5 Forces Model of Verizon Essay

Verizon’s wireline business, which includes the operations of the former MCI, provides telephone services, including voice, broadband data and video services, network access, nationwide long-distance and other communications products and services, and also owns and operates one of the most expansive end-to-end global Internet Protocol (IP) networks. Verizon’s domestic wireless business, operating as Verizon Wireless, provides wireless voice and data products and services across the United States using one of the most extensive and reliable wireless networks. The results of high competitive pressure could impact prices, margins, and hence, on profitability for every company in the industry. a. Sprint Nextel b. Cingular – AT&T wireless c. T-Mobile d. AOL e. Qwest f. RBOCs g. COMCAST 4. Bargaining Power of Suppliers – Low The term ‘suppliers’ comprises all sources for inputs that are needed in order to provide goods or services. If there is a market with much choice supplier choice, bargaining power will be less. There are many network equipment suppliers, which are suffered from the down telecom market. Having mature technologies also commoditize the products. As such, the bargaining power of suppliers has been weak. 5. Bargaining Power of Customers – Low The bargaining power of customers determines how much customers can impose pressure on margins and volumes. Since most of buyers are small (residential and small business users), they do not have much buyer power. Big corporations are better positioned to negotiate for discounts but industry consolidations of SBC acquiring AT&T and Verizon acquiring MCI have significantly reduced the available lternatives for these corporations and thus their negotiation power. PEST Analysis A PEST analysis is an investigation of the important factors that are changing which influence a business from the outside, these include: Political Factors †¢This includes government regulations and legal issues that define both formal and informal rules of the operation of Verizon. Economic Factors †¢This factor affects the purchasing power of consumers and the Verizon’s cost of capital. Social Factors †¢Cultural and demographics of the environment would affect the customer’s needs as well as potential market size. Technological Factors †¢This can lower barriers to entry, improve production efficiency and influence outsourcing decisions. ? PoliticalEconomicalSocialTechnology Stability of the internal/external political environmentEconomic growthPopulation growth rate Automation Trading agreementsInterest ratesAge distributionTechnology incentives employment lawsInflation rateCareer attitudesRate of technological change environmental regulationsBudget allocation Perception of technological change within the unit Trade restrictions and tariffsThe level of inflation 5 Forces Model of Verizon Essay Verizon’s wireline business, which includes the operations of the former MCI, provides telephone services, including voice, broadband data and video services, network access, nationwide long-distance and other communications products and services, and also owns and operates one of the most expansive end-to-end global Internet Protocol (IP) networks. Verizon’s domestic wireless business, operating as Verizon Wireless, provides wireless voice and data products and services across the United States using one of the most extensive and reliable wireless networks. High for fixed-line, low for mobile / broadband A threat from substitutes exists if there are alternative products with lower prices that are of better performance parameters for the same purpose. This could potentially attract a significant proportion of market volume and hence reduce the potential sales volume for Verizon. a. Vonage(Threat to Fixed Line service) b. Skype(Threat to Fixed Line service) 3. Competitive Rivalry between Existing Players – High This force describes the intensity of competition between existing players (companies) in an industry. The results of high competitive pressure could impact prices, margins, and hence, on profitability for every company in the industry. a. Sprint Nextel b. Cingular – AT&T wireless c. T-Mobile d. AOL e. Qwest f. RBOCs g. COMCAST 4. Bargaining Power of Suppliers – Low The term ‘suppliers’ comprises all sources for inputs that are needed in order to provide goods or services. If there is a market with much choice supplier choice, bargaining power will be less. There are many network equipment suppliers, which are suffered from the down telecom market. Having mature technologies also commoditize the products. As such, the bargaining power of suppliers has been weak. 5. Bargaining Power of Customers – Low The bargaining power of customers determines how much customers can impose pressure on margins and volumes. Since most of buyers are small (residential and small business users), they do not have much buyer power. Big corporations are better positioned to negotiate for discounts but industry consolidations of SBC acquiring AT&T and Verizon acquiring MCI have significantly reduced the available lternatives for these corporations and thus their negotiation power. Generic Strategy Verizon needs to make the technology customers have today work better through new, customer-friendly products, services, applications and solutions. As well as to invest in the broadband infrastructure that will give customers even better services in the future. â€Å"Competitive advantage can be obtained using three generic strategies; they are cost leadership, differentiation and focus. †¢Cost Leadership oVerizon is required to compete on cost because there are many wireless operators in Europe, reduce cost to increase subscriptions.