Running head: VERIZON’S STRATEGIC PLAN ANALYSIS 1
Verizon’s Strategic plan Analysis
Executive Summary
This essay provides and analysis of Verizon’s strategic plan with the aim of identifying its
type and lacking components for future sustainability. It begins with a brief introduction,
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which introduces the concept of its static/single strategic plan approach. It then discusses the
company’s profile in order to understand the current strategic plan issues. More importantly,
it carries out the company’s SWOT analysis of Verizon Communications as a step of
understanding its strategic plan. This is followed by analyzing the current situation through
determining the effectiveness of this strategic plan.
Literature review, which gives a lot of insight concerning the benefits of dynamic strategic
plan model and how the company can utilize such a model to enable it gain more competitive
advantage over its rivals is also included. The analysis also focuses on comparing the
company with another company AT&T to understand the difference in their strategic planning
approach and determine what Verizon can do to improve on its strategic planning. Comparing
these two companies revealed difference in static/single and dynamic strategic plans and the
essay concludes by recommending that Verizon change its strategic planning to a dynamic
one that prioritizes and commands customer confidence rather than revenue maximization
focus.
Table of Contents
Executive Summary...................................................................................................................2
VERIZON’S STRATEGIC PLAN ANALYSIS 3
Introduction................................................................................................................................4
Background Information............................................................................................................5
Company profile.....................................................................................................................5
Summary of the case..............................................................................................................6
SWOT Analysis....................................................................................................................6
Understanding the existing strategic planning strategy.....................................................9
Current thinking.......................................................................................................................10
Relationship to AT&T..............................................................................................................12
Conclusion and Recommendation............................................................................................13
References:...............................................................................................................................14
Introduction
Strategic planning is an important component in organizations that seek to deliver
excellent services. It does not matter whether organizations in question seek to pursue profit-
making goals or not. A review of strategic planning in organizations reveals existence of two
extremes of choosing or designing strategic planning. One of them is that some people may
VERIZON’S STRATEGIC PLAN ANALYSIS 4
claim that organizations may rely on a single strategic planning model regardless of other
factors that may prevail. Others may claim that systems and settings are very dynamic and
organizations exhibit significant differences and uniqueness. With such dynamics often
attributed to time and settings, a formal strategic planning model is necessary. My experience
working with the Verizon’s Finance Operations-Billing, aroused my desire to develop an
elaborate strategic plan since this organization has continued to rely on a single strategic
planning model.
Important considerations will include the fact that no single strategic planning
approach may suit all circumstances or organizational setting. A few formal procedures and
approaches, however, form the basis for adopting strategic planning models depending on
circumstances that prevail. With that, specific models may be adopted by several other
organizations as long as similar circumstances prevail. Therefore, based on the fact that this
company lacks a dynamic strategic plan, this essay focuses on looking at the current process
and how a dynamic approach can effectively be adopted. In order to properly do this, the
essay first discusses the background of this company, followed by the current state and a
literature review, which covers perspectives of various authors concerning strategic planning
and Verizon. The essay then discusses relationship of the reviewed literature with the current
state of affairs in Verizon, focusing on strategic planning based on its SWOT analysis as the
first mechanism to identify strategic issues. It then provides a conclusion and possible
recommendations to the organization.
Background Information
Company profile
Verizon Communications, popularly known as Verizon, is an American company
dealing with telecommunications and broadband. The company is located in New York, in
Lower Manhattan. The company started as Nell Atlantic founded in 1984 but later changed to
VERIZON’S STRATEGIC PLAN ANALYSIS 5
Verizon Communications in June 2000 after a merger between GTE and Bell Atlantic. This
merger made Verizon Communications to be the largest telephone company in the United
States, operating over 40 states. During this period, the company operated over 63 million
telephone lines. The merger brought about additional 25 million customers. However, before
the company was branded as Verizon Communications, Bell Atlantic, through a joint venture
with Vodafone, formed Verizon Wireless 2000. This joint venture saw Bell Atlantic owning
55% of the venture. Then the merger with GTE saw the company form Verizon
Communications hence being able to integrate Vodafone, PrimeCo holdings, and GTE’s
wireless division. This enabled it to gain competitive advantage over other regional providers
because it managed to ensure national coverage with competitive rates.
