Wolpert- Verizon Wireless Strategic Analysis

Strategic Analysis of
by
Eric Wolpert
MBA-700-X2133: Strategic Management 14TW2
Dr. Patrick Udeh, Instructor
Southern New Hampshire University
March 23, 2014

Wolpert – Strategic Analysis of Verizon Wireless
2 | P a g e S o u t h e r n N e w H a m p s h i r e U n i v e r s i t y
Executive Summary
Verizon Wireless is the largest wireless provider in the United States. It recently became
a wholly-owned subsidiary of Verizon Communications as a result of a $130 billion buyout of
Vodafone’s 45% minority interest. The company enjoys the largest profit margin and most
revenue in the industry. The company also has the most customers with the lowest defection rate,
also known as churn.
This strategic analysis examines the company, its successes and its areas of opportunity.
It also provides insight as to why it has become a leader in the wireless industry, how it got there,
and what needs to happen for the company to maintain its competitive advantage.

Table of Contents
I. Strategyand the Strategic ManagementProcess……………4
II. External Environment and Competitive Position………….. 7
III. Internal Environment and Competitive Position………… 10
IV. Competitive Strategy……………………………………….. 12
V. Strengthening Competitive Position……………………….. 12
VI. The GlobalMarketplace……………………………………. 14
VII. Corporate Strategy:Business Diversification……………… 15
VIII. Ethics, SocialResponsibility& Environ. Sustainability….. 17
IX. Building the Capability to Execute Strategy………………. 18
X. Managing Internal Operations………………………………. 20
XI. Recommendations for Leadership…………………………... 22

I. Strategy and the Strategic Management Process
Verizon Wireless operates in the wireless service industry. It is now a wholly owned
subsidiary of Verizon Communications and focuses on the operation and sale of wireless
products and service over a nationwide network (About Us, 2014). The wireless industry
directly/indirectly employs more than 3.8 million people in the US (About Us, 2014). For the
year ending December 2012 there were 326.4 million wireless connections in the United States
and the market penetration is recorded at 102% (About Us, 2014). In the same year the industry
recorded revenue of $185 billion (About Us, 2014).
Stated Strategyof Verizon Wireless
Verizon Wireless has a strong strategy that has led the company to be the most profitable
wireless provider that has the largest network with the most connections with the most loyal
customer base. Its strategy is expressed by four components:
Powerful technology. Our record speaks for itself: The nation’s largest and most reliable 4G
LTE network and America’s first nationwide 3G wireless broadband network. Verizon Wireless
consistently delivers the most advanced wireless technology available (About Us, 2014).
Technology innovators. Our innovative solutions are changing the mobile landscape,
revolutionizing the way people interact with it and raising everyone’s expectations of what it can
be done. What seemed impossible yesterday is the way we live today. Imagine what we’ll do
tomorrow (About Us, 2014).
Change agents. Our investment in people and commitment to technology drive positive change
in the communities we serve. Through our core initiatives we work to improve the lives of

domestic violence victims, prioritize accessibility and take steps to ensure a sustainable future
(About Us, 2014).
Award winners. The network. Technology. Innovation. Leadership. Corporate citizenship.
Diversity. Customer care. We’re proud to be recognized for those efforts as well as the privilege
of improving the lives of the people and communities we serve (About Us, 2014).
Comparing Industry MissionStatements
The company’s mission statement is relatively verbose when compared to most other
Fortune 500 companies. It is expressed in the form of a credo which combines their vision,
mission and values in one. Verizon uses a Credo for its landline and wireless business units. It is
as follows:
“We have work because our customers value our high-quality communications services.
We deliver superior customer experiences through our products and our actions. Everything we
do we build on a strong network, systems and process foundation. The quality and reliability of
the products we deliver are paramount. Customers pay us to provide them with services that they
can rely on.
We focus outward on the customer, not inward. We make it easy for customers to do business
with us, by listening, anticipating and responding to their needs.
We know our products and can explain them to customers. We focus on fundamental execution.
We are accountable and we follow through with a sense of urgency. We know that having the
highest ethical standards is a competitive advantage.
We know teamwork enables us to serve our customers better and faster. We embrace diversity
and personal development not only because it’s the right thing to do, but also because it’s smart
business.
We are driven not by ego but by accomplishments. We keep our commitments to each other and
our customers. Our word is our contract. We respect and trust one another, communicating
openly, candidly and directly since any other way is unfair and a waste of time. We voice our
opinion and exercise constructive dissent and then rally around the agreed-upon action with our
full support. Any one of us can deliver a view or idea to anyone else, and listen to and value
another’s view regardless of title or level. Ideas live and die on their merits rather than where
they were invented.

