U08a1 VZW - Business Strategy PDF

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Strategic Process and Analysis: Verizon Communications Inc Capella University MBA5006 - Business Strategy

December 6, 2020

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Generic Business Strategy The generic business strategy of a company comprises of two strategies known as cost leadership and differentiation (Rothaermel, 2020). For a company to stay relevant in the competing market as well as have competitive advantage, it’s important for a company to have the support and experience of its leadership team. By Verizon having both the support and experienced leaders, this company continues to focus on these two business strategies. Due to the large number of competitors within the telecommunication market, it’s important for Verizon to continue to be creative in its service approach, as well as innovated in the products that are offered. Not only does Verizon promises to provide customers with reliable service on an award-winning networks, but Verizon is also committed in providing these services in a socially responsible way by working to make the products and services safer and more sustainable that would help to improve customers lives (“Verizon Company Profile,” n.d.). Cost Leadership The purpose of a cost leadership strategy is for a company to offer the same or better service as its competitors but at a lower cost (Rothaermel, 2020). An example of Verizon implementing a cost leadership strategy would be related to the newest 5G network that’s offered along with an unlimited plan. AT&T, a Verizon competitor, offers an Unlimited Elite plan which includes access to the 5G nationwide network, unlimited talk, text, data and comes with HBO Max for $85 per month, while Verizon offers a Do More Unlimited plan which offers the same unlimited talk, text, data and access to the 5G nationwide and 5G UWB (Ultra Wideband) networks, along with Hulu, Disney and ESPN included for $80 per month (Cipriani, 2020). Verizon’s cost leadership is providing a lower cost plan with more options to consumers on a more reliable network. Consumers have become more conscious on how far their hard-earn dollars can stretch. Getting more and saving less will always be the deciding factor. Differentiation This strategy looks to provide a higher value with unique features while keeping the cost similar to its competitors (Rothaermel, 2020). Verizon certainly does provide a much higher value and unique features, but in some situations, the cost of their products and services tend to be a little pricier compared to its competitors. In considering this issue, Verizon partnered with a company call Visible, which offers a low monthly cost prepaid wireless plan to consumers (Berr, 2018). While this plan will give you unlimited data, messages and minutes for $40 a month, the plan will only be beneficial if several people join by receiving an invite by a Visible plan member (Berr, 2018). Another example of how Verizon differentiate itself from its competitors is by continuously being innovated in their services. Last month, Verizon Business unit partnered with Nokia to offer a private 5G platform to global enterprises located in Europe and the Asia-Pacific region (“Verizon Takes Business Private,” 2020). The benefit of this partnership will allow those businesses to implement a private and secured 5G network within their businesses (“Verizon Takes Business Private,” 2020).

