AT&T Versus Verizon: A Financial Comparison SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Finance & Accounting
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of AT&T Versus Verizon: A Financial Comparison
This case asks students to prepare a report comparing the financial and operating performance of AT&T and Verizon. Taking the perspective of a communications industry analyst, they must also consider the differences between and implications of the companies' business strategies and the differences between the technology and growth rates of the wireless and wireline business segments. As part of this exercise, students reorganize the balance sheets in terms of operating and financial components, calculate changes in working capital, derive un-levered free cash flow (FCF), and apply DuPont style ratios and margin analysis on a consolidated-as well as a segment-basis. Students must also consider the effects of actuarial gains and losses on operating results; and how analysts might adjust for those effects. The case was designed for first-year MBA students in financial statement analysis (FSA) and accounting classes, but it could also be used in other courses to prepare for discounted cash flow (DCF) exercises.
Swot Analysis of "AT&T Versus Verizon: A Financial Comparison" written by V.G. Narayanan, Joel L. Heilprin includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Verizon Actuarial facing as an external strategic factors. Some of the topics covered in AT&T Versus Verizon: A Financial Comparison case study are - Strategic Management Strategies, Budgeting, Business models, Financial analysis, Operations management and Finance & Accounting.
Some of the macro environment factors that can be used to understand the AT&T Versus Verizon: A Financial Comparison casestudy better are - – talent flight as more people leaving formal jobs, increasing transportation and logistics costs, central banks are concerned over increasing inflation, increasing government debt because of Covid-19 spendings, supply chains are disrupted by pandemic , increasing commodity prices, increasing household debt because of falling income levels,
challanges to central banks by blockchain based private currencies, there is backlash against globalization, etc
Introduction to SWOT Analysis of AT&T Versus Verizon: A Financial Comparison
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in AT&T Versus Verizon: A Financial Comparison case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Verizon Actuarial, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Verizon Actuarial operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of AT&T Versus Verizon: A Financial Comparison can be done for the following purposes –
1. Strategic planning using facts provided in AT&T Versus Verizon: A Financial Comparison case study
2. Improving business portfolio management of Verizon Actuarial
3. Assessing feasibility of the new initiative in Finance & Accounting field.
4. Making a Finance & Accounting topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Verizon Actuarial
Strengths AT&T Versus Verizon: A Financial Comparison | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Verizon Actuarial in AT&T Versus Verizon: A Financial Comparison Harvard Business Review case study are -
Ability to recruit top talent
– Verizon Actuarial is one of the leading recruiters in the industry. Managers in the AT&T Versus Verizon: A Financial Comparison are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
High switching costs
– The high switching costs that Verizon Actuarial has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Strong track record of project management
– Verizon Actuarial is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Low bargaining power of suppliers
– Suppliers of Verizon Actuarial in the sector have low bargaining power. AT&T Versus Verizon: A Financial Comparison has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Verizon Actuarial to manage not only supply disruptions but also source products at highly competitive prices.
Organizational Resilience of Verizon Actuarial
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Verizon Actuarial does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Innovation driven organization
– Verizon Actuarial is one of the most innovative firm in sector. Manager in AT&T Versus Verizon: A Financial Comparison Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Learning organization
- Verizon Actuarial is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Verizon Actuarial is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in AT&T Versus Verizon: A Financial Comparison Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Effective Research and Development (R&D)
– Verizon Actuarial has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study AT&T Versus Verizon: A Financial Comparison - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Analytics focus
– Verizon Actuarial is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by V.G. Narayanan, Joel L. Heilprin can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Highly skilled collaborators
– Verizon Actuarial has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in AT&T Versus Verizon: A Financial Comparison HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Diverse revenue streams
– Verizon Actuarial is present in almost all the verticals within the industry. This has provided firm in AT&T Versus Verizon: A Financial Comparison case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Successful track record of launching new products
– Verizon Actuarial has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Verizon Actuarial has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Weaknesses AT&T Versus Verizon: A Financial Comparison | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of AT&T Versus Verizon: A Financial Comparison are -
High bargaining power of channel partners
– Because of the regulatory requirements, V.G. Narayanan, Joel L. Heilprin suggests that, Verizon Actuarial is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the AT&T Versus Verizon: A Financial Comparison HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Verizon Actuarial has relatively successful track record of launching new products.