We believe integrity is at the core of who we are. It establishes the trust that is critical to the
relationships we have.
We are committed to do the right thing and follow sound business practices in dealing with our
customers, suppliers, owners and competitors. Our competitors are not enemies; they are
challengers who drive us to improve. We are good corporate citizens and share our success with
the community to make the world in which we work better than it was yesterday.
We know that bigness is not our strength, best is our strength.
Bureaucracy is an enemy. We fight every day to stay “small” and keep bureaucracy out. We are
more agile than companies a fraction of our size, because we act fast and take risks every day.
We see crisis and change as opportunities, not threats. We run to a crisis, not away. Change
energizes us. We work hard, take action and take personal accountability for getting things done.
Our actions produce measurable results.
Everything we do is built on the strong foundation of our corporate values.
We work 24x7 because our customers depend on us 24x7. We know our best was good for today.
Tomorrow we’ll do better. We Are VERIZON.”
AT&T Mission Statement
Our mission is to exploit technical innovations for the benefit of AT&T and its customers
by implementing next-generation technologies and network advancements in AT&T's services
and operations (Mission & Vison, 2014).
Sprint MissionStatement
Sprint is guided by a corporate commitment to doing the right thing as it brings the
freedom of mobility to consumers, businesses and government users with a comprehensive range
of wireless and wireline communications services (Company Info, 2014).
T-Mobile
T- Mobile’s mission statement is not obvious. A thorough examination of their website,
annual reports as well as a generalized internet search did not turn up anything specific.

It is obvious that Verizon’s Credo carefully lays out the expectations of how the
organization is to conduct its business whereas its competitors have generalized statements that
loosely define their respective businesses. Following the Credo has led to success in industry
metrics such as new subscribers, churn and financial success. Verizon’s EBITA margin for 2013
was close to 50% (2013 Annual Report, 2014). The company enjoys the highest profit, revenue,
customer base, and loyalty in the industry.
The Credo focuses on integrity, teamwork and honest communication. Change is
constant. The management team is focused on using new technology to create new market
opportunities for their customers and lines of business. The management team leads the company
to be a strong corporate citizen from supporting victims of domestic violence to having crisis
response teams that support federal and NGO disaster response teams.
II. External Environment and Competitive Position
Porter’s Five Forces Evaluation
There are numerous driving forces of change in the wireless industry. Porter’s Five
Forces model allows us to take a standard look at the playing field and evaluate company
performance across all companies within the industry.
Competition in the Industry
The wireless provider industry in the United States is an extremely competitive
marketplace with a lot of potential profit to be made. The reaction to changes in the marketplace
is lightning fast with regard to the size of the industry. Recently T-Mobile has launched its
“uncarrier” campaign which has had significant effect on the industry. In Q2 2013 T-Mobile

gained 1.1 million subscribers versus a loss of 200,000 customers the same period, previous year
(Tsukayama, 2013). This significant year-over-year change can be attributed to their aggressive
marketing campaign, the launch of the iPhone 5 in April, and a new upgrade plan which allows
customers the ability to upgrade sooner than the traditional two years (Tsukayama, 2013).
Verizon Wireless identified this movement in the market from T-Mobile which is the 4th
largest carrier and changed its strategy to address driving forces by launching the Edge Program.
This program allows customers to upgrade their device as soon as 30 days with at least half of
the device cost paid all without signing a two year agreement (Verizon Edge, 2014). This led to
Verizon leading all other carriers with a total of over 2.7 million new connections in the last six
months of 2013 (Quarterly Earnings, 2014).
Potential of New Entrants
Due to the size of the U.S., there is little potential of new entrants into the wireless
industry. Verizon’s physical assets to run a nation-wide network are valued at $209 billion
(Verizon 2012 Annual Report, 2013). This valuation does not include the cost of paying people
to run it or the cost associated with acquiring wireless spectrum. The evidence of the cost, time
and effort involved deploying a nationwide network is cost prohibitive for any new company
entering into competition with the existing wireless carriers.
Power of Suppliers
With the exception of Apple, Inc. Verizon has power over their suppliers. Apple is
known for its control over its supply and distribution chains as it produces products that are in
high demand by its customers (Gupta, Poornima & Randewich, Noel, 2013). Since Apple, Inc. is
the largest company in the world in terms of market capitalization, it would be safe to assume

