Verizon SWOT analysis MGMT 303 DeVry University Julia Smith May 19th, 2012
Verizon Communications Inc. is a provider of communications services with for operating segments: Domestic Telecom, Domestic Wireless, information Services and International. Domestic Telecom is services principally represent Verizon’s telephone operations that provide local telephone services in 29 states and the District of Columbia. Domestic Wireless are products and services which include wireless voice and data services and equipment sales across the United States. The Information Services segment encompasses Verizon’s domestic and international publishing businesses, including print SuperPages and electronic SuperPages.com directories, as well as Website creation and other electronic commerce services. This segment has operations principally in North America and Latin America. The International segment has wire line and wireless communications operations and investments primarily in the Americas, as well as investments in Europe. The Company was formed on June 30, 2000; with the merger of Bell Atlantic Corp. and GTE Corp. Independently both companies managed its own success. GET had over 7 million wireless customers, close to 35 million land lines distributed between the United States, Canada and the Caribbean. Bell Atlantic enjoyed over 40 million mobile customers; at the moment was the world’s largest directory information service provider. Verizon’s Mission Statement is as follows: “As a leader in communications, Verizon's mission is to enable people and businesses to communicate with each other. We are also committed to providing full and open communication with our customers, employees and investors.” (Verizon, 2012)
Strength: Top Wireless Provider in the U.S. Verizon Communications Inc. is currently the top performer as a wireless service provider; such acknowledgment serves by itself as a means to attract more consumers and business opportunities. Evidence of this is based on the fact that the company has over 93.2 million customers within the united states, from a total of 101.1 million subscribers on total connections (Thonis & Varettoni, 2010) which is ahead close to a quarter of a million from the second largest provider, AT&T Mobility, in Q3 2010B Strength: High-speed data network in all major markets Verizon Communications Inc. has the most comprehensive 3G network, and it wins awards every year for coverage, consistency, and call quality. Awards such as PC Magazine’s “Services & Reliability Survey (S&R) and the “J.D. Power and Associates satisfaction surveys”. (Segan, 2009) The company has a relentless focus on coverage and signal quality, which makes it’s a primary choice for wireless data network service provider. It provides better coverage and service overall than competitors like sprint and AT&T. Weakness: $55.6 billion in long term debt High debt levels and large financial leverage ratios lead any company to be unable to cope with the recent market trend. This leads companies to have difficulties should overall business activity take longer to revive as consumers and enterprises become more selective in their spending. Among the risks that can be encountered are potential business slowdowns, weak credit profiles and increased competition. “Lower overall top-line sales among carriers are expected to continue weighing on capital spending decisions — a major problem for equipment vendors. Companies are expected to remain focused on balance sheet improvements, financial discipline and free cash-flow generation. Unfortunately for the equipment vendors, the method of choice for improving free cash flows remains disciplined capital outlays.” (Research, 2010) Among the ways for the company to mitigate this effect is to place objectives to increase income so as to help pay down debt, up to a point to match the sectors average within a time span of 3 years. Decrease in cost by increasing efficiencies in order to match income goals. Weakness: International Roaming. Verizon phones and data cards roam to about 50 countries, including Canada, Mexico, most of the Caribbean, parts of Latin America, China, India, Israel, the Philippines, and New Zealand. Only a few Verizon devices can access networks in Europe. While Verizon is slightly ahead of Sprint's thin roaming list, AT&T's 215-country international roaming is much more globally compatible. Through expansion, technological improvements and more investment leading to continuous network and product upgrade, should lead Verizon to better compete in international services. With emerging competition from countries like China, it is a matter of survival to act or not.
Opportunity: Increased usage of wireless services, specifically 3G and 4G. Less than a decade ago, the telecom operators in the U.S., Western Europe, and Japan were upgrading their existing networks to high-speed 3G technologies. Now the world telecommunications industry is about the switching to the next-generation super-fast 4G technologies. The major thrust for the telecommunications sector is coming from within the industry due to continuous network and product upgrade and invention by industry players. With the Alcatel-Lucent contract, it should help to better support Verizon Wireless “ongoing 3G network expansion and 4G/LTE network build out”. (Alcatel-Lucent, 2010) Opportunity: More Exclusive Product Offers Apple gave AT&T exclusive rights to the IPhone when it was released, and the world was hit by a frenzy of new technology, customers waited hours in line just to have this new phone. Now that the IPhone is no longer exclusive to just AT&T, Verizon has the opportunity to find a product or service that is exclusive only to them. Unlimited data rate plans are very hard to find and new smart phones are being introduced almost daily it seems. So if Verizon were able to offer an exclusive smart phone by a name brand carrier or bring back the unlimited data rate plan, it would give them a competitive advantage.
Threat: Increased Competition The markets for broadband wireless solutions are emerging rapidly in terms of technological innovation. While wireless/wireline service providers have started entering the video services market for cable operators, the cable multiple system operators are in turn started entering the telephone business for the small & medium sized business enterprises. Technically innovative products have been the silver lining for the telecommunication industry in an otherwise tough environment. This is tied to Verizon’s Opportunity in increasing 3G and 4G coverage both nation and worldwide. With the massive growth of smart-phones is maintaining and impressive trend, providing the opportunity to capture and retain customers with better, and more exclusive, product offers and services. Threat: Weak Credit Profile Over the near-term, telecom companies may be exposed to high debt levels and limited liquidity, which puts a premium on sustainable cash flow to service debt obligations. As a result, telecom companies may have free cash flow impacted by a slowdown in demand.
This is tied to Verizon’ s long term debt, which is why it needs to focus in increasing its profit levels by acting and playing smart in al already demanding, highly competitive and global telecommunications market.
Verizon Communications Inc. is without a doubt a leading provider of wireless services. It has continued to show that it can hold its grown, which is why the U.S. current top wireless provider, with High-Speed data network in all major markets that rivals are trying to catch up. Due to recent economic recessions, it’s not hard to believe that this organization has long term debt that can cause potential growth slowdown. The telecommunications industry encompasses a lot of technology-related businesses. Besides the legacy local and long-distance wireline phone services, telecommunications also include wireless communications, Internet services, fiber optics networks, cable TV networks and commercial satellite communications. Verizon only needs to continue providing the world class service it does today, continue expanding it’ s coverage with faster connections, smarter product offers and maintain customers service levels.
References
Alcatel-Lucent. (2010). Press Releases. Retrieved from Alcatel-Lucent: http://www.alcatel-lucent.com
Research, Z. I. (2010). Analyst Interviews: Telecommunications Industry Outlook. Retrieved from Daily Markets: http://www.dailymarkets.com
Segan, S. (2009). Verizon Wireless High-Speed Data (EV-DO). Retrieved from PC Magazine: http://www.pcmag.com
Thonis, P., & Varettoni, B. (2010). News Center. Retrieved from Verizon: http://news.vzw.com
Verizon. (2010). Who we Are. Retrieved from Verizon: http://www.verizon.com 