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The current licenses spectrum of Verizon and future ones that are expected to be acquired include: 45 MHz of spectrum, a weighted average of 39.8 MHz, a weighted average of 38.1 MHz, and a weighted average of 34.2 MHz. Combined with the company's CDMA technology, these spectrum licenses are expected to grant the company significant competitive advantage. This situation will further lead to a better anticipation of demand increase for wireless voice and data services.
Another factor that differentiates the company to its customers refers to facilitating the company's customer's access to Internet content by using an easy-to-use format that ensures using desktop computers. The services provided by Verizon to its customers through this method include:
Stock market information, portfolio monitoring and stock trading through E. Trade, Fidelity Investments, Charles Schwab, TD Waterhouse, and CSFB direct
Travel information and reservations through Getthere.com, and Expedia
Shopping through Amazon.com
News from MSNBC, ABCNews.com, and the New York Times, sports from ESPN.com, and weather from the Weather Channel
Instant messaging from Yahoo.com
Games provided by JAMDAT.
Verizon will also expand its applications library, which will include:
Games from companies like Electronic Arts, and Mattel
Entertainment applications like movie finders, MIDI ringer tones, avatar fortune tellers, MP3 music downloads
Productivity applications, including e-mail clients and applications to synchronize address books and calendars or access enterprise databases
Navigation assistance and mapping applications to help customers find their way or avoid traffic jams
Information applications like concert information from MP3.com, stock information and directories
Messaging applications that provide leading-edge capabilities and animated messages
However, there are certain risks that might affect the company's activity and that must be taken into consideration. The most important factor regards competition in the wireless services market. Competition on this market is becoming stronger. More wireless companies decide to merge in order to become more powerful, and more new wireless companies are emerging. Therefore, it will be very difficult for Verizon to maintain its leader position on the wireless market.
The company is very aware of the fact that competition is very likely to increase significantly, because of a series of factors, like: consolidation of the industry, entrance of new competitors, new technology developments, and also development of products and services. This situation will empower Verizon's competitors, granting them significant financial, technical, marketing, and other resources.
This situation has forced Verizon to make certain changes in order to adapt to increasing competition and to maintain its leader position on the wireless service providers market. These actions include:
Service prices reductions
Service packaging restructuring so that customers receive more value
Providing special introductory pricing or packages
This situation could lead to revenues decreases, and also margins and average revenues decreases.
Another risk that the company is facing refers to significant cash requirements that the company needs in order to expand and upgrade its network. As mentioned above, the annual amount needed for these operations is of approximately $8 billion. This situation could lead to increasing additional debt.
Another risk of extreme importance is based on a possible failure in developing business opportunities like wireless data services, and that could become an impediment in the company's activity growth.
Also, Verizon relies on a suppliers and vendors network that could not be able to respect their contracts with the company. In such cases, company may become unable to provide services to its customers at normal levels, and the network maintenance and upgrading could be severely compromised.
Strategic Options Analysis
Verizon's main strategic objective resides in the acknowledgement as the market leader in providing wireless voice and data services in the United States. Attaining this objective requires secondary strategic objectives and strategic actions to be taken. The most important strategic options are discussed bellow.
The first step in implementing the company's strategy consists in acquiring, satisfying, and retaining the number of subscribers, on the one hand, and increasing the quality of services, on the other hand. Increasing the number of customers and increasing the amount of their usage of services will lead to increased revenue and cash flow that can be further invested in expanding the company's activity. A specific area of investment is consisted of customer loyalty and retention efforts. The company has already started to implement certain actions in this direction, like:
Introducing the Worry Free Guarantee
Introducing two-year contracts with customers
Announcing a three-year call center improvement plan
Another strategic action refers to increasing the value of the company's services. This plan should lead to retaining existing customers and attract new ones as well. Also, Verizon must establish more specific pricing packages suitable for all customer types.
One of the most important strategic options that the company should exploit refers to continuing the investment in expanding the company's digital network. If the company could develop this project, it will help Verizon to provide the highest quality service to its customers. This could be the action that would establish Verizon as the indisputable leader on the wireless service providers market.
National coverage must also be expanded, even if this would require significant financial, technical, and human resources investment. This could be attained by acquiring more wireless operations and spectrum licenses.
Regarding strategic marketing options, the company should focus on building the Verizon Wireless brand. Verizon's launching campaign was quite an aggressive one that reached its goals in a short period of time, since the company achieved brand awareness of over 90% among wireless users. It is recommended that the company continues to use messages of simplicity and affordability, which will determine the company's customers to associate Verizon with confidence and acceptance. This will lead to increased number of customers, on the one hand, and increased loyalty among the company's existing customers, on the other hand. The company's campaign should be doubled by a campaign promoted by Verizon Communications, which will increase the company's seriousness and will be promoted on other markets also.
However, the company's strategy should include financial objectives also. For example, the company should work on increasing its operating margins and capital efficiency. This situation will generate cost competitiveness. In order to do so, the company must reduce certain costs regarding network and equipment, and it must also reduce other costs by:
Reducing network and equipment costs
Reducing subscriber acquisition costs
Another strategic action is based on expanding Verizon's wireless data and messaging offers. The company already enjoys considerable success on this segment. Therefore it is recommended that the company follows this direction and expands its range of products and services by introducing value-added digital wireless data applications.
Also, consolidation and streamlining operations could be used in order to accomplish economies of scale and scope. One way of accomplishing this objective is by reducing handset and network equipment costs, by consolidating customer call center operations, by reducing roaming costs, and by consolidating staff functions. The company has already started to work in this direction by reducing the number of network operations control centers.
However, given the fact that the company's activity is also based on sales, another marketing objective refers to establishing a stronger sales and distribution strategy. The implementation of such a strategy, if successful, will lead to reducing the waiting time for customers, and reducing distribution costs.
This section will focus on discussing the implementation of Verizon's sales and distribution strategy. The company's current strategy relies on using a combination of distribution channels like direct, indirect, and resale. The purpose of this strategy is to increase the number of customers, on the one hand, and to reduce customer acquisition costs, on the other hand. The distribution channels currently used by Verizon are:
Business to business
Indirect retailers and agents
These distribution channels are very suitable for the company's object of activity, company type, and customer preferences. However, in order to reach the growth objectives that the company has set for the following period of time, it is recommended to develop the management of these distribution channels.
For example, the company should focus on expanding direct sales. This objective can be achieved by increasing the number of the stores owned by the company, by increasing telemarketing activity, and by increasing web based activity also. These actions should be doubled by developing indirect distribution channels. Development of indirect distribution channels will determine the development of the distribution system, which will eventually lead to increasing the number of customers and national coverage. This factor already represents one of Verizon's strong points, and, if developed, it could generate significant competitive advantage for the company.
However, such actions will require tremendous amounts of financial, technical, and human resources. The company should focus in training its employees, since the most valuable resources that any company could have is represented by human resources. The company's success relies on how well its employees manage to do their tasks. Therefore, it is recommended that the company invests more in its human resources. Although costs will not be reduced, the effects will be priceless. However, these…[continue]
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