With FCC proposal to incorporate portability requirement to consumers, the company
was assured that its customers could use their phone numbers across different carriers. This
helped the company gain over 1.5 million subscribers in 2003. In order to change with
technological advancements, Verizon Communications launched FiOS, which enabled it to
transmit data and information through fiber optic cables in Texas in 2005. In 2005 Verizon
Communications acquired MCI, enabling it to gain over one million international holdings
and corporate clients hence expanding its global markets. Due to this fact, a new division was
founded, Verizon Business to serve government and company business customers. Since then,
the company has undergone various acquisitions and purchases such as Alltel in 2008, and
acquisition of Terremark in 2011 among others. Therefore, it is evident that this company has
undergone or experienced various changes based on its need to grow, and technological
advancements. This calls for the need to look at this company’s strategic plan.
Summary of the case
As mentioned above, Verizon uses static/single strategy mechanism to develop its
strategic plan; however, as evident from the company profile, a significant aspect of
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dynamism, in terms of expansion, growth and technological advancements forms a crucial
part of this company. Therefore, it is expected that such company focuses on adopting
dynamic strategic plans rather than static/single ones. A proper and effective strategic plan
must peg on the company’s vision and mission statements. More importantly, it must be
based on the strengths, weaknesses, opportunities and threats of the company. Therefore, in
order to understand more about Verizon, it is important to conduct a SWOT analysis of the
company.
SWOT Analysis
Strengths
Verizon has three major strengths that enable it to stay competitively above its
competitors. These include strong wire-line Network, strong financial performance, and
wireless capability and coverage. Verizon Communications has shown strong financial
performances, especially in 2012 when the company recorded a revenue of $115, 846m. This
has been due to significant contributions by its wireless segment, which has recorded
tremendous increase over time. On the same note, the company recorded an increase in its
operating income to $13,160m in the same year. Cumulatively, the company recorded an
operating margin of 11.36% and a gross margin of 60.05%. This indicates strong financial
performance.
The other strength mentioned is strong wireline network. This has enabled the
company to serve a larger range of customers. Through expanding its internet connection
globally, the company connected US with Asia and Europe, enabling delivering of over 100
gigabits per second speeds to different routes. With the company having its FiOS network, it
is able to pass data to over 14.2 million homes and provide high quality broadband services,
live streaming alongside high bandwidth services. In addition, through wireline connections,
the company also provides entertainment services to mass markets. The company then
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focuses on providing residential, corporate and government connections with high speed
digital data transmission such as synchronous optical network and Ethernet. The third
strength is wireless coverage and capability. The company’s wireless network is the largest in
the US with coverage in over 100 metropolitan areas, which are most popular. It has over
98.2 million connections as retail with provision of 4G LTE, providing improved efficiency
and throughout performance over 3G.
Weakness
One evident weakness of Verizon Communication is supply dependency. For
provision of services and equipments, the company depends on key vendors and suppliers.
Since these supplies and vendors provide equipments and devices used to provide services
and products to customers, failure of the vendors or supplies in supplying these crucial
components can paralyze the operations of the company. The other weakness is decline in its
liquidity. In 2012, the company recorded a decrease in its total assets, thereby burdening its
working capital. The company attributes this decline to decline in equivalents and cash. In
addition, Verizon experienced an increase in its trade receivables, relating to sales on credit.
This related to a decline in both the current and cash ratio of the company.
Opportunities
One great opportunity this company has is the ability to expand its 4G LTE network.
Currently, 4G LTE is gaining a lot of acceptance, and this can result to the opportunity of
expanding on it. With projections that revenues from this LTE broadband is likely to be over
$70 billion and market expansion in China, North America, Western Europe and Far East,
mobile broadband is likely to be driven by mobile payments and commerce.
The company also has an opportunity of utilizing various business initiatives. In the
past, the company took various initiatives to enhance its potential growth. Business initiatives
such as Verizon Live Events help content retailers, multichannel video programming,
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broadcasters and studios in enhancing growth of customer demand to watch online television
and live events. With the projects of generating over 70 million kilowatt hours of green
energy and completion of acquisition of HUGHES telematics, the company expects to
accelerate its growth. The company also has the opportunity of capitalizing on the increasing
demand for smart phones as an opportunity. Expectations for growth of Smartphone industry
is high and this can translate to need for wireless connections and networks hence important
for the company.
Threats
The company also has few threats that pose challenges to its prosperity. The first
threat is competition. Telecommunication service market is a competitive market.