that they would have the upper hand at the negotiating table with Verizon Wireless. Verizon has
a strong relationship with their suppliers. They entered into a strategic relationship with Google
and Motorola to launch the Droid lineup in 2009 to combat the exclusivity of the iPhone on
AT&T (Cheng, R., & Sheth, N, 2009).
Power of Customers
Verizon has strong leverage over their customers. The carrier is one of the most
expensive in the United States yet they added more new connections in the 4th quarter of 2013
than their two biggest competitors (PR Newswire, 2014). At this point pricing wars have not
caused customers to leave Verizon. The value proposition of a reliable network trumps low
customer cost.
Threat of Substitute Products
There is very little threat for substitute products. A smartphone combines so many
electronic devices that it could be considered the Swiss Army Knife of the 21st century. If a
person wanted to look at a viable substitute, they would have to invest in multiple electronic
devices to replace the capabilities of a smartphone. This would not be practical in most cases.
Industry Position
Based upon the Five Forces model, Verizon Wireless is the leader of the wireless
industry in the United States. The quality of the network attracts customers in droves with little
threat from new entrants, suppliers, customers or substitute products. Verizon has shown that
they are always looking for new ways to stay competitive and adapt to the changing marketplace.

Competition within the industry is the most influential of Porter’s five forces on the
company. We have seen that T-Mobile has moved the market and sparked a competitive battle
focusing on AT&T but Verizon is targeted as by association. Within the last six months the
industry has completely changed pricing structures of their phones and monthly service plans.
This new pricing structure eliminates the lucrative contract and allows customers to get a phone
much sooner than the traditional two year time period.
In order to maintain the position of industry leader, Verizon needs to reiterate why
customers choose them in the first place. These competitive advantages of network coverage and
device lineup will overshadow the pricing war and customers will confirm their value
proposition of why they are willing to pay a premium for service with Verizon. As the market
matures profitability will reign by cutting costs. Wireless companies pay large sums for device
subsidies on two-year contracts. The ability to keep a customer without a contract on a leasing
program such as the Edge promotion is the lowest cost way to keep a customer paying the same
monthly rate.
If the pricing war starts to have a negative effect on Verizon’s growth alternative
measures will need to occur. In this case it would be beneficial to increase the value proposition
by adding low cost services which would maintain the revenue stream.
III. Internal Environment and Competitive Position
The company has performed well to stated strategic objectives and performance targets.
For the fourth quarter of 2013 Verizon Wireless reported total revenue of $21.125 billion up
5.7% from the previous year (Wireless – Selected Financial Results, 2014). Its EBITA was 47%

an uptick of 22.6% from the same quarter in the previous year (Wireless – Selected Financial
Results, 2014).
The biggest strength of Verizon Wireless is the reliability and coverage of its network
and its ability to attract new customers and keep existing ones better than its competition.
Financially, it is able to have a higher EBITA margin than the competition meaning that it makes
more efficient use of its revenue and is more profitable. Verizon can use this profit to research
products and services to invent new revenue streams for future growth. The opportunities within
the areas of machine-to-machine communications are one example of a revenue stream with a lot
of potential. Verizon can use the coverage of its network and the technology in its Innovation
Centers in California and Massachusetts to win marketshare of the machine-to-machine industry.
The one aspect of weakness that has recently occurred is of a financial nature. Verizon
Communications, Inc. has agreed to purchase Vodafone’s 45% stake in Verizon Wireless for
$130 billion, taking on a huge amount of debt (Toronto Star, 2013). If the economy takes another
downturn the debt load may be too great for Verizon, especially if any pricing war with T-
Mobile heats up. The competition will ultimately improve their networks to operate on par with
the performance of Verizon Wireless. At this point Verizon Wireless will lose its largest
competitive advantage. The company will have to adapt to this threat of network equality to
ensure that they don’t lose differentiation from its competition.
Verizon Wireless’ core competency is its ability to attract new customers and keep its
existing customer base and earn more profitable money better than any competitor. This allows
the company to stay at the top of the wireless industry.

