Verizon Wireless Strategic Management Essay Example

systems — surpassing any U.S. local or long-distance company and enough to loop around the Earth 390 times. (Investor.Verizon.com) Verizon Wireless provides services to over 51 million users across 49 states. The wireless network of Verizon is wholly digital with in excess of 160 switching facilities and 23,000 cell sites spread all over the nation. (Investor.Verizon.com)

Between 2000 and 2005, Verizon made substantial investments exceeding $70 billion in technological enhancements, upkeep, and extension. The company managed to slash its total debt by over $20 billion between 2000 and 2002, bolstering its growth in the broadband and wireless sectors. Verizon achieved this by divesting non-core assets like wireline access lines in Alabama, Missouri, Kentucky in 2002, and Hawaii in 2005. Thanks to these actions, Verizon has managed to provide significant initiatives such as broadband services for wireline and wireless users across the United States.

Towards the end of 2005, Verizon introduced FiOS TV, a superior and swift video service compared to the prevailing broadcast and broadband TV programs. By 2005's close, over a million households were subscribers to Verizon's FiOS TV service. On a macroscopic level, the telecommunications sector is progressing at the speed of the latest technology. The sector primarily delivers services like telephone, television distribution, and data transmission such as the internet. These services are made available to customers through a comprehensive system comprising wires, computers, transmission devices, satellites, and receivers.

Telecommunication service providers' tasks include constructing, sustaining, and running networks to connect with customers. This can be done not only by physically installing wires, erecting transmission towers and linking switching centres but also by purchasing already existing facilities or leasing capacity on another firm's network. Even

in the face of an economic downturn and the looming threat of recession, communication devices like telephones and cell phones have become as vital for us as water and air. The industry is witnessing transformations with rival companies merging through horizontal integration.

There were several significant mergers in the telecommunications industry, including Verizon's acquisition of MCI in 2005, Cingular buying AT&T in 2004, and Sprint taking over Nextel towards the end of 2004. The US dollar depreciated to $0.74/ˆ by 2004's close, creating economic instability. Fuel prices also increased disproportionately, with yearly rates skyrocketing above 50% - 60% (eia.doe.gov), causing concern as the price per barrel jumped from a mere $25 in September '03 to $60 in August '05. Similarly, there was an increase in unemployment levels to 6% in 2003 which remained high at around 5-6% up until 2005.

Each day, local news channels relay a number of elements instilling worry and distress among the people of the United States. The US Citizens, afraid of an impending economic downfall, harbor a drive to economize regardless of whether or not the fear is validated. This urge to stash their cash skews repercussions that end up striking corporations which eventually hits the economy even harder. The Federal Communications Commission (FCC) diligently supervises the regulations in order to maintain an equitable service experience for customers, involving aspects such as service charge and the duration a customer has to wait on hold to acquire aid or subscribe to a service.

Established in the 1930s, the Federal Communications Commission (FCC) is responsible for enforcing rules within the cable television industry, including those pertaining to advertisements aired on cable networks. Alongside the U.S.

Department of Justice, it helps prevent monopolies by overseeing corporate combinations with regulatory scrutiny. While its control over such mergers is limited, companies intending to conduct business or offer services globally must adhere to specific government regulations. Acknowledging this requirement, European regulators have agreed on ensuring equal opportunities for Voice over Internet Protocol (VOIP).

In the U.S., telecom companies have sued state regulators seeking an exemption from wireline usage fees. Unlike telephone networks, data networks have been mostly free of regulation and taxes, a strategy meant to promote expansion. This, however, is causing worry among groups like the Multistate Tax Commission, who fear that services akin to internet could put at risk billions of dollars in state fund allocated for various programs, such as universal phone service, the 911 emergency services, and the e-rate technology fund for schools.

It appears that federal regulators are contemplating either granting VoIP providers an exemption from existing regulations or instigating the creation of new ones. The Hispanic minority market in the U.S is indisputably expanding, with figures projecting a growth from over 10 million households currently to 13.5 million by 2010 - a noteworthy surge compared to less than 6 million in 1990. This demographic should be taken into account when devising and executing new technologies or plans. Additionally, there has been a recent spike in environmental consciousness across America which has resulted in a deeper comprehension of our environment and our collective duty to safeguard it.

Employing eco-friendly products in this sector is advantageous to attract clientele. The constant advances and rapid evolution in telecommunications, such as cell phones, are pronounced across generations, reflecting the extent of our technology use. For

instance, programming a phone number into a mobile device might be an overwhelming task for a senior citizen while it's mundane for a 10-year-old. Today's children are nurtured in an era filled with computers and electronic devices, representing a significant shift from four decades ago. The demand for telecommunication fluctuates based on varying situations.

