Verizon Strategy Analysis: Success Factors and Financial Projections

Differentiation Strategy and Competitive Advantage

Verizon, like any other business seeking to thrive in an increasingly competitive marketplace, has in place financial and strategic priorities that guide its operational and strategic decisions. To ensure competitive advantage, Verizon employs a differentiation strategy. This strategy is particularly valuable as the business seeks to keep various external forces that may affect its profitability at bay. In adopting this approach, the company appears determined not only to defend its market share but also to enhance its brand image. Verizon's key selling point is quality — it aims both to win new customers and to retain existing ones.

It should be noted that the company ensures this generic strategy is adopted across all its business units and activities. Verizon Wireless advertisements, for instance, largely focus on the quality of the company's wireless services. According to Clegg, Schweitzer, and Whittle (2016), the company has also heavily invested in infrastructure and continues to embrace new technologies to sustain its high-quality narrative. Verizon's personnel — and particularly its customer service representatives — are also well trained, with the company periodically implementing training programs to further enhance staff competency.

To successfully deploy this strategy, Verizon must, among other things, engage in customer accounting through cost analysis and customer profitability analysis, as well as competitor accounting via competitor performance appraisal and cost assessment (Clegg, Schweitzer, and Whittle, 2016). As a result of this strategy, Verizon is able to charge a premium for its services, meaning it earns more than competitors covering the same market ground. The superior quality of the company's services also enhances customer loyalty, with loyal customers choosing to remain with Verizon rather than switching to competitors.

Capitalizing on Non-Financial Factors

There are various ways through which Verizon could capitalize on non-financial factors. First, the company could further enhance the capabilities of its human resources by offering additional training, particularly in the areas of change management and technology. As Hill, Schilling, and Jones (2016) point out, the industry in which Verizon operates is prone to constant change as businesses seek better and more efficient ways of meeting client needs. Resistance to change could impede the company's ability to adapt to new market conditions. On this front, the company could also spur creativity in its workforce by encouraging teamwork and fostering better employee relations. Furthermore, reviewing its employee compensation policies could enhance employee motivation, boost loyalty, and reduce turnover rates.

Technology is another non-financial factor that Verizon could seek to capitalize on. A study Verizon sponsored found that companies that adopt new technologies early are likely to gain first-mover advantages — leading not only in revenue generation but also in expanding market share (Verizon, 2017). First-mover advantages are often difficult to overcome, meaning that by embracing better applications and methods, Verizon could move significantly ahead of its competition. In addition to erecting entry barriers, continuous improvement in technology could help Verizon revolutionize its operations and become more effective in service delivery.

Reputation is also of great relevance when it comes to capitalizing on non-financial factors. Over time, Verizon has received numerous awards based on its commitment to superior service. In 2017, for example, Verizon was ranked first in wireless network performance and quality across the entire United States (Verizon, 2017). The company also has an excellent reputation as an equal opportunity employer, having received "a 100% rating on the Disability Equality Index (DEI), demonstrating the value of our diverse and inclusive experiences for employees, customers and suppliers."

Verizon could continue to build on this reputation by being more visible on the corporate social responsibility (CSR) front. While the company already enjoys a strong CSR reputation, it could strengthen it further by selecting a specific cause and following through on it. Areas of interest could include, but are not limited to, cancer treatment, HIV/AIDS prevention, and the enhancement of literacy levels in developing regions. The company should also uphold principles of sustainable development — for instance, by offering practical solutions related to climate change in alignment with the Sustainable Development Goals. The goodwill generated by such engagement is likely to open new markets for Verizon's products and services.

Conclusion

It is important to note that the percentage projections highlighted above are largely hypothetical and have no strict quantitative basis. However, the discussions informing the projections are grounded in actual facts regarding Verizon, its historical performance, and the factors most likely to affect its future performance. In the final analysis, this exercise is beneficial in that it offers a generalist view of the direction in which the company is headed, informed by strategic analysis of both financial and non-financial performance drivers.

References

Clegg, S. R., Schweitzer, J., & Whittle, A. (2016). Strategy: Theory and Practice (2nd ed.). Thousand Oaks, CA: SAGE.

Deloitte. (2016). Global Mobile Consumer Survey: US Edition. Retrieved from

Hill, C. W., Schilling, M. A., & Jones, G. R. (2016). Strategic Management: Theory and Cases — An Integrated Approach (12th ed.). Mason, OH: Cengage Learning.

Scheiber, N., & Chen, B. X. (2016). In Verizon strike, blue-collar stress hits the sidewalk. The New York Times. Retrieved from https://www.nytimes.com/2016/04/14/business/verizon-workers-strike.html

Verizon. (2017). Our company. Retrieved from http://www.verizon.com/about/

Appendix

Verizon's Consolidated Net Income — Historical and Projected (in $'000s)

2015: $17,879,000 | 2016: $13,127,000 | % Change: (36.20%) | 2017 (Projected): $15,096,000 | 2018 (Projected): $17,360,000 | 2019 (Projected): $16,839,000

Quarterly Performance (in $'000s)

2017 Q2: $4,362,000 | 2017 Q1: $3,450,000 | % Change: 20.91% | 2016 Q4: $4,495,000 | 2016 Q3: $3,620,000 | % Change: 19.47%

Best/Worst Case Scenario for 2017 (in $'000s)

2015: $17,879,000 | 2016: $13,127,000 | % Change: (36.20%) | Best Case 2017: $15,752,000 | Worst Case 2017: $14,964,000