The Allocation Problem

The allocation problem

Name of the Organization: Verizon communications

Type of business:

The organization provides various forms of optical fiber line services, landline services, and long distance services. Some other products offered alongside these by the company include wireless, voicemail, video, data, and Verizon VoiceWing services. This is a public company and I am just a client of the organization. I anticipate to be getting Financial statements and other essential information about the company from the Internet.

This paper will focus on Verizon Company that specializes in the wireless industry. Conceivably, it provides innovation, creativity, and competitively priced data and voice products. Verizon has significantly developed America’s biggest and highly dependable 3G network that offers its clients a chance to send e-mail, browse the Internet, and download different applications easily and securely. In addition, the organization is presently constructing the first American 4G network that will the offer increased speed and raise bandwidth-intensity capacity for wireless gadgets.

Text message is one of the wireless services provided. Ideally, for users to its common 450 minute/$40 month rate, the organization is presently charging twenty cents in relation to what used to be, which were ten cents. Remarkably, this is for each message, which is forwarded or received on the cellphone. Moreover, there is an alternative to include unlimited text messages to the scheme; the entire of this package comprises unlimited images alongside instant messaging. This is approximated at a price of an extra $20 per month. The cost raises to twenty cents, alongside the cost of this product, transforms into $1310.72 per megabyte for the client (which goes for 160 bytes per SMS or 1,048,576 bytes per MB).

Verizon Company on a yearly basis has over $71 billion in annual earnings. With this figures it makes (NYSE:VZ) one of the global leading providers of various communications services. Observing other activities, Verizon offers clients living in 28 countries connected with wire line and some telecommunication products and services, comprising broadband. Verizon Wireless controls and owns the country’s most dependable wireless networks, attending to 48.7 million data and voice clients throughout the United States. Data services controls directory-publishing business and offers electronic commerce services. Globally it entails wireless and wire line investments and functions, mainly in the American and Europe markets.

The company was strategizing on how to increase transaction fees of almost 4 cents for each mobile terminated (MT) message, which was to be transferred through its network. These forms of messages comprise those news or text alerts, which have been sent through news or information services. It afterwards implies that the fee will be included to present messaging cost. As per RCR wireless, the fee may be somewhere from small penny division to some few extra cents only.

The current deals that will be charged by Verizon include a cost for both premium plans and standard rate. Nevertheless, the organization will relinquish the cost in plans, and this is where the sender is supposed to incur the whole cost of the deal while the receiver is not charged any cost (Marschak, 1996).      

Currently, Verizon validated the new cost with overhead fee, which was to be incurred. Furthermore, Verizon asserted that it is the first fee raised from the time the service was initiated in 2003. Significantly, overhead charges are those production as well as nonproduction expenses not freely accessible to certain operations or procedures. By definition, overhead cost comprises three common fields: indirect material, indirect labor, and other miscellaneous production costs like taxes, insurance, suppliers, utilities, repairs, and depreciations. This implies that extra costs entail a section of the entire costs of staffing or sustaining the organization or enterprise.