Five Forces Analysis
Management Information Systems
Verizon Wireless is one of the leading wireless providers in the United States. Of the major four carriers in the United States, Verizon has been able to maintain the lead in all areas such as the network, customer service and products. Established in a joint venture between Vodafone and Verizon Communications in the year 2000 after diluting the company formally known as Bell Atlantic, Verizon “is the standard-bearer for the industry and leader in delivering the benefits of our empowering technology to the world” (About Verizon, 2013). With the other major carriers, AT&T, T-Mobile, and Sprint, it can be seen how Verizon has been able to stay ahead of the competition using Porters Five Force Model. In Michael Porters Five Force Model, the first force he describes is new entrants into the industry. This force pertains to how the development of the internet now makes it easier for new or smaller companies to compete in the industry. Within the wireless industry, the advancement in technology and the internet has made it much easier for smaller, start-up companies to compete. In the past, many companies such as Nextel and Boost have emerge, but just as quickly as those businesses were established, they were acquired by one of the major carriers. Recently, there has been the emergence of Metro PCS, which has started to gain leverage with its customer base among other smaller carriers such as H2O. Since its founding in 1994, it is now the fifth largest wireless carrier in the United States and is now owned by T-Mobile (Reuters, 2012). The key to success of Metro PCS was that they were marketing their services to those who already had cellular devices. This was a huge risk for the company due to the fact that the wireless industry has been classified as saturated. Metro PCS allowed consumers to take their currently devices and sign up for service online and pay a flat rate for unlimited talk, text and data. This came at an integral time for the industry with both Verizon and AT&T no longer offering unlimited plans. To the consumer who was looking to cut costs they didn’t have to purchase a new device and they would be able to pay less for monthly service with no limitations. The company aimed it marketing efforts at “cost-conscious, high-volume minute users and is a good option for customers with big wireless bills” (M/C Partners, 2012). Despite Metro PCS only having stores in twenty-four major cities, much of their success is due to their online transactions. Giving consumers the option to purchase devices from their limited selection or use a phone from a different carrier has given them an advantage over not only other smaller carriers, but the major ones as well. It has become that store location is no longer a limiting factor with over 9 million subscribers (T-Mobile Buys MetroPCS, Adding 9 Million Customers In One Fell Swoop, 2013). The best way for Verizon to combat the success of Metro PCS would be to put more emphasis on their pay-as-you-go options. Although the company does offer a flat rate for their pay-as-you-go smart phones, it isn’t highly marketed. Today’s consumer is looking for the most cost effective price with no surprises on their bill. Much of the company’s focus is on their 4G network however it isn’t offered on their prepay options. Their only offering is on their locked 3G network with a very limited product line-up. Allowing consumers to use bring in their own devices would open up a large client base that Verizon has never had access to. The second force the Porter discusses is the bargaining power of buyer (Porter, 2008). In short this focuses on the power of the buyer and how they seek high quality products and/or services at competitive prices. An example of this in the wireless industry became evident with Ebay, Craigslist and Newegg.com. Consumers no longer have to limit their purchase of their devices...
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