Verizon Wireless: Examining Fiscal Policy in a Competitive Market - Essay Sample

Introduction

Several factors affect the fiscal policy to be adopted by the company. The company's executive must consider these factors to ensure that effective and sound financial policies are adopted. Verizon Wireless is a company that is in a financially sensitive, yet highly competitive market. Unemployment rates, inflation, and gross domestic product (GDP) trends in the USA must be highly considered by the executive.

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According to the 2019 USA's U-3 and U-6 unemployment rates, the country has a considerable fiscal capability. The country's statistics indicate that as of July 2019, the U-6 unemployment rate was seven percent, while the U-3 unemployment rate was six percent. These unemployment rates indicate that the unemployment rate in the USA is high. It also shows that the number of discouraged employees is high. Verizon Wireless must consider this fact to ensure that better working policies are implemented. Finances can be allocated to employee motivation policies to ensure that employee productivity is improved (Luo & Shang, 2016). Also, the company's executive should invest more capital in employee development, thus ensuring that the firm's fiscal policy is geared towards employee satisfaction.

The US has had a fluctuating inflation rate. The Consumer Price Index (CPI) and Product Price Index (PPI) illustrate that in recent months, the rate of inflation has reduced. The reduction is in favor of the company's financial performance. Despite the reduction, the inflation rate is still unpredictable, which is a great threat to Verizon Wireless' financial stability. Also, the country's inflation is not yet at the required level of 1.5%. Predictions show that it may rise in the years 2020 and 2021. The company needs to implement effective measures to counter the expected increase in inflation. Pricing is the major fiscal policy that the company can use to adapt to rising inflation rates. In case CPI and PPI levels reduce, it is advisable that the company increases the price of its products to ensure its financial stability (Lecaj, Baftiu, & Sylaj, 2015). Also, reducing the firm's debt will guarantee an effective performance for the company. The company will benefit from increased loan interest rates that are rampant when inflation rates are high. Cutting costs and improving cash flow in the company are other measures that will ensure the company's financial performance in an environment with high inflation rates (Gaffard, Napoletano & Battiston, 2018). When inflation is high, costs are exaggerated, unstable, and unpredictable, prompting companies to spend more. However, when costs are minimized, the company will have a stable financial performance. Also, developing effective cash flow policies such as the use of electronic payments to track payments will ensure that an effective financial operation is achieved by the company. Therefore, these fiscal policies will be of great help to Verizon Wireless given the state USA's CPI and PPI rates.

USA's GDP levels are important in making financial decisions. The country's GDP for the past financial yeas has fluctuated. In terms of percentage change from the preceding quarter, the second, third and fourth quarter of 2018 recorded a GDP of 4.2%, 3.5%, 2.2% respectively, while the first quarter of 2019 recorded a GDP of 3.1%. These fluctuations in GDP illustrate that the country's productivity s unstable. Verizon Wireless must implement fiscal policies that will ensure the company has assured productivity expectations. The major policy required is a capital investment in effective production mechanisms (Micic, 2017). For instance, focusing the company's expenditure on technology-based production approaches will help in boosting the firm's productivity. Also, investing financial resources into research and development will assure the company a stable financial performance (Lecaj, Baftiu, & Sylaj, 2015). Any fiscal policy developed to ensure that productivity is improved must focus on facilitating a stable financial environment. Research development and implementation of technology initiatives in production will offer effective solutions to the company's problems by ensuring a positive contribution to the USA's GDP.

Five-year financial trends based on the USA's GDP, inflation rate, and the U3 and U6 unemployment rates indicate that the country is a radical financial environment. The major trend identified is financial fluctuations, which are highly influenced by political, social, and civic factors. Forecast of the country's financial performance is seen to bring ineffective financial implications on Verizon Wireless. The company should adopt long-term financial goals to ensure itself from the volatile financial environment. The major fiscal policies that the company should implement is the stabilization and improvement of cash flows. Cash flows influence factors that help in building the financial stability of a firm (Allen, 2012). For instance, tracking costs and revenues using technology-based accounts is a cash flow strategy that will boost Verizon's financial certainty. Therefore, trends challenge the company's executive to develop long-term financial solutions and initiatives to boost Verizon's financial performance.

References

Allen, F. (2012). Trends in Financial Innovation and their Welfare Impact: an Overview. European Financial Management, 18(4), 493-514. doi: 10.1111/j.1468-036x.2012.00658.x

Gaffard, J., Napoletano, M., & Battiston, S. (2018). Some reflections on inflation targeting, monetary-fiscal policy interactions, and unconventional monetary policies. European Journal Of Economics And Economic Policies: Intervention, 15(2), 132-138. doi: 10.4337/ejeep.2018.0035

Lecaj, V., Baftiu, N., & Sylaj, B. (2015). Fiscal Policies as a Boost of the Economic Development of Kosovo. Academic Journal Of Interdisciplinary Studies, 1(1), 16. doi: 10.5901/ajis.2015.v4n2p479

Luo, J., & Shang, J. (2016). Exploratory Data Analysis On Unemployment Rates In USA. Advances And Applications In Statistics, 48(4), 303-316. doi: 10.17654/as048040303

Micic, L. (2017). Digital Transformation and Its Influence on GDP. Economics, 5(2), 135-147. doi: 10.1515/eoik-2017-0028