Case Study on Verizon
Verizon is a communication company operating in the American soil. It diversifies its services by incorporating wireless communication, television broadcast and internet services. This has enabled the organization face competition in the market which is in the rise due to diversification. The American economy experiences intensified competition from multinational communication networks such as Fox news, Cable News Network (CNN) and American Broadcasting Company News (ABC). This means that any organization operating in this industry have to come up with diverse strategies in conducting its businesses in order to remain relevant as well as ensure there is business continuity. The company came into beings as a result of mergers of two institutions formerly owned and operated by baby bells. There are several challenges the entity is facing that ranges from social, economic, finance, environmental, legal and managerial skills. They must be dealt with in the mean time if the entity is determined to register changes in the future. This case study explores the Verizon operating mechanisms through SWOT analysis.
Verizon has been intrigued in managerial tussle hence affecting the level of production and efficient services delivery. This is reflected in the company’s financial statements. These issues need to be dealt with by the entity in order to avert the negative effect that may come along with the happenings. This article will look at these issues extensively by analyzing the organization in terms of financial and managerial strengths and weaknesses.
In this section, the analysis addresses Verizon Accounting, Administrative Studies, Economics, Finance, Management and Legal aspects. In regards to account affairs, Verizon has registered the following financial results in the first quarter of the year 2016. This case study involved conducting a SWOT analysis on Verizon to ascertain its standing in the market.
The organization has amassed wealth and skills essential to move it up the ladders of prosperity.
Competitive Strength Assessment
The strength will be discussed into details below. First, the entity has maintained its services through integrated communication provided to consumers at all times. This makes the company competitive in the sense that consumers get what they are looking for within seconds so long as they are connected to the official site. Second, it utilizes its high speed fiber DSL systems implanted in various sections in the country. This enabled the organization makes sales amounting to $ 26 billion in the year 2010.
The organization has a strong taste for diversity where wide services are rendered to consumers. This includes distance connections, local calls, wireless connections as well as broad connections. The area covered by the company is wide enough to guarantee massive sales of these services. Most cities in Europe and United States are served by the entity through diversified services. At the same time the revenue earned for a singles share stood at $37.66 which is extremely high and shows the level of product acceptance in the market. This has been attributed to the organization marketing and sales techniques. In marketing, the entity involves various platforms to help reach out to as many people as possible. Another strategy includes managerial skills and defined goals for the business entity. Having well and organized goals help employees perform their activities with easiness (Mitchell, 2010).
This is because of the clear procedure and regulation guiding their actions within the entity. Proper Goals are important for each and every player in the market because they aid spearhead the purpose of the entity. This is attributed to the efficient hiring process that involves the employment of experts in various fields. The candidates are sourced out from formidable institution hence able to provide high end services to clients at any given time. Employees are the core players in the delivery system because they serve consumers on a one on one basis. This means that they need to be motivated so as to be productive. One of the methods through which employee motivation is carried out by the entity is through incentives and bonuses. Therefore, individual workers feel appreciated when the company recognizes their efforts in serving clients to their ability. These are some of the strengths that the entity prides having been able to implement to date.
These ratios are indicators of the firm’s welfare. First, the entity is considered to be solvent or insolvent depending on these ratios. They also give prediction about the future as well as offer advice to manager about the next action to take in order to end the statement. Apparently, Verizon is trending on the wrong foot in terms of development and current ratio analysis. Cash in-flows do not show a growing trend from one year to the other. This infers that the entity is stagnant in its investment portfolio as well as in the day to day activities. The following ratios are observed for the entity financial statements as at December 2015.
Current Ratio=current asset/current liabilities
Current assets stood at $22,280
Current liabilities included $35,052
Therefore, current ratio =22,280/35,052
=0.64 while the industry performance stood at 0.75.
At this point, Verizon current ratio goes down year after year. This is a situation to call for alarm for the entity as it struggles to relevant and competitive at the same time.
Quick Ratio is another measure of the sales activities and how current assents are changed to cash in the entity (Mitchell, 2010). The formula is as follows:
Quick ratio = Total quick assets ÷ Current liabilities
= 18,277 ÷ 35,052 = 0.52
The results above have an effect on the financial activities geared at making profits for the entity.
Cash ratio is the financial indicators of the progress and organization status. Cash conversion ratio is an important indicator of the activities involved in money circulation.
Cash ratio = Total cash assets ÷ Current liabilities
= 4,820 ÷ 35,052 = 0.14
Interpreting the results, cash ratio is on a declining trend from 2014 henceforth. It is contrary to the management endeavor which needs to expend its territories beyond regional operations. Comparing different financial year, the company trend is deteriorating from subsequent year to the other.