Skills based hiring
– The stress on hiring functional specialists at Verizon Actuarial has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
No frontier risks strategy
– After analyzing the HBR case study AT&T Versus Verizon: A Financial Comparison, it seems that company is thinking about the frontier risks that can impact Finance & Accounting strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study AT&T Versus Verizon: A Financial Comparison, is just above the industry average. Verizon Actuarial needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study AT&T Versus Verizon: A Financial Comparison, in the dynamic environment Verizon Actuarial has struggled to respond to the nimble upstart competition. Verizon Actuarial has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Lack of clear differentiation of Verizon Actuarial products
– To increase the profitability and margins on the products, Verizon Actuarial needs to provide more differentiated products than what it is currently offering in the marketplace.
Low market penetration in new markets
– Outside its home market of Verizon Actuarial, firm in the HBR case study AT&T Versus Verizon: A Financial Comparison needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Increasing silos among functional specialists
– The organizational structure of Verizon Actuarial is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. Verizon Actuarial needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Verizon Actuarial to focus more on services rather than just following the product oriented approach.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study AT&T Versus Verizon: A Financial Comparison, it seems that the employees of Verizon Actuarial don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
Slow decision making process
– As mentioned earlier in the report, Verizon Actuarial has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Verizon Actuarial even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
Opportunities AT&T Versus Verizon: A Financial Comparison | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study AT&T Versus Verizon: A Financial Comparison are -
Manufacturing automation
– Verizon Actuarial can use the latest technology developments to improve its manufacturing and designing process in Finance & Accounting segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Building a culture of innovation
– managers at Verizon Actuarial can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Finance & Accounting segment.
Learning at scale
– Online learning technologies has now opened space for Verizon Actuarial to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Verizon Actuarial in the consumer business. Now Verizon Actuarial can target international markets with far fewer capital restrictions requirements than the existing system.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Finance & Accounting industry, but it has also influenced the consumer preferences. Verizon Actuarial can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Verizon Actuarial in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Finance & Accounting segment, and it will provide faster access to the consumers.
Better consumer reach
– The expansion of the 5G network will help Verizon Actuarial to increase its market reach. Verizon Actuarial will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Leveraging digital technologies
– Verizon Actuarial can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Developing new processes and practices
– Verizon Actuarial can develop new processes and procedures in Finance & Accounting industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Verizon Actuarial can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, AT&T Versus Verizon: A Financial Comparison, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Finance & Accounting industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Verizon Actuarial can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Verizon Actuarial can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Verizon Actuarial can use these opportunities to build new business models that can help the communities that Verizon Actuarial operates in. Secondly it can use opportunities from government spending in Finance & Accounting sector.
Loyalty marketing
– Verizon Actuarial has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Threats AT&T Versus Verizon: A Financial Comparison External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study AT&T Versus Verizon: A Financial Comparison are -
Shortening product life cycle
– it is one of the major threat that Verizon Actuarial is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Technology acceleration in Forth Industrial Revolution
– Verizon Actuarial has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Verizon Actuarial needs to keep up with the evolution of technology in the Finance & Accounting sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Verizon Actuarial needs to understand the core reasons impacting the Finance & Accounting industry. This will help it in building a better workplace.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Verizon Actuarial with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Regulatory challenges
– Verizon Actuarial needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Finance & Accounting industry regulations.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Verizon Actuarial can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study AT&T Versus Verizon: A Financial Comparison .
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study AT&T Versus Verizon: A Financial Comparison, Verizon Actuarial may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Finance & Accounting .
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Verizon Actuarial will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Verizon Actuarial in the Finance & Accounting sector and impact the bottomline of the organization.
High dependence on third party suppliers
– Verizon Actuarial high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Verizon Actuarial.
Stagnating economy with rate increase
– Verizon Actuarial can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Weighted SWOT Analysis of AT&T Versus Verizon: A Financial Comparison Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study AT&T Versus Verizon: A Financial Comparison needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study AT&T Versus Verizon: A Financial Comparison is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study AT&T Versus Verizon: A Financial Comparison is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of AT&T Versus Verizon: A Financial Comparison is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Verizon Actuarial needs to make to build a sustainable competitive advantage.