Competitive Advantage at Verizon Wireless Established in 2000 as a joint venture

Question

Competitive Advantage at Verizon Wireless

Established in 2000 as a joint venture between Verizon Communications and Britain’s Vodafone,

over the last 12 years Verizon Wireless has emerged as the largest and consistently most profitable

enterprise in the fiercely competitive U.S. wireless service market (see the Opening Case to Chapter

2 for details of the industry). Today the company has almost 136 million subscribers and a 38%

market share.

Case Discussion Questions

1. What resources underlie Verizon’s strong competitive position in the U.S. wireless tele-communications

industry?

2. Apply the VRIO framework and describe to what extent these resources can be considered valuable,

rare, inimitable, and well organized.

3. Where is Verizon positioned today and how do you think they can maintain or gain competitive

advantage?

4. List and explain who their competitors are and how are they positioned.

5. Do you think there are any strategic groups in the telecommunications industry? If so, what

might they be? How might the nature of competition vary from group to group?

There was no case, all my professor gave me was this.

Explanation / Answer

1. Verizon’s network performance and great customer care has given it a competitive position in the U.S. wireless telecommunications industry. These things combined have helped Verizon to maintain the lowest churn rate in the industry.  

Verizon’s wireless network covers 95% of the nation. Their network performance has improved the quality of Verizon’s services by resulting in fewer dropped calls and dead zones. Verizon also offers fast downloads and high-speed data transportation between cell towers. These factors have resulted in an overall high-quality user experience.

2. Verizon’s network performance and customer care has proved to be very valuable to the company because these things combined have led Verizon to having the lowest churn rate in the industry. Although the market is very saturated, these features are rare because Verizon’s network blankets 95% of the nation. They are also very inimitable due to the large coverage area and software used to improve customer care. These features are well organized and tied together to provide a low customer churn.

3,4,and 5. Verizon will need to ensure that they can keep their prices low to maintain its competitive advantage in the U.S. wireless telecommunications industry.   This is because the market is saturated and any merger attempts are being blocked by regulators. Companies have maintained a cost advantage in the past by offering lower costs and more data than their competitors and by eliminating contracts and fees. Verizon can also continue to maintain its competitive advantage by continuing to build out and upgrade its network infrastructure.

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