Presently, half the American population possesses a cell phone (Chen, CBS NEWS). The pressure for children below 16 to own a cell phone comes from the desire to conform to societal norms. Similar to owning a wrist watch two decades back, not possessing a cell phone now raises eyebrows about one's upbringing. It's a perceived necessity for youngsters to appear trendy among their peers. In contrast, for older adults aged 50 and above, the requirement of having a cell phone arises out of a practical need for an accessible method to reach out for help in emergencies - be it dialing 911 or contacting family in case of events such as a flat tire.

Finally, the necessity to maintain contact with family members is emphasized. The growth of the Hispanic market has significantly influenced this necessity due to the more economic rates for long-distance calls through cell phones in comparison to the cost of regular landline calls. It should be noted that apart from the Hispanic market, many Americans who relocate from one state to another also greatly benefit from using cell phone services over landlines.

In conclusion, the progression of the telecommunications industry has bolstered social communication via the cable industry. It has facilitated a platform for networking, and serves as an inspiration for communal gatherings during special moments like the Super Bowl

or through online chat rooms for finding potential partners or assisting with school tasks. The enhancement of various industries can be attributed to telecommunications, through the use of internet services and other communication channels.

One way this support manifests is through the growth of online course offerings from universities. This permits students who may be unable to attend traditional classes due to travel schedules or busy lives, to register and complete their coursework from the comfort of their own homes. Within the swiftly advancing and evolving realm of technology, nations like Japan and Korea employ handsets that eliminate the necessity for a keypad. The Asian market is often viewed as technologically superior to the United States, posing a continued risk to the industry as long as they keep innovating and manufacturing products at the pace they have maintained over the years.

The implementation of third-generation networks, initiated in Japan back in 2001, is still ongoing. The technological advancements in Asia bring about numerous advantages, such as the utility of Wi-Fi hotspots that significantly enhance our industry and expands our service range from our base in the United States. However, with these advancements, there arises a notable challenge. The industry must constantly stay alert and respond to the production of superior mobile phones by competitors.

Presently, camera-equipped phones dominate 85% of the mobile phone industry, a notion that was only established a few years ago has rapidly captured the market. An evaluation based on Porter's Five Forces indicates Rivalry - The level of competition varies in different industries. This competition is gauged by signs of industry concentration. The concentration ratio (CR) serves as a measure for this. The CR

represents the market share percentage owned by the top-four firms. An industry is deemed disciplined, if the competition among firms is relatively low.

Different strategic actions can result in an increase in competition, these may include modifying the pricing structure, enhancing product uniqueness by upgrading attributes, employing vertical integration strategies and by enforcing stringent quality control on suppliers. The severity of rivalry is influenced by several factors such as the number of businesses in the sector, market growth rate, high overhead costs, elevated storage expenses, minimal changing costs, and prohibitive exit costs. The looming menace of substitute goods can restrict the potential of industry companies when it comes to price hikes.

Within the telecommunications sector, the consistent emergence of new mobile phones poses a challenge. This is because new models tend to devalue older ones, compelling companies to reduce their prices in order to clear stock. The buying power also significantly influences this industry. When there are multiple suppliers against a single buyer, the latter gains strength and can dictate product prices. However, buyers' power diminishes when there is a large pool of them, or when switching costs are so high that moving to another product becomes prohibitively expensive.

The power of suppliers in the telecom sector is currently diminished due to the significant customer presence and concentration of buyers. Mobile phone manufacturers produce the same phones for a variety of markets and retail outlets. The weakness in supplier power might intensify with the increasing prices of fuel, escalating labor costs, and rising component expenses. The final force among the five forces is Entry Barriers, or the risk of entry - At the moment, the greatest risk in

the telecom industry is the horizontal integration pursued by rival companies.

Various start-ups have attempted to secure a place in this sector but have failed to rival the comprehensive service packages provided by the leading companies. These major firms don't only deliver a single service, but rather spearhead three or four simultaneously. In a Competitive Analysis, Verizon Communications, Inc is ranked just below AT&T, Inc. Together, Verizon and AT&T control over half of the telecommunications industry's Market Cap. Following them are Qwest Communications International and Sprint Nextel Corporation which hold the second and third positions respectively in the sector (derived from Finance.Yahoo.com).

The telecommunications industry is home to 11,000 companies generating an overall yearly income exceeding $400 billion. The main contributing factors to a competitive edge in this sector are technological progression and the expansion of commercial activities. A firm’s profitability is hinged on streamlined operations and effective marketing strategies. Big companies have the edge as they can cater to a extensive client base through a highly automated service. Conversely, smaller companies can only contest in minuscule markets where they provide specialized services, a case in point is Metro PCS in Miami.