Future of Verizon Wireless = VERIZON + ALLTEL

Commercial

Tuesday, July 8, 2008

BUSINESS STRATEGY

Based on operating income, Verizon Wireless is the most profitable wireless communications provider in the United States and their goal is to continue to implement the key elements of their strong business strategy of global differentiation. The focus of the company is on providing a high-quality service that is designed specifically to meet the growing needs of the customers. The company’s strategy entails a global dimension as it is a joint venture of Verizon Communications, covering a population of 260 million within the United States, and Vodafone Group, which is the largest mobile telecommunications network company in the world, headquartered in England, UK. Verizon continues to fulfill all of the company's promises and is proud of their growing expansion within the wireless industry. The following is a News Center article explaining in detail how Verizon Wireless builds on their business strategy to provide superior service, "Nation’s Leading Wireless Carrier Delivers the Fastest Commercially Available High-Speed Wide-Area Network in the United States". In order to be able to differentiate their service from other competitors, Verizon Wireless tries to accomplish the following objectives:







      • Improve data transmission rates through EV-DO [evolution data optimized] technology




      • Continue to expand the wireless data, messaging, and multi-media offerings for both customer and business segments




      • Focus on efficiency and satisfaction rates in customer service, distribution and product development divisions

      STRATEGIC MANAGEMENT & MICHAEL PORTER'S FIVE FORCES ANALYSIS

      1) Buyer Power
      The Buyer Power that is used by Verizon Wireless is relatively high due to competition. The way Verizon Wireless is trying to reduce this Buyer Power is by creating a competitive advantage that will attract more customers thanks to the quality and innovation of their services as well as products and features such as GPS systems offered in cell phones. Verizon Wireless is also improving their customer service and providing a high network quality through new technologies like EV-DO, which improves data transmission rates and creates a competitive advantage in this buyer powered industry.



      2) Supplier Power
      Verizon Wireless has many suppliers that provide different varieties of wireless telephones and devices such as Smartphones and PDAs’. Main suppliers are Samsung, LG, Blackberry, Motorola, Nokia and Palm. Each one of them offers a distinct range of colors, sizes and innovative technologies, which are geared towards a wide range of targeted users. Therefore, the supplier power is low as the customers have many choices to go with.

      3) Threat of Substitute Products or Services
      There are many different plans offered by Verizon Wireless to suit each individual’s needs. It ranges from basic phones and services to elaborate executive corporate plans and sophisticated touchscreen devices. A possible threat could be Nextel technology that uses walkie-talkie devices popular in commercial companies and mainly used by construction workers. Also, new internet based communication software could possible threaten the revenues in the wireless communications industry. As the technology advances, it is much more accessible and feasible to use Internet and portable laptops as means of free communication that could easily substitute for cell phones and paid wireless network services. For instance, Skype program is used all over the world as a no cost telecommunications service with the advantage feature that shows a visual image of the person you are having the conversation with.

      Also, in the wireless network industry it is common for companies to require a contract in order to create and control switching costs in case customers decide to switch to another company. Verizon wireless charges fees to avoid losing existing customers to their competition and to lower the threat of subsitute products or services.


      4) Threat of new entrants
      The threat of new entrants is low in wireless network industry as it is a quite hard place to gain access to as a new service provider. However, the companies have learned the advantages of the joint ventures and it is much more common to see wireless companies merging together to benefit from all of the advantages from both companies at the same time. It creates the threat as if it was a new entrant as the competition is much higher and companies must adjust their strategies in order to keep their competitive advantages.

      5) Rivalry Among Existing Competitors
      AT&T is Verizon's biggest competitor because they have the highest number of customers in the United States. They have been in the wireless cell phone market longer than Verizon Wireless. They also have an advantage of a roll-over minutes program, which allows the customers who do not use all their minutes in one billing cycle to carry them to the next one. The USA Today article, "AT&T eager to wield its iWeapon", depicts the fierceness of the rivalry between Verizon and AT&T, where both companies claim to be No.1 in the industry; AT&T for their customers and Verizon for their revenues. However, on June 5th, Verizon has announced that the company made an agreement to take over Alltel and consequently it will transform Verizon into the largest wireless network in the country. The article posted on Forbes.com, "Verizon Buys Alltel; Takes Over the Wireless World" explains the advantages and disadvantages of this breaking-news deal.

