Organizational Economics Final Case Study: Verizon ✓ Solved

Organizational Economics Final Case Study Paper: Verizon

Your final case study paper should be 6-8 pages and will consist of 5 sections (each about 1.5-2.0 pages). The first section should be an overview of the company Verizon:

• What does the company do?
• What product or service does it offer?
• Where is it located?
• Who are its main competitors?
• What is the market structure (e.g. pure competition, monopoly, oligopoly, etc.)?
• How is it regulated?

This first section should provide a background or baseline understanding of the company in support of the rest of the paper. For the remaining four sections, include the following:

• A demand analysis illustrating the most applicable terms, concepts, or ideas in Chapter 3, including consumer behavior (purchasing power and substitution effect), targeting, switching costs, positioning, price elasticity of demand (demand determinants), and interpreting income and advertising elasticity.
• A pricing analysis illustrating the most applicable terms, concepts, or ideas in Chapter 14, including value in use/value-based pricing (product specifications, ease of use, service frequency, change order responsiveness, loyalty programs, and empathy in order processing), couponing, bundling, price discrimination, and price skimming versus full-cost pricing.
• A “What they got wrong” analysis detailing a strategy mistake using the course concepts.
• A “What they got right” analysis detailing a strategy win using the course concepts.

If you are having trouble addressing or finding enough information for any of the sections above, you can augment your analysis by articulating what you think the company should do. For example, if you can’t find any information on your company’s value-based pricing, explain how you would price the product or service and why. This is Organizational (managerial) Economics; make some decisions on behalf of your company and support them using concepts and ideas from the course! The goal of this paper is to illustrate that you understand the concepts covered in this course and that you can apply them to a real company. Remember to document or source borrowed research using the standard APA citation style.

Extensive quoting is not necessary (and not additive to your grade). Reference the source, but, to the extent possible, explain the concept or strategy in your own words. For example, if you find a great article on your company’s pricing strategy, explain the article and concepts in your own words and source it. Do not cut and paste long passages of text. The paper should be 6-8 pages (or more) double-spaced, size 12 font Times New Roman, Calibri, or Cambria. The final paper is due on Sunday of Week 13.

Sample Paper For Above instruction

The telecommunications industry is a vital component of modern infrastructure, and Verizon Communications Inc. stands as one of the leading companies within this sector. Established in 1983 and headquartered in New York City, Verizon primarily offers wireless telecommunications services, including voice, data plans, and internet connectivity. Its extensive network infrastructure enables it to serve millions of customers across the United States and globally, making it a dominant player in the American telecommunications market.

Verizon operates within an oligopolistic market structure characterized by a few large firms dominating the industry. Its main competitors include AT&T, T-Mobile, and Sprint (now merged with T-Mobile). These firms compete vigorously through pricing, service quality, coverage, and technological innovation. The company is regulated by the Federal Communications Commission (FCC), which oversees spectrum allocation, fair competition practices, and consumer protection policies. Additionally, Verizon must comply with state regulations governing telecommunications services, customer privacy, and service standards.

In understanding Verizon’s market and strategic positioning, it is essential to analyze consumer behavior and demand elasticity. Consumers in the telecommunications sector tend to have high switching costs, especially due to the hassle of changing phone numbers, plans, or devices. This creates a relatively inelastic demand in the short term, although demand can vary with price changes and technological innovations. Verizon’s targeting strategy emphasizes urban and suburban populations with high-income levels seeking reliable, high-speed internet and mobile services. Its positioning as a premium provider with high-quality coverage and customer service aligns with consumer preferences for value and stability, impacting its demand elasticity.

Regarding demand determinants, the price elasticity of Verizon’s services is moderately elastic for high-end consumers who have substitute options like T-Mobile and AT&T. However, certain segments, such as enterprise clients or consumers heavily reliant on Verizon’s extensive network, exhibit inelastic demand. Verizon’s advertising elasticity indicates that increases in marketing expenditure can boost demand, particularly for new services like 5G. Income elasticity is significant, as higher-income consumers are more willing to pay premium prices for superior service, which aligns with Verizon’s premium pricing strategy.

From a pricing perspective, Verizon employs value-based pricing, emphasizing the quality, reliability, and coverage of its services. The company offers bundled packages, combining mobile, internet, and television services to increase customer retention and perceived value. Loyalty programs and promotional discounts such as coupons and device subsidies serve as incentive tools to attract new customers and retain existing ones. Verizon also utilizes price discrimination tactics by offering different plans tailored to various consumer segments, including individual, family, and enterprise plans. Price skimming is evident when Verizon introduces new 5G plans at premium prices before gradually lowering them to attract a broader customer base.

Analyzing strategic missteps, Verizon’s limited investment in advertising over recent years has hampered its ability to effectively communicate its superior network benefits to consumers. Unlike some competitors who heavily promote their technological advancements, Verizon’s conservative advertising approach may have led to missed opportunities in market expansion and brand reinforcement. Additionally, the high costs associated with maintaining its extensive network infrastructure and premium pricing have placed pressure on customer acquisition and retention, especially amidst rising competition and price wars with other service providers.

On the positive side, Verizon’s core strengths include its extensive network coverage and technological leadership in 5G deployment. Its strategic focus on providing reliable, high-speed internet services aligns with consumer preferences for quality and stability. The company's investments in fiber optic infrastructure and 5G networks position it as a leader in next-generation telecommunications, allowing it to charge premium prices and sustain profitability. Verizon’s network reliability and customer service excellence have cultivated strong brand loyalty, making it a top choice for high-income consumers and business clients alike.

In conclusion, Verizon’s strategic positioning within an oligopolistic market leverages demand elasticity, value-based pricing, and technological innovation to retain its competitive edge. Although it faces challenges such as high infrastructure costs and intense competition, its strengths lie in its extensive network, brand reputation, and targeted premium offerings. Future strategies should include increased advertising efforts, diversified pricing models, and expansion in emerging markets to sustain growth and market dominance. A balanced application of demand and pricing principles will be pivotal for Verizon’s continued success in the rapidly evolving telecommunications landscape.

References

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