Competitors such as Sprint Nextel, AT&T and T-Mobile pose competition to Verizon
Communications since they also compete for wireless service provision. The company
expects intensification of competition because of increase in level of wireless market
penetration. The other threat is rapid technological changes. This affects business operations
because little time is available to evaluate, assess and adopt new innovations before an
improvement of better version emerges. Lastly, government regulations also threaten the
existence of such companies. The availability of diverse regulatory authorities is likely to
affect affiliates and subsidiaries operating in the USA.
Understanding the existing strategic planning strategy
As indicated, understanding strategic planning significantly depends on a company’s
SWOT analysis. Conducting and reviewing SWOT analysis is the first step to developing a
successful strategic plan. Another significant factor in coming up with a successful strategic
plan is to understand the mission and vision statements. The strategic plan must strive
towards realization and actualization of these two statements. Verizon’s business strategic
plan is on global differentiation. The company focuses on ensuring provision of high-quality
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services to meet the growing and continuously changing needs of its customers. The reason
why the company chooses a global dimension in its strategic plan is because of the past
mergers and acquisitions that enabled it transverse to various continents, making it a
multinational corporation.
Therefore, the strategic plan entails provision of superior services to its customers. In
order for the company to realize this, it focuses on provision of highest internet quality to its
customers. In order to realize the company’s strategic plan, it also focuses on improving the
rates of data transmission and expansion of data, multi-media and messaging offerings to
businesses and customers. Lastly, the company focuses on satisfactory and efficient rates in
production development and distribution, and customer services. Verizon’s strategic plan
builds on the porter’s five forces. For Verizon, the buyer power is relatively high. This is a
disadvantage since it is forced to try working on its competitive advantage to narrow this gap
through improving the quality of its innovations. Its strategic plan also entails having a
variety of supplies, hence low supplier power, such as LG, Samsung, Blackberry, Nokia,
Motorola and Palm among others.
The static/single nature of Verizon’s strategic plan is in terms of high dependence on
its financial performance, as mentioned under its strengths. In addition the continuous
increase and growth of internet based communication systems highly affect most of its paid
communication services. Yet the company’s strategic planning has shown high dependency in
this. Internet communication software such as Skype threatens the amount of revenue the
company collects on wireless communications. Currently, millions of people use internet
services for communication services instead of paid network services. Since such
telecommunication programs such as Skype offer no cost to people to use, they are likely to
reduce revenue collected by this company. In addition, such over the internet communication
software offer visual images, hence real time visual communication. This has forced the
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company to charge fees to avoid losing already existing customers, just in case they try to
switch to low or no cost communication channels. Therefore, Verizon’s strategic plan focuses
on dictating the market and customers, rather than trying to let the customers or market
determine how best its services and products should be.
Current thinking
Rudd, et al, (2008) discussed issues of the relationship between strategic planning and
performance. In their analysis, they indicated that flexibility in strategic planning is a crucial
aspect since it defines the extent at which an organization is able to develop alternative
decisions to be considered in strategic planning. In addition, they indicated that flexibility of
the strategic plan components creates room for positive change and the ability to adapt to
environmental turbulences. The flexibility concept is also suggested by McGrawth (2010),
who indicated that strategists are faced with reality of uncertainty and unpredictable
environments, thereby calling for flexibility in strategic planning. She indicates that modern
strategies must focus on discovering and exploiting new models by engaging in
experimentation and learning, popularly known as the discovery driven approach to strategic
planning. Therefore, these two authors recognize that strategic planning should not take the
analytical approach as has been a common practice. Evidently, for strategic planning to focus
on experimentation and planning, it must be dynamic, hence the need to incorporate dynamic
rather than static/single strategic plans.
Poister, (2010) also looked at the role played by strategic planning, and recognizes
that by 2020; it is highly likely to play the most crucial role in an organization. He indicates
that such predictions call for the need to address new issues likely to emerge. He suggests the
need to move from strategic planning to strategic management. Such a suggestion anticipates
for continuous monitoring of ongoing issues rather than dealing with them in an episodic
basis. He suggests the need to link ongoing performance and their strategic managements for
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a strengthened overall performance. He also suggested inclusion of performance monitoring
mechanisms to help build dynamic strategic management, which stems from dynamic
strategic plans. Therefore, despite the suggestion to change to strategic management, which
broadly analyses and studies strategic planning, this article also tends to support dynamism of
strategic planning process. This suggestion tends to advocate for a living, learning and
adapting strategic plan, hence dynamic.