      BUSINESS INITIATIVES AT VERIZON WIRELESS

      First major business initiative used by Verizon Wireless is customer relationship management system [CRM]. The goal of this system is to reduce as many negative interactions and provide customers only with positive experiences. It includes such functions as sales force automation and customer service and support. Verizon Wireless is one of the very few companies that offer their customers the opportunities to save money through online services. For instance, the wireless carrier will guarantee that customers who pay their bills online will receive emails notifying them if a different price plan better matches their usage needs.

      Verizon also uses Supply Chain Management [SCM] as their business initiative. The article from NetworkWolrd by Jim Daffy talks about how Verizon got into supply chain management in 2007. It provides customers with two main offerings such as custom supply chain managed services and invoice automation services.

      Also, E-collaboration plays a great role within Verizon Communications. As a matter of fact, Verizon introduced a ‘collaboration calculator’ in 2007, which is a Web-based tool designed to help large businesses and government agencies quickly and simply measure the effectiveness of existing collaborative initiatives and determine potential next steps for improving teamwork and performance. In conclusion, Verizon Wireless definitely uses a top-line initiatives and activities. The company focus is on increasing revenues and reaching new customer segments and offering new products all at the same time. The company has been rewarded for fulfilling their mission to be recognized as the U.S. market leader in wireless industry and continues to get rave reviews around the nation. Few of the recent 2008 Awards are as follows:



      • Best Place To Work In IT
      • A Leader In Customer Satisfaction
      • Recognized for Embracing ‘Green’ IT
      • Top Company For Diversity
      • Leaders in Loyalty
      • Verizon Wireless Is “Carrier Of The Year”

      E-commerce allows Verizon Wireless to build on the relationship with millions of their customers, consumers and companies from all over the world. The technology allows anyone to take advantage of the features available on their company website: www.verizonwireless.com at any given time or from any place or location in the world. E-Commerce offers the ability of e-advertising through sites such as You Tube, which posts videos with Verizon’s commercials and reviews of different products offered by the company. Through the technology of Internet, consumers and companies have a wide variety of information available online that relates to Verizon Wireless. For instance, materials such as newspaper articles, news videos, awards, financial data, company information and much more is available online with a click of a mouse. In addition, the company is able to offer a much broader variety of services through E-commerce. Debra Carroll, a previous vice president of Marketing for Verizon Wireless, concluded the following: "Our Internet strategy is focused on giving our customers wireless access to the Web-based information they want, when they want it,"… "We want our customers to have fast and easy access to information and m-commerce from their digital handset, especially when it comes to e-shopping for the best deal." Verizon Wireless customers are able to access comprehensive database to receive pricing and manufacturer information on millions of products directly from their Web-enabled digital phones. Also, mPoria – a provider of e-commerce mobile solutions and GameStop – a global video game retailer came out with a feature of ‘EB Games by mPoria’ available to Verizon Wireless mobile customers. Other features like mobile stores for gifts and flowers became available to Verizon Wireless users. At this point, Verizon Wireless is using every kind of E-commerce dimension in order to support their brick-and-mortar traditional sales.


      Verizon wireless uses two types of E-Commerce which are B2B (Business To Business) and B2C (Business to Consumers). These two forms of e-Commerce help Verizon expand their market not only to a consumer market but also to any business or corporation that requires their services. Verizon offers specially discounted rates and plans for businesses. In addition, Verizon also extended its services to be offered to the government. As listed on the company website, ‘It’s the network for Government’: “Wireless communications, wireless Internet access, and wireless collaboration are critical to helping the Government operate effectively and efficiently. We are dedicated to partnering with Government and industry leaders to support mission-critical demands with wireless voice and data solutions designed for the specific needs of the state, local, and federal government sectors.”


      The type of marketing mix adopted by Verizon includes the online ads, pop-ups, and affiliate programs. The company has the online ads on Google, MySpace, YouTube, E-bay, any website that will attract their target market's attention. Our affiliate programs are those websites that also provide our services as retail store websites like Best Buy, Wal-mart and Circuit City.
      Verizon allows their customers to pay their bills online within their own online account that grants them access to the Electronic Bill Presentment and Payment (EBPP) system which also has the option for the electronic check payments that allow customers to take the money straight out of the saving or checking accounts.

      7 comments:

      Chante' M. Fernandez said...

      Great Post :D

      Tom Abraham said...

      Excellent work. You could have mentioned switching costs and entry barriers.

      Richy123 said...

      Hi,

      I too agree that Verizon wireless is the most profitable wireless communications in US. It creates multiple streams of income. Thanks for sharing the information on Verizon wireless.

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      Business Strategy