IV. Competitive Strategy
Verizon Wireless employs a broad differentiation strategy as they provide a great
customer experience, cutting edge devices, and a reliable network with the best coverage. These
tenants of its strategy allow the company to grow its customer base faster and lose customers
slower than the competition. In order to maintain this competitive strategy the company needs to
continually innovate to keep this differentiation in a highly competitive marketplace.
V. Strengthening Competitive Position
The company’s strategy is to be the largest and most reliable wireless network in the
United States. The company has focused heavily on investing in its network to the tune of $9.4
billion in 2013 alone (About Verizon Wireless, 2013). Beginning in late 2010 the company has
built out its 4G LTE network to exceed the nationwide footprint of its 3G network in less than 3
years. The company has also partnered with Motorola and Google to launch the Droid brand of
Android phones that are iconic and unique to the Verizon network (About Verizon Wireless,
2013). This lineup provides a unique smartphone experience such as the Droid Maxx with a 48
hour battery-life, unheard of in the marketplace.
The wireless industry in the U.S. is extremely competitive. Just like any sports team
offense and defense need to be used together to maintain a competitive advantage over other
companies. Due to the maturing of the wireless market in the U.S. Verizon Wireless has
concentrated on offering new products and services that new and existing customers can
purchase. In a defensive move to T-Mobile’s self-proclaimed pricing war, the company recently
released the More Everything plan which introduced value-added services like cloud backup

through Verizon Cloud and concentrated account management through Family Base (More
Everything Plan, 2014). Family Base gives consumers control over usage to avoid overage fees
from using too much data. They have also streamlined operations through Verizon Lean Six
Sigma. This internal program deals with operational efficiency to streamline and energize
operations across both wireless and wireline business segments (Freifeld, 2013). The
combination of new products and services and operational efficiencies resulted in a 1.7%
increase in operational expenses vs. a 6.8% increase in operational revenues between 2012 and
2013.
Complementary Strategic Options
Verizon Wireless has pursued complementary strategic options over the past few years.
The company has branded itself to become not just a cellphone company but a technology
company. There is a current store redesign to focus on various aspects of the “mobile lifestyle”
(Smith, 2013). The zones focus on music, fitness, home, business and mobile connectivity
(Smith, 2013). This is shifting focus away from cellphones and towards profitable accessories. A
focus on accessories will ensure that revenue growth will be maintained in the event of a pricing
war over rates of monthly service.
The company has also partnered with other Verizon Communication, Inc. subsidiaries
such as Hughes Telematics and Terremark to design and develop services for Enterprise and
Government customers that utilize automation and cloud based services (About Us, 2014). New
product offerings through new services will help to ensure a positive revenue growth for the near
future.
Looking Towards the Future

Recommendations for future complementary strategic options are to focus on machine-
to-machine connectivity for home and businesses. By continuing to be a market innovator,
Verizon Wireless will remain at the top of the industry. Machine-to-machine connectivity
promises multiple connections per account as businesses and consumers keep tabs on various
assets including buildings, vehicles, and people. According to Parks Associates, “Widespread
consumer and enterprise adoption of broadband Internet service, wireless routers, and devices
with mobile connectivity means the ingredients are there for the M2M market to take off. Plus,
mobile network operators have unique assets that position them to take advantage of the growing
M2M market (Presswire, 2013). A focus on the many (connections)-to-one (account) proposition
makes machine-to-machine communications a viable next step in the growth of Verizon
Wireless. The company’s competitors are still focusing on building out their 4G LTE networks
that they don’t have the resources available to design “the next big thing.” Having a long time
free of competition in the research and design of new products and services is a big advantage as
the company will be bringing new technology to market before their competitors creating market
exclusivity.
VI. The Global Marketplace
Verizon Wireless does not own any wireless networks outside of the United States. The
company uses strategic alliances with various wireless providers to ensure coverage for
customers that travel internationally. Verizon Wireless provides coverage in over 200 countries
with varying roaming rates (Global Services, 2014).
Even though the company does not have any wireless assets outside the United States,
great strides have been made to provide a great customer experience for the customer who