The entity has not been in a position to harmonize its debt status for quite a long period of time. This means that most of its activities are financed through debt. In a situation where an organization is unable to manage the debt, the entity becomes solvent and shareholder’s capital and interests reduces in value. This means that the entity is unattractive to shareholders in this section of the industry. Some management strategies have fueled the situation such as lack of international presence and reduced care centers in the country. Verizon is a local and regional operator that has the potential to broadcast and offer services in the international market. However, the entity has limited itself to only two countries which are United States and Europe. This makes it unpopular to the world population which is eager and ready to consume these services. The youthful population in the world spends a lot of time on the internet platforms hence a niche for any business that operates in this sector. Due to these limitations, profitability for the entity remains at 4% or below for the last twenty-four years (Mitchell, 2010).
It can be seen that the entity is not making progress in terms of expansion and growth in terms of financial capacity. These features discourage the entity from venturing into new markets while putting it at a disadvantaged place in regards to competitive advantage. Rival companies such as CNN utilize the platform to advance their business undertaking in the world as the communities embrace the new way of life. This creates market for the entity which is determined to air out timely news to users of such products. The youth get engaged into the system in a way that they comment and communicate to the entity regarding different activities. This help make changes to the current conditions to meet client’s needs and specification. In so doing, the entity attains its goals in terms of sales and customer satisfaction.
Core Values Analysis
The organization core values include offering standard services to consumers and increased transparency in business undertaking. It has been in a position to provide standard and quality product to clients in the region where it operates. Therefore, it has been branded as one of the key stakeholders in the development agenda amongst many other social activities that it directly or indirectly contributes towards.
Environmental Analysis –Porter’s Five Forces
The environment surrounding this institution involved with high bargaining power of consumers with low threat of new entrants. The reason behind this is that the entry fee is quite high for start-up companies to engage and invest in the market. Globalization has deteriorated the situation in the sense that international companies are dominating markets hence making it less attractive to new investors. Industry rivalry is at a higher edge because of massive international players who stretches their muscles to uptake any niche that arises in their line of business. This leaves many entities with no chance to entry hence chose to leave the market. Consumers also believe in brand sold to them by bog organizations hence less likely to purchase products from unknown and new entrants. The third item in the porter’s model is the bargaining power of suppliers of services such as the electricity and other services (Srinivasan, 2010). Host companies for internet services enable the entity to offer services at a competitive price. This has earned the entity some advantages such as being able to work out and set prices for the market where it dominate. Competitors have to struggle to equalize or offer services at the prevailing market prices hence an advantage for Verizon. The last item is threat of substitute from parallel rival companies such as BBC and CNN. Their services are moving beyond clients expectations such as introduction of destructive strategies. An example of such strategies includes internet bonuses and gaming programs. The youth are attracted to such strategies hence increase in population for the entity (Mitchell, 2010).
Discussion of Opportunities / Threats
The following opportunities face the entity. First, customers are increasingly becoming aware of the telecommunication and internet network. To be specific, around 150 million people within UK, Canada and Europe region are depending on these sites for information and communication purposes. Individuals companies will have to fight and tries to their level best to win a portion of this market. Thus, the future of Verizon will depend on the rate at which the entity utilizes these opportunities at its disposal. In addition, the organization can also increase its services through diversification and venturing to new and destructive businesses that will wipe out competition in the market and in the region where they locate their businesses. The world is laying on optical infrastructure which is a big boost for telecommunication businesses. This means that no cost of wire connection will be incurred by entities in their endeavor to serve the global community. Thus, Verizon is set to benefit from these activities in one way or the other by moving from its current platform to wireless platform (Srinivasan, 2010). Consumers also will shift to the new platform in the near future hence boost the organization activities.
These threats come hand in hand with opportunities. First, the entity is unable to handle the huge number of complaints that consumers’ advances. The network in place is not capable of running all these claims and give timely feedback. At the same time, customer records end up being lost due to obsolete systems as well as fewer customer centers where consumers can leave their claim and get advice. Rival organizations are taking advantage of these weaknesses to promote their businesses.
Strategic Group Map
The entity is pursuing a number of strategies and goals. They range from financial, consumer, internal business processes and learning and growth. In regards to financial status, the business maximizes on the shareholders capital. The reason as to why the company is unable to maximize capital rendered to them by shareholders is because the market is dominated by rival’s institutions. This has forced the entity to adopt new measures in regards to financial management such as market development and penetration. Concentration on existing market offers hope for expansion and penetration for the business. It gives Verizon command over some of these markets at the local setting. However, this is not a guarantee that it will be at the top for a long time rather it will make profit in the mean time (Srinivasan, 2010). Internal processes are on the verge of implementing new system to help increase profit for the company. Streamlining these processes is an important step in building a successful endeavor. The last aspect is about employee’s growth and development. One of the key advantages of the business is that it hires skilled workers who perform good work. These employees will also go through training to ensure that they meet the set standard in performing their day to day activities. The map is represented below.