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Focus When looking at the two focused versions of business strategies, focused costleadership strategy and differentiation strategy, Verizon has appeared to combine these two strategies with their recent partnership with Apple. With this partnership, Verizon and Apple offered their current business partners a more convenient way of trading in their smartphones (Lardinois, 2020). This partnership created a new program called 5G Fleet Swap, in which business owners could trade in their current smartphones for the newest Apple iPhone 12’s with no upfront cost for the phones and have a low monthly plan cost with Verizon (Lardinois, 2020). This program addresses the cost leadership in offering a product at no cost and a phone plan service at a low monthly cost. This program also addresses the differentiation strategy by offering this program to business partners even if they are currently not a customer of Verizon (Lardinois, 2020). This partnership is a win for both companies because it allows Verizon to increase the number of business customers and it allows Apple to have more of their new products out in the market (Lardinois, 2020). Marketplace Approach One of the key focuses of Verizon’s business strategy through its innovation efforts is to be the first to offer new products and services as well being the best at it. When looking back at the history of this company, I found this company achieved a lot of success by offering a brand-new product or service before any of its competitors did. For example, in July 2000, Verizon completed the first live 3G wireless data call, which led the first 3G network being launched two years later, in January 2002 (“Verizon Company Profile,” n.d.). In the following years, there were more products and services produced by Verizon that created major milestones in the telecommunication market. For example, Verizon created the very first Smartphone, Kyocera 6035, as well was launched the very first North American Continent calling plan (“Verizon Company Profile,” n.d.). There were also major mergers and acquisitions Verizon took on to increase its footprint in the telecommunication market. During those times, Verizon also continued to launch better and much faster networks, 4G LTE and 5G. Another business strategy that set Verizon apart from its competitors is the consistent focus it has on its customers. In 2004, Verizon created its credo to deliver a superior customer service experience through the products and services (“Verizon Company Profile,” n.d.). More than 10 years later, this continues to be consistent in their approach. Verizon has many competitors in the telecommunication market, in which the primary services that are offered are wireless. Verizon not only offers wireless services, but they offer so much more. With the reorganization Verizon, performed in 2019, three business units were formed: Verizon Consumer, Verizon Business and Verizon Media, in which all three units will provide specific services to its customer base (Verizon Communications Inc., 2019). Verizon Consumer, oversees products and services related to postpaid and prepaid wireless services as well as wireline services and products, Verizon Business oversees wireless, wireline, video and data services, managed network services, etc., to small, medium and governmental businesses (Verizon Communications Inc., 2019). Verizon Media provides consumers with digital advertising, content delivery and video streaming platform access (Verizon Communications Inc., 2019).

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Business Model Core Products Verizon is one of the world’s leading providers of technology, communications, information and entertainment products and services (“Verizon Company Profile,” n.d.). This company has a vast number of products, such as fiber optic and broadband internet access services, data protection, streaming services, etc., but their core product is data services and wireless services (“Verizon Company Profile,” n.d.). These products along with 3G, 4G LTE, 5G Nationwide and 5G Ultra Wideband network services are offered through Verizon’s wireless service units to customers (“Verizon Broadband Services,” n.d.). Customers can access Verizon’s data services on any electronic device, whether it’s a tablet, laptop or hotspot. This service which is offered as a monthly plan or pay as you go, does not require customers to have a cellular plan (“Verizon Support Wireless,” n.d.). Verizon offers a variety of wireless services on their most reliable network. This is one of the reasons why Verizon continues to have competitive advantage. Whether Verizon customers have data service or wireless service, they have the access to Verizon’s Mobile Broadband Internet Services (“Verizon Broadband Services,” n.d.). Depending on the network service customers are on, will determine the amount of speed they will receive from the mobile broadband service (“Verizon Broadband Services,” n.d.). Generated Revenue Verizon generates income from the many products and services that are offered through their consumer and business units that oversee the wireless and wireline segments (Verizon Communications Inc., 2019). In order to achieve the desired outcome of these two business units, Verizon conducted a reorganization to its current business structure to create Verizon 2.0 (Verizon Communications Inc., 2019). Under this new structure, the two business segments were formed. In 2019, the wireless segment generated $94.2 billion dollars in revenue and in the same year, the wireline segment generated $28.6 billion dollars in revenue (Verizon Communications Inc., 2019). Both segments offer voice and data services, but the wireless segment offers these services to consumer, business and government customers, while the wireline segment offers these same services, but in addition to video products and services over landline connections (Bylund, 2017). Customer Value Proposition Verizon’s customer value proposition is to offer customers reliable and quality voice, data and video services on its award-winning networks (“Verizon Company Profile,” n.d.). This company’s credo is everything they do revolve around their customers, because they know their customers value the high-quality communication services that are offered (“Verizon Company Profile,” n.d.). Verizon continues to have the competitive advantage over of its competitors by continuing to be innovated. For example, during the pandemic, Verizon quickly realized that with more customers working from home as well as students learning virtually, the need for a faster and higher quality connection was imperative to have (Pfleghardt, 2020). Verizon created a fixed cellular-based internet service with an inexpensive unlimited data plan