travels internationally. The company has gained recognition for its coverage through its
partnerships. For the past four years they have been chosen as the best wireless service in the
world by readers of the Global Traveler magazine (About Verizon Wireless, 2014).
One of Verizon’s main competitors in the global coverage market is T-Mobile where the
company offers free data roaming in over 100 countries with a low per minute rate of 20 cents
(Global Coverage, 2014). Verizon Wireless could work with their strategic partners to negotiate
lower roaming fees to maintain a competitive advantage over T-Mobile. Verizon
Communications, Inc. operates in over 130 countries. Now that Verizon Wireless is wholly-
owned by its parent company, establishing an international presence may be easier now that all
of the cash flow from the wireless business is at Verizon’s disposal. This money could be used to
either further existing partnerships or actually establish a physical presence in other countries.
VII. Corporate Strategy: Business Diversification
Verizon Wireless uses partnerships with its affiliated companies of its parent company
Verizon Communications. In addition to the sale of wireless devices and service, the company
has recently branched out into offering a diverse line of products involving the Cloud. Verizon
Cloud is a “freemium” service as it allows customers to have a limited amount of Cloud storage
space for their devices with the option to increase the available amount for a monthly service
charge. Verizon Wireless has also made a significant investment to widening the offering of
various accessories. Verizon now offers over 1100 different accessories on their website (All
Accessories, 2014). Some of the more unusual offerings include a garage door opener, door
locks, remote-controlled drones and scales for weighing a person (All Accessories, 2014).
Verizon Wireless’ focus on the diverse products has contributed to an increase in revenues for
the total year of 2013 vs. 2012. Service revenues in particular increased 8.3% while equipment

such as accessory and phone sales only increased by 1.1 percent (Wireless- Selected Financial
Results, 2014). As Verizon Wireless is reported as a part of Verizon Communications, more
insight is not available as to the breakdown of the additional revenue gained from the additional
products. Since revenues are growing, it can be assumed that the diversification is not hurting the
company.
As of February 21, 2014 Verizon Communications Inc. completed the purchase of
Vodafone PLC’s 45% stake in Verizon Wireless, making the company a wholly owned
subsidiary. Future financial reporting after the completed purchase may lead to further insight
into the financial impact caused by the company’s diversification.
In the years to come, Verizon and Verizon Wireless seem poised to move forward as a
true telecommunications conglomerate. Lowell McAdam, CEO of Verizon Communications,
recently appointed Marni Walden, COO of Verizon Wireless, to lead the newly formed Product
Development and Management organization. This new entity “will leverage all of Verizon’s
assets to develop innovative products quickly across the company’s wireless, wireline, IP and
cloud networks and platforms” (Press Release, 2014). This new organization will add to the
competitive advantage of the Verizon organization. Verizon Wireless will benefit with more
service offerings to increase its revenue of its largest revenue stream; monthly service revenues.
A proposal for future business diversification would be for the company to use the power
of its network and its cloud computing to venture in the booming industry of EMR or electronic
medical records. As of January of 2013 the top 10 EMR management companies controlled
64.8% of the industry - a decrease of 3 percent in just three months (McCormack,2014). This

trend means that there is no clear universal provider and Verizon could use the power of its
network and name recognition to gain marketshare into this field.
In 2009 the Health Information Technology for Economic and Clinical Health Act was
signed into law. This act included $19 billion in incentives for healthcare offices to adopt EMRs
with a mandate for healthcare providers to become “meaningful users” by 2015 (McCormack,
2014). Verizon Wireless’ entry into the EMR industry will give access to provide not only SaaS
(Software as a Service) solutions but additional growth to wireless connections as healthcare
providers would look to portable electronic devices such as tablets or laptop computers to access
the EMRs. This industry will lead to positive growth in both the service and equipment revenues
for Verizon Wireless.
VIII. Ethics, Social Responsibility, and Environmental
Sustainability
Summarize the corporate ethics statement, statement about social responsibility, and
sustainability statement. If none exist, report what you believe are these unwritten statements or
code of conduct based on what the company says about itself. Be sure to answer the following
questions:
Verizon Wireless has a Credo which establishes the culture, ethics, and expected conduct
of the company. The core values of the company are integrity, respect, performance excellence
and accountability (Code of Conduct, 2014). The company by and large does live by their Credo.
They have won numerous awards recognizing the company as a workplace that is concerned
with working mothers, veterans and military, IT excellence, LGBT equality and diversity (About
Us, 2014).