Figure 1 shows group map.
From the figure, Verizon has invested a lot in building its customer base and improving its sales activities by streamlining the goals to organization systems. From employee training, finance maximization, growth strategies and improved internal operations, the company is determined to pursue its profit and customer service maximization goals (Singh, 2014).
Key Success Factor
The success factors include skilled work force and market penetration. The two aspects have enabled the company make the best out its available resources. Professional managers make formidable plans that employees execute to the advantage of the whole enterprise. The hiring process is such that it intends to eliminate the candidates to ensure that the most qualified personnel assumes positions of leadership. They spearhead successful plans and sales endeavor hence improving the status of the company. Penetration and concentration of certain markets has increased the popularity of the entity and brand in the local markets (Singh, 2014).
The souk is segmented into different sections depending on the nature of services consumed. The young generations are targeted through the social media and internet platforms. This ensures that they participate favorably to the organization and activities hitherto. The social setting is such that they conform to cultural and religious setup. Thus, the material communicated through the entire social platform that Verizon uses are strictly cognizance of these issues. Technology has revolutionized telecommunication industry in the sense that individuals work and perform duties in accordance within minutes at the click of a button. This makes work easier while geographical limitations are eliminated by globalization. The older generation is served through mass media such as television and radio stations (Singh, 2014).
Discussion of Strategies
Verizon utilizes diversification strategies to penetrate the market. Different customers order diverse goods and services which must be provided on defined platforms. Diversification in this context means to come or invent new ways of doing things. It comes in forms of communication platforms diversity where the entity invests in different channels. These channels include social media, television network, and internet services and call services. The company will still make profit despite one of the section in the economy doing badly. It is because when one section is experiencing low activities the others may be doing well. Thus, at any given moment the entity will be making sales despite economic cycles in different sections. Moreover, Verizon is making strides towards internet networks greatly embraced by the youths (Kasi, 2015). It insinuates that the company is focused at tapping the growing online community which is growing day in day out. Globalization has also come along the internet platforms. An entity is able to serve a wide range of consumers through global platforms enabled by internet services. There are indications that the entity want to move to global platforms as a way of counteracting competition. However, its regional presence and concentration is discouraging this move which will see it rise to the topmost level (Singh, 2014).
In order to go worldwide, the company need and is exposed to numerous opportunities which include globalization and acquisition. The new systems in the world such as market liberalization have led to the emergence of virtual market. This is where individual and groups order goods and pay for them on online platforms while delivery is carried out by the organization in case of tangible goods. This is a niche that can be put into proper use by Verizon to serve the world population. It is not only effective but also time saving. People are also able to work within their budget as they pay less for the transportation costs. In consideration to acquisition, Verizon is better placed to go ahead and acquire small telecommunication companies in different regions and upgrade them to international standards. The end results would be increased traffic towards the entity as global society uses their platforms for various purposes. Its integrated systems can help change the manner in which small and medium companies in the world perform activities. In the event they acquire these companies, the financial status will change positively.
My recommendation to the entity is to improve its accounting activities to ensure that value is derived from money rendered. This is a sure way of saving money for investment in activities such as going to international souk. Furthermore, Verizon need to consider moving to global souk as a way of expanding its activities.
In ending this discussion, Verizon is a company that has full potential to move into new platform if the managerial issues are looked at and solved before implementing the strategy. Some of the reasons as to why the firm is very strong in the industry involve skilled labor and ready souk for products. It would therefore be an essential thing to move towards world souk that presents numerous and massive opportunities. Competition is increasingly moving to higher level in terms of service delivery and innovation. Shifting to these networks, Verizon will be required to source for funds from different sources while improving their diversification status. This is the only way to make it in the saturated market for service as well as other products. Consumers change in preference and taste also makes it difficult for new entrants to come into the souk.
Kasi. (2015, January 10). Verizon SWOT Analysis | Marketing Mixx. Retrieved from http://marketingmixx.com/marketing-basics/swot-analysis-marketing-basics/157-verizon-swot-analysis.html
Mitchell, R. B. (2010). Global environmental assessments: Information and influence. Cambridge, MA: MIT Press.
Singh, P. (2014). 10.5937/industrija42-5782 = Verizon acquired Vodafone: Analysis of market reaction. Industrija, 42(3), 163-182. doi:10.5937/industrija42-5782
Srinivasan, S. (2010). SWOT Analysis. Wiley International Encyclopedia of Marketing, 22(3), 132-145. doi:10.1002/9781444316568.wiem01057
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