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for residential areas, which ran off the 4G LTE and 5G networks (Pfleghardt, 2020). Recently, Also, Verizon announced the current 4G routers associated with the home internet service will be replaced with the updated 5G routers which will have automatic access to Verizon’s 5G Ultra Wideband network (McNabb, 2020). While home internet service is not a new service and is also offered by Verizon’s competitors, what makes Verizon’s home internet service different from the others, is the better network and faster speed customers have access to through Verizon (McNabb, 2020). Profit Proposition Verizon’s profit proposition is driven from the products and services that are offered through telecommunication services, retail sale of wireless equipment and products (Verizon Communications Inc., 2019). There are other available services and products, such as media, advertisement, etc., which also generates continued revenue for Verizon (Verizon Communications Inc., 2019). Verizon’s operating income for 2019 was $30 million dollars, which was an increase from $22 million in 2018 and the net income for 2019 was $19 million which was an increase from $16 million in 2018 (Verizon Communications Inc., 2019). Corporate Strategy Verizon’s corporate strategy relates to the telecommunication market it is currently competes in. This market is comprised of different services, such as wireless, network, land lines, media, etc., (Reuters, 2020). Even though Verizon is known for its wireless network, this company is also socially responsible in the communities they serve. For example, in 2019, Verizon donated $8.4 million dollars along with over 235 thousand employee volunteered hours to its supporting neighbors and communities (“Verizon Giving & Grants,” n.d.). One of Verizon’s goal is to improve the climate in committing to become carbon neutral by 2035 (“Verizon Climate Protection,” n.d.). Verizon continues to work on the necessary initiatives to make this a reality. In keeping with up the competitive advantage, Verizon decided to realign its current business structure. Due to the high-quality network standards Verizon is known for, in order for a better-quality network service to become available, as it was promised, an internal realignment was needed. With this strategy put in place, these changes enhanced the current business and corporate strategy for this company, because it allowed more services to be created and more products to become available. In 2019, Verizon 2.0 was created which formed three new business groups (Verizon Communications Inc., 2019). The new business groups will focus its efforts on bringing more value to Verizon’s customer base as well as revenue to the organization (Verizon Communications Inc., 2019). The first group is Verizon Consumer. This group will focus on wireless and wireline businesses and wireless sales for consumers. The wireless services are offered to postpaid or prepaid customers (Verizon Communications Inc., 2019). Postpaid services are billed one month in advanced and prepaid services are paid in advance by the customer without a needing a credit check for service approval (Verizon Communications Inc., 2019). With either service, customers have access to available wireless equipment, such as