Verizon Wireless does have a proactive social responsibility statement “At Verizon
Wireless, we use our resources to improve the lives of individuals and the communities we serve.
With our network, our people and our financial support, we’re building a better world, one
connection at a time” (About Us, 2014). With programs such as Hopeline, which supports
victims of domestic violence, the company does exhibit their statement in action. Verizon
Wireless also has a crisis response team that responds to natural disasters to support first
responders and residents that are in need (About Us, 2014).
Verizon Wireless follows environmentally sustainable business practices. The company
participates in a device recycling program that has kept over 850 tons of electronic waste out of
landfills (About Us, 2014). The company also is energy conscious. The company has over 100
stores that are LEED certified and over 100 that are Energy Star certified (About Us, 2014).
There is no question that Verizon Wireless is a good corporate citizen. There is some
room for improvement in the realm of its sustainable practices. The company mentions that they
have over 100 locations that are LEED certified; this is less than 10% of the 1700 corporate retail
locations (About Us, 2014). Verizon Wireless could also implore their resellers to take on energy
efficiency and sustainability as a central role as representatives of their company. This would
align with the overall goals of the company to “build a better world, one connection at a time.”
IX. Building the Capability to Execute Strategy
The company hires talent across six functional areas; customer service, finance, network,
professional, sales, and technology (Our People, 2014). Focus on education and experience is
highlighted in job descriptions with most positions requiring a college degree. Verizon has been
honored with many awards involving workplace diversity of various cultural backgrounds and

acceptance of working moms as well as current and veteran military members (Our People,
2014). This ensures that the workforce has many ideas from a variety of backgrounds to ensure a
well-rounded organization.
Once employed, significant training and educational opportunities are provided to
employees. Up-front tuition assistance is provided for relevant college curriculums to aid career
development. Many classroom and online training modules are held to educate employees in
changes to the wireless and corporate environment. The company was ranked the top of 125
companies for the second year in a row by Training Magazine (Freifield, 2013). This award
defines the company as excelling in employee development across multiple disciplines.
Continuous training ensures that the company will remain nimble enough to drive the technology
market and maintain a strong competitive advantage by having the best trained staff in the
industry. The company also has a centralized database of employee methods and procedures to
ensure that everyone is on the same page when conducting company activities. A company that
is inventing the future of communications is dependent on a strong, intelligent workforce to
remain competitive. The multifaceted employee base is arranged in a way to maximize the talent
for the benefit of the entire organization.
The company is configured in a matrix format as a division of Verizon Communications,
Inc. This matrix format has multiple departments such as HR, IT, Finance, Marketing, and
Administration servicing the various business units of Verizon Wireless such as Retail Sales,
Business and Government, Enterprise, Customer Service, and Network. This format works best
for a large company and this organization is a great example of how departments can be shared
across various business units, creating a matrix structure. This structure provides the most
efficient use of the support departments. In this instance an employee in Network, Retail Sales,

or Customer Service would contact the same IT department to replace a broken keyboard on
their terminal. This provides a significant cost savings as a IT department does not need to be
staffed for each business unit.
Now that Verizon Communications has full ownership of Verizon Wireless, departments
such as Human Resources and Marketing may be consolidated to function as an operation of the
entire conglomerate. A consolidation in the Marketing department specifically would help to
ensure a common brand across the entire organization.
X. Managing Internal Operations
In addition to its industry-leading network, the company focuses on the customer
experience. Employees are encouraged to sell with integrity and solve any issues on the first call
to customer service. This mantra leads to a happier customer who will tell others and stay loyal.
To achieve a high level of customer satisfaction, much is expected of an employee at
Verizon Wireless. Information systems are used to mine various reports of customer data to
ensure that the company has the best opportunity to maximize each customer experience. The
company uses their own customer database that is shared across the sales and customer service
lines of business. This unique system allows any employee to access customer’s accounts
without regard to physical location or change in job function. The system has evolved so that
most customer facing transactions in a retail store can be completed on an iPad. This provides for
a more intimate customer experience which has led to an increase in average monthly revenue
per account (ARPA) in the past three years. ARPA has risen 14.4% to $153.93 since 2011
(Verizon 2013 Annual Report, 2014).

