Verizon Wireless SWOT
Verizon Wireless is a mobile network company operating under the legal name of Cellco Partnership d.b.a Verizon Wireless. The company serves 108.7 million American customers offering a wide array of products and services ranging from data, messaging to wireless voice communication. The company holds the majority of the United State's wireless communication market, making them the largest in the country. Apart from line and wireless communication, Verizon Wireless also offers service for online and print directory. This is because the company also operates one of the most expansive IP networks in the entire world (Yousigma.com, 2009). Having such technological structure provides the company with a bigger advantage over their other competitors in the market. However, the communication industry is a lucrative business that makes investors and other other companies wanting to get a bite of the market pie.
The intense competition in the communication industry makes everyone vulnerable and a slightest wrong decision would send them packing down the road. This is why a thorough analysis of the company's strength, weaknesses, opportunities and threats or SWOT should be clearly identified. This is because determining SWOT in any business not just with Verizon Wireless could make or break the progressive growth of the firm. The lack of emphasis on those four important elements of strategic situation determinants would have an adverse effect to the firm in terms of growth and revenue. SWOT analysis is widely used in large companies because it provides a quick overview of the company's current position in the industry. This technique is based on the theory that an effective strategy comes from a sound strategy between the internal and external environmental stimulus. Internal factors consist of the strengths and weaknesses while the external factors are more about the opportunities and threats.
Verizon Wireless has a strong grip on the market, which explains their current top position in the in the industry. As of 2009, the company has enjoyed 30% of the entire American market leaving the other three large wireless operators with only 70% of the industrial market to share (Reuters, 2009, Web).
The company's network infrastructure remains strong and even made stronger by the added innovations in their operations. In fact, Verizon Wireless is the only communication service that remained in service during the wake of Hurricane Isaac. The company's network systems were able to sustain and complete 98% of its calls during the hurricane of the emergency personnel and residents of the Gulf Coast. Verizon stores remained open during that period, allowing people that have lost their landline phone service to make a call. They were also able to set up WECC's or Wireless Emergency Communication Centers (Streetinsider.com, 2012, Web).
The company is showing a steady growth despite subscribers growing slow. The revenue growth comes from mobile data and internet service fees paired with a steady high Smartphone sales. The parent company Verizon Communications have reported that the company's profit as of the second quarter of 2012 already increased by 13.4%, which translates to two US$1. 8 billion. Last year's total revenue was reported to have increased by 3.7% or US$28. 6 billion (Chen, 2012, Web).
Effective marketing strategies helped the company to achieve its continuous growth. Their efforts were focused on providing their customers with an all in in pricing structure with data service that can be shared with other Verizon Wireless subscribers (Ehrlich, 2012, Web).
One of the weaknesses that Verizon Wireless should overcome is the reach of their service. The company is still considered to be a local company because it does not serve customers from outside of the United States. The problem is that, there are customers that prefer to use their phone even when love the country. None of the company's Smartphones products carry a global roaming service. The rationale behind the behind the problem is that Verizon's current technology is not compatible with the most of the wireless carriers in the world. The absence of a global roaming feature would affect the company's product competitiveness because the other largest communication companies offer global roaming. This problem will push potential expensive plan subscribers to move to another company because high-end service users are the ones that are likely to travel more often and can sustain a service plan without hesitation to pay bills regardless of the amount (Reardon, 2012, Web).
Verizon Wireless does not cover the entire United States particularly its 4G network service. This is another weakness that the company has to address. The company's competitors do have service in most part of the country. However, Verizon Wireless only covers 75% of the population. The fact that the company offers its subscribers with high performance Smartphones and wireless internet enabled gadgets, the company should also make sure that the customers can get wireless data service wherever they go. But that is not the case, looking at the company's website, the coverage map only shows portions of the United States and key cities that can be served by wireless data service. In fact, even the 3G service also cannot reach parts of the country. The coverage map also shows that the concentration of the service is being served mostly in the West coast, with only a few cities on the East Coast that can actually receive the service. The service coverage area is one of the things that the company should improve (Network4g.verizonwireless.com, n.d., Web).
Based from the two apparent weaknesses discussed earlier, the company has the capability to expand its services internationally. Considering the amount of increasing revenue that the company is getting, they have all the means to develop technology that will allow them to integrate their services with the international providers. Doing so will expand the company's product portfolio by adding international roaming in their list of services.
Because of the fast growth in revenue, the company would be able to accumulate capital in a short period of time to purchase smaller phone companies and initiate merger with other corporations that offers products and services that can be integrated with their own.