Eppler & Platts, (2009) introduced a new concept of visualization of strategic
planning process. Through their analysis of various literatures, they identify that visualization
of strategic planning improves its quality through addressing social, emotion and cognitive
challenges likely to occur during the process. They also highlight the benefits of visualization
of strategic planning process through five case studies right from analysis to implementation.
Through analyzing the visualization and how it is used at different levels or the organization,
this article considered the challenges of employing graphic means in strategic planning. It
also looked at the executive’s role in the visualization process and suggested that it should not
be viewed as an attractive way of communicating strategies, but as a powerful tool that
enables the process of strategizing. However, they also cautioned on a blind approach to
visualization of strategic planning since it also presents caveats that must be considered.
Although Nonaka & Toyama (2014) introduced a philosophical approach towards
understanding strategic planning, the fact that they recognize the need for a back and forth
communication of the strategy amongst all members of the organization is critical in
understanding that they advocate for dynamic strategic planning model. They insinuate that
effective strategic management needs wisdom to enable determination of the ability to
interpret, identify and utilize resources through a subjective approach. They also indicate that
organizations must understand interactions between objectivity and subjectivity of strategies.
VERIZON’S STRATEGIC PLAN ANALYSIS 12
They emphasize on the need to communicate the strategy to every member of the
organization for a universal and development of a common goodness.
Relationship to AT&T
The effectiveness of a dynamic or static/single strategic plan depends on where the
organization or the company concentrates on. When a company focuses more into revenues,
then its strategic plan heavily rely on financial strategies. However, good or effective
strategic plans rely on the customers and stakeholders more than the revenues. Although the
main reason for existence of a company is profit or revenue maximization, It is paramount
that it concentrates on its customers. One such company using this mechanism to pose a lot of
rivalry to Verizon is AT&T. This is Verizon’s biggest competitor. AT&T’s advantage lies in its
high customer demand, since it has the highest number of customers in the whole of USA.
Having been in this market industry longer than Verizon, it has a deeper understanding of
customer needs compared to Verizon.
AT&T highly concentrates on its customers’ needs, and this is well displayed in its
elaborate roll-over-minutes plan, where they allow customers to pass their unused minutes to
the next billing cycle. This gesture portrays customer first service and builds confidence in
customers. Both Verizon and AT&T claim to be number one company in the wireless industry
due to the difference in which part of the market they command. Verizon claims to lead in
revenue collection while AT&T claims to control customers. despite the fact that Verizon
overtook AT&T, it is possible that the continuous command of customers by the latter can
result to future prospects. This is mainly because of the back and forth strategic plan that
AT&T has. AT&T is not putting a lot of concentration to its revenues as Verizon. This
indicates that AT&T’s strategic plan is dynamic due to the dynamic nature of customer
demands and satisfaction. This is likely to propel the company to greater heights in future.
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However, for Verizon to accelerate its growth and success, it must tailor its strategic plan to
increase customer demand rather than highly concentrating on revenue maximization.
Conclusion and Recommendation
Therefore, as it was indicated that the essay will concentrates on understanding the current
situation and identifying the lacking components, it is evident that the need to focus on
improving its customer confidence and demand calls for a dynamic approach to strategic
planning. Even though, Verizon’s current strategic plan of global differentiation practically
performs better financially, the dynamism of customer demands and satisfaction forces the
company to try changing its strategic plans to customer-oriented than the current revenue-
oriented approach. As evident in the reviewed literatures, dynamic strategic planning is the
way to go, and Verizon must focus its plans to this direction despite its current market
command.
References:
Rudd, J. M., Greenley, G. E., Beatson, A. T., & Lings, I. N. (2008). Strategic planning and
performance: extending the debate. Journal of Business Research, 61(2), 99-108.
McGrath, R. G. (2010). Business models: a discovery driven approach. Long range
planning, 43(2), 247-261.
Poister, T. H. (2010). The future of strategic planning in the public sector: linking strategic
management and performance. Public Administration Review, 70(s1), s246-s254.
Eppler, M. J., & Platts, K. W. (2009). Visual strategizing: The systematic use of visualization
in the strategic-planning process. Long Range Planning, 42(1), 42-74.
Nonaka, I., & Toyama, R. (2007). Strategic management as distributed practical wisdom
(phronesis). Industrial and Corporate Change, 16(3), 371-394.
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