Motivation
Verizon Wireless provides aggressive targets for its employees and offers performance-based
incentive compensation. In all sales roles, a commission structure is present that can easily
exceed twice the base pay of certain positions. Commission payments are continually aligned
with the changing products and services that the company provides. For all other employees, a
short term incentive program is issued based upon the performance of the company as well as the
overall customer experience perception.
In addition to the financial aspect of motivating employees, the company has a culture
that is set by the aforementioned Credo. This can be experienced by their customers when they
visit a corporate store or call customer service. This culture provides a healthy work environment
that embraces diversity for the benefit of each employee.
Executive Compensation
The chart in Figure 1 displays the compensation packages for the top three executives for
Verizon Communications, Inc. Since Verizon Wireless is now a strategic business unit of
Figure 1. Executive Compensation. Source:2014 VerizonProxyStatement p.43

Verizon Communications, only Verizon Wireless’ President and CEO Dan Mead’s
compensation is publically available. He serves a dual role as Executive Vice President for
Verizon Communications. Executive compensation at Verizon is highly variable. The base salary
is designed to be around 10% of total compensation while the rest is contingent upon the
performance of the company. For 2013, Dan Mead’s base salary was $880,769 with total
compensation exceeding $7.1 million.
Dan Mead’s compensation was very similar to the head of AT&T mobility, Ralph de la
Vega. AT&T has a similar variable structure where 8% of the total compensation is guaranteed
annual salary and the rest is at risk. Mr. de la Vega’s base salary was $895,000 with a total
compensation of $7.3 million (2014 AT&T Proxy Statement, 2014). Dan Hesse, CEO of Sprint
had a banner year of total compensation of $49 million, but most of the total was an incentive
payout of stock options for him to stay at the helm for the next five years under the new owners
of Sprint, Softbank (Davis, 2014). With the exception of the one-time payment, Dan Hesse’s
compensation was around $11 million (Davis, 2014). This seems to be an anomaly since Verizon
Wireless and AT&T are significantly larger companies in terms of revenue and customer base.
As margins tighten due to pricing wars and a slowdown in technology advancement, it
would not be surprising for the incentive-based pay taking hold across more parts of the
business. This would hold employees accountable for their performance and reward those who
perform to the high expectations the company sets forth.
XI. Recommendations for Leadership
One of the most important things that Verizon Wireless needs to do is to continuously
invest in innovation. We can look to Apple, Inc. to see where investors can be scared about the

lack of the next best thing. In 2013, Apple’s stock hit a high of $700.09 on September 21, 2012
(Finance: Apple, 2014). In 18 months the stock has plunged 24% to a price of $532 on March 21,
2014 (Finance: Apple, 2014). This loss of market value can have serious implications on a
company by not having available funds to staff departments and to conduct expensive research
and development. Verizon Wireless is in an interesting predicament where they are not makers
of hardware. The company is reliant on the innovation of other companies to bring iconic devices
to market to attract customers. Verizon Wireless’ role is to ensure that the network that these
devices run on is as close to perfection as possible.
If the growth of technology in the last five years is any indication of future growth,
Verizon Wireless certainly has its work cut out for them. In order to ensure that the company
maintains its competitive advantage of network superiority and iconic devices, the company
should concentrate on elaborate strategic partnerships to design the next evolution in the wireless
industry. Visionary titans such as Steve Jobs and Bill Gates have changed the way that society
functions. It is up to Verizon to continue their legacy and truly evolve the wireless environment.
Stronger investment in their Innovation Centers in Waltham and San Francisco will trailblaze the
way into the future.
Concentration in emerging industries such as the medical field, transportation, or
distribution provides a wide range of opportunities. Google is working on a driverless car. Why
not take the next step and utilize the power of a network to work on automated trucking or other
types of transportation which could eliminate accidents due to human error?
The future is undefined. It is up to companies like Verizon Wireless to take the next step
in the progression of society and the human experience in a wireless world.

References:
2014 Proxy Statement, Verizon Communications, Inc. 2014 Retrieved from
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