Verizon Wireless can continue to improve their network infrastructure to allow wider coverage of their 4G wireless data service. The company should consider that the growing popularity of Smartphones and wireless internet enabled devices are inevitable and the only way around is to move forward with the demand. In order to get more customers, Verizon Wireless must strengthen their infrastructure to expand reach and serve more customers.
There is a wide diversity of products out in the market, new models of Smartphones, tablet PC's and mobile phones are coming out almost every month. More and more new players in device manufacturing are also emerging in the market and Verizon Wireless can use that opportunity to diversify the range of products they offer to their customers along with more flexible service plan to choose from.
There is a lot of room for growth and opportunities available to the company, all they need to do is to explore the possibilities and leverage on the current trends. Innovation is the key to the further success of the company, the only thing that they need to do is to adapt to the market and continuously improve their services.
The main threat that Verizon Wireless should always take a look out is the stiff competition in the market. Among the other companies offering the same type of products and services similar to Verizon Wireless, AAT&T Wireless is the company's biggest competition to date. Based from the report by Credit Suisse, AT&T already surpassed Verizon Wireless in terms of ARPU or Average Revenue Per User. Currently, AT&T was at $51.07 ARPU while Verizon Wireless is only at $50.78. The difference in ARPU between the two companies can only be even out by the number of active subscribers. Therefore, Verizon has the option to keep the ARPU at the minimum and focus more on customer acquisition or disregard customer headcount and increase ARPU. That is the only way they can compete evenly with AT&T (Kharif, 2010, Web).
The growing popularity of Smartphones may pose threat to the wire-line services that the company also offers. Since the company is divided into two segments namely wireless and wire-line, more and more people now prefer wireless because of total convenience. However, it will eventually impact the company's wire-line segment by constantly losing revenue from the wire-line products. This is one of the implications of the wireless trend to the company, other than that is the continued growth in the wireless segment. This scenario is an economic threat that the company has to address. The telecoms industry is one of the most vulnerable in the Marco-economic environment. The industry is subject to technological changes. The rate of advancement in telecommunication devices will make it impossible for Verizon Wireless to catch up, especially with the cost of money that the company invested to subsidize the Smartphone units they distribute together with the service plans they offer. Although the industry is promising an attractive fundamental outlook, Verizon Wireless should accurately balance their service quality in both wireless and wire-line segments. In order for them to keep their customers, they should continue to invest in technology.
Chen, B. X. (2012, July 19). Verizon’s Profit Climbs as Subscriber Growth Slows - NYTimes.com. NY Times Advertisement. Retrieved September 14, 2012, from http://www.nytimes.com/2012/07/20/technology/verizon-wireless-profit-climbs.html?_r=0
Ehrlich, S. (2012, June 25). How Verizon�s new data pricing scheme affects mobile marketers - Mobile Marketer - Columns. Mobile Marketer - The news leader in mobile marketing, media and commerce. Retrieved September 14, 2012, from http://www.mobilemarketer.com/cms/opinion/columns/13168.html
Kharif, O. (2010, January 26). Verizon Wireless-AT&T Competition Heats Up - Businessweek. Businessweek - Business News, Stock Market & Financial Advice. Retrieved September 14, 2012, from http://www.businessweek.com/technology/content/jan2010/tc20100126_523377.htm
Reardon, M. (2012, May 16). Why Verizon 4G LTE smartphones are a bad choice for world travelers | Mobile - CNET News. Technology News - CNET News. Retrieved September 14, 2012, from http://news.cnet.com/8301-1035_3-57435720-94/why-verizon-4g-lte-smartphones-are-a-bad-choice-for-world-travelers/
Reuters.com (2009, February 5). Research and Markets: During 2009 USA Wireless Revenues Will Continue to Enjoy Strong Growth, Following Growth of Nearly 50% in 2008 According to This Latest Study| Reuters. Business & Financial News, Reuters.com. Retrieved September 14, 2012, from http://www.reuters.com/article/2009/02/05/idUS219853+05-Feb-2009+BW20090205
Streetinsider.com (2012, August 31). StreetInsider.com - Verizon Wireless Network Remains Strong in Wake of Hurricane Isaac. StreetInsider.com. Retrieved September 14, 2012, from http://www.streetinsider.com/Press+Releases/Verizon+Wireless+Network+Remains+Strong+in+Wake+of+Hurricane+Isaac/7697847.html
Verizonwireless.com (n.d.). 4G LTE Network | Verizon Wireless, Coverage Area. 4G LTE Network | Verizon Wireless. Retrieved September 14, 2012, from http://network4g.verizonwireless.com/#/coverage