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smartphones, tablets, wireless-enabled devices, etc., (Verizon Communications Inc., 2019). The wireline services provide internet access to customers through the fiber-optic network, in areas where Fios is not available (Verizon Communications Inc., 2019). This group provided a yearend revenue for 2019 of $91.1 billion, which was an increase of $1.3 billion from the prior year (Verizon Communications Inc., 2019). The second group is Verizon Business. This group will focus also on wireless and wireline services for small and medium size businesses as well as government businesses, in addition to adding video and data services, corporate networking solutions, security and managed network services, local and long-distance voice services, etc. (Verizon Communications Inc., 2019). These products and services are offered not only to businesses in the US, but globally as well. This group provided a year-end revenue for 2019 of $31.4 billion, in which was a decrease of $91 million in the prior year (Verizon Communications Inc., 2019). The third group is Verizon Media. This group will assist in helping customers access and receive media, such as advertisements, entertainment, gaming and other services (Verizon Communications Inc., 2019). This group provided a year-end revenue for 2019 of $7.5 billion, which was a decrease of 3.0% from the prior year. Verizon is a US based company which currently competes in the national and regional markets, based on the large number of wireless providers (Verizon Communications Form 10K, 2019). Due to the amount of telecommunication providers in these markets, Verizon has chosen its competitive focus to be on network reliability, coverage, capacity, pricing, customer service, products and sales (Verizon Communications Form 10-K, 2019). Currently, Verizon’s 4G LTE covers over 99% of the US population, which would equate to about 32 million people (“Verizon Featured Our Network,” n.d.). Verizon understands the negative impact if a supplier was unable to deliver products and services when requested and for this reason is why Verizon operates in a vertical integration over its supply chain, suppliers and retail locations (Pierce, 2020). This process helps Verizon to control costs and continue to have the ability to meet the customer needs (Pierce, 2020). For example, when Verizon purchased Yahoo, this positioned Verizon to have a vertical integration in terms of advertising (Barrett, 2016). Verizon will not have control over the online content (Barrett, 2016). With the previous acquisition of AOL, which was considered as the leader in digital content, and now with Verizon’s purchase of Yahoo, its increased Verizon’s access to a much broader audience (“Verizon To Acquire Yahoo,” 2016). From the moment this company was formed, Verizon was always focused on providing quality service to its customers. Through the years of mergers and acquisitions, looking for new products and services that would become beneficial to its customers, Verizon’s products were not out of the normal scope of products or services that were originally offered. Verizon has only enhanced the quality of its products and services through its continued innovation by its experienced technologist and engineers. For example, Verizon started off by offering a 1G network in addition to other service offerings (“Verizon History,” n.d.). As technology evolved, so did Verizon. In keeping up the competition, Verizon made it a point to stay ahead of it, whether it was the first to offer smartphones, or increased services through partnerships (“Verizon History,” n.d.).

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Verizon’s goal and mission are to create a better-quality network and provide a betterquality service experience for all customers in comparison to its competitors. With the continued improvements of this company, Verizon’s customers can experience the promised goals of better services and products. This why Verizon is known for its reliable networks and quality services. An example of this is related to the networks Verizon has created through the years. Prior to Verizon’s 5G network, this company was the first to launch a 4G TLE network in Dec 2010 (“Verizon Network Speed,” n.d.). This new network provided an increased internet speed of up to 10x times faster than the previous 3G network (“Verizon Network Speed,” n.d.). With the same goal in mind, Verizon began working on increasing the quality of its current 4G network. Verizon launched the first 5G network in 2018 and then went on to expand the network into becoming a 5G nationwide network. Shortly after, Verizon’s competitors began to offer the same type of network, but Verizon offered the network at a much faster speed due to the mmWave band that Verizon offered (Gartenberg, 2020). The new 5G Ultra Wideband provided a much faster speed of 25x compared to its competitors (“Verizon Coverage Map,” n.d.). Unfortunately, this network is only available in certain areas currently. Verizon is currently working to bring the 5G UWB network to more cities with the U.S. (“Verizon Coverage Map,” n.d.). Corporate Structure The decision to realign the current corporate structure was implemented in April 2019 by the new CEO, Hans Vestberg (Krouse, 2018). The decision to make this change was based on customer needs as well as focusing on launching the world’s first 5G network. Verizon’s top focus has always been to meet the needs of its customers by providing quality service. This reorganization gave all of Verizon’s customers the ability to access the available services offered by Verizon (Krouse, 2018). This change in the corporate structure created three separate business groups which are overseen by executive leaders who all are experienced in their field and subject matter experts. Each new business group, Verizon Consumer, Verizon Business and Verizon Media, have a different focus to serve the specific needs to those customers (Verizon Communications Inc., 2019). Verizon choose to diversify its portfolio when AOL and Yahoo was acquired (Dang, 2019). The acquisitions of these two companies will allow customers the ability to make purchases right from the Verizon Media’s site instead of being redirected to the advertisers site to complete the purchase (Dang, 2019). One of the goals Verizon Media had was to redesign the current Yahoo Mail’s look to have new features, offer a better way of organizing emails and provide an easier and faster way of processing online shopping transactions (Dang, 2019). The acquisition with AOL will position Verizon to have much larger footprint in online advertising due to AOL’s a...