement in trade and commerce, social dynamics and an ever-expanding global market. Telecommunication has become one of the most essential mediums that facilitate communication, interaction and transaction in both social and economic platforms. To this end, many companies have invested billions of dollars worldwide in an attempt to rip some of the benefits the young but lucrative industry has to offer. Verizon Communication Inc. is one such industry that has grown to become an international player. Verizon is one of the largest telecommunication companies with a vast network in the U.S. And Europe and roaming capabilities that have enabled the company to have a world wide access.
Verizon Communication was formed in 2000 after a merger of Vodofone and Bell Atlantic to form Verizon wireless. The company later merged with GTE a long distance fixed line provider to form Verizon communication and became the largest long distance coverage provider covering 29 states. The company later merged with MCI inc. To form the second largest wireless service providers in America. Verizon Communication has three major segments, namely fixed line communication, information and directory services and wireless services with numerous innovative and distinct products that it offers to consumers. Verizon Communication industry is the largest telecommunication industry in America with revenue of $79 million as per 2004 financial reports. In 2004, it was voted the most admired telecommunication firm by Fortune magazine; the company also won the Frost & Sullivan 2005 product innovation and development award among others. The company has a strong brand, is recognized for its reliability, quality products and excellent customer service (Mockler 2006).
Firstly, there several strengths that Verizon Communication has. As stipulated earlier the mergers of Bell Atlantic and Vodofone and consequent mergers with GTE and MCI gave Verizon advantage over other competitors to the extent that it acquired a wide network in America. Compounding this with its wide roaming capabilities, Verizon Communication's productive capacity increased dramatically, making it possible to acquire millions of customers hence maximizes its revenue. According to Mockler (2006), 47.4 million customers subscribed to Verizon's wireless services and 3.6 million customers used its fixed line services as per the 2004 reports. This shows that Verizon Communication's market share is large enough to make them market leaders and profitable given their outreach.
Secondly, Verizon's Communication has been a pioneer with regards to range of products and services offered to its customers. With its admirable technological resources, Verizon's has a wide range of products that it offers to its customers, providing both fixed line and wireless services. Also in order to capture different markets, they have introduced new exiting features products such as picture messaging, VOIP, instant messaging, video conferencing just to name but a few. Moreover, features such as caller ID's call waiting, call forwarding and three-way calling not only help in strengthening Verizon's products range and services but also adds value to the company as it helps improve the quality of its service and hence helps the company attract new customers and retain them (Mockler 2006).
Thirdly, one of the strongest attributes of Verizon Communication is leadership and management approach. Under the leadership of Ivan Seidenberg, the company adopted a strategy that emphasized upon differentiating their enterprise to survive aggressive competition in the market. We can infer from the case study (Mockler 2006) that Seidenberg concentrated on customer satisfaction, excellent marketing strategy and production efficiency via innovation and creativity. Under Ivan Seidenberg's leadership the company's customer service and product invention have been recognized and awards given to this effect. This proves that Verizon Communication has pioneering leaders, strong leadership helps chart the course and hence gives direction to the organization.
Fourthly, Verizon Communication has a strong marketing presence and brand name, with distribution chains selling its products and offering essential services to consumer across the state, the company's outreach is far much superior to its competitors. Verizon has become a household name and more so its wireless wing which is preferred by young customers whose market is vibrant, growing and potentially profitable. This gives the company a competitive edge over its competitors and further positions the company for expansion and retention of consumers. It is worth noting that Verizon has decided to capitalize on this market and this can be a good strategy to the extent that the company is maximizing on its strong side to rip maximum benefits and secure their place in the market.
Fifthly, being a large profitable corporation, one of the strong internal factors that can help the firm achieve sustainability is availability of resources. Verizon invested 220 million dollars in building 280 cell sites in an attempt to improve their network. It is worth noting that the initial investment needed in telecommunication industry is humongous and this creates a barrier of entry for many potential firms, this therefore makes Verizon attain advantage over competitors given that expansion in this sector requires resources which they have at their disposal (Mockler 2006).
Lastly, one of the most important strength of Verizon is product development and marketing strategy. Verizon Communications has adopted rapid promotional techniques by advertising its product in print media, TV among others. Given its diverse range of products, Verizon introduced bundling strategies where different products are packaged together and sold as a bundle. This makes it easier to make introduce different packages for different market segments, add value and hence improve on quality of products and services provided by the firm (Mockler 2006).
On the flipside, there are several weaknesses that negatively affect profitability and performance in the organization. Firstly, one of the most significant weaknesses is limitation of some of its technological resources. Verizon fixed line network uses coaxial cables, coaxial cables have limited bandwidth, are affected by electromagnetic devices and thus are ineffective relative to fiber optics. To this end, the quality of service offered to fixed line users is ineffective because of the limited capabilities of coaxial cables making the company loose out in the market. Secondly, CDMA operating which is used in wireless network has a limitation to the extent that it is not compatible with GSM. According to Mockler (2006), most wireless networks use GSM, to this end; CDMA operating systems have limited roaming capabilities which ultimately affects the ability of consumers using their mobile phones anywhere.
Secondly, Verizon Communication has failed to capitalize on fixed-line market mainly due to inadequate technical capacity relative to its competitors. According to Mockler, the fixed line revenue in 2004 grew by only a mere 6% compared to wireless revenue which grew by 60% from 2003 to 2004. This is a major weakness especially because fixed line market accounts for 54% of the company's total revenue. The company's also failed in production and marketing of accessories such as handsets mainly because it could not compete with specialized firms.
Looking at external factors, there are a few opportunities that Verizon can capitalize on, firstly, as mentioned earlier; telecommunication market attracts few entrants because of the large amount of initial capital that has to be pumped in. As noted by Mockler (2006), a network is establish by setting up cell sites, each cell site has transmission power of around one mile to twenty miles in diameter depending on the terrain. The cost of setting up a single cell site ranges from $100,000 to $1,000,000. This estimation gives us the idea of how much money is needed to invest in this line of business. Verizon being one of the few companies in the industry stand to gain a lot from the market given the fact that only a few companies can afford to meet the capital requirement needed to establish a network.
Secondly, deregulation and further relaxation of rules by FCC is advantageous to telecomm firms because stringent rules inhibit business operation and profitability. Moreover, given that the world market is continually moving towards liberalization, Verizon potentialities extend beyond America. Moreover given the ability of using other networks services through mutual agreement, the companies can have a national coverage and hence improving its services to customers. It is worth noting that the company already has interest in Europe and can extend its operation to Asia and Africa to become an international brand.
Finally, looking at the threats, the first most formidable threat is competition. Verizon is facing fierce competition from AT&T, among other networks. AT&T has taken over the fixed line market segment hence affecting Verizon's ability to penetrate this market. Cingular Inc. The mobile service provider arm of AT&T is also a dominating force in the wireless market segment hence threatening Verizon's position and market share; it is worth noting that the wireless market which is Verizon's specialty is volatile to the extent that mobile users can easily change from one network to another. Other important factors to consider is political factors, as noted in the case study, the September 11th bomb attack affected the company as it…