VERIZON CASE STUDY

1. What resources underlie Verizon’s strong competitive position in the U.S. wireless
telecommunications industry?

According to the text, Verizon has several resources that enable the company to have such a
strong competitive position. The primary is the extensive amount of coverage provided from
their reception towers, which “blanket over 95% of the nation.” To couple with this impressive
statistic, Verizon has invested substantial money into another beneficial resource: a wireless,
high-speed, fiber-optic network. Finally, Verizon has a customer care resource, which is an
automated software program that enables Verizon to analyze the call habits of individual
customers and make various recommendations with this data.

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From independent research, Verizon has added three other resources to the company in the past
few years. In 2015 and 2017, respectively, Verizon acquired AOL and Yahoo to diversify the

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company’s interests and to generate an uptick in profitability. Most recently, as of 2018, Verizon
announced the acquisition of Movildata Internacional, a Spain-based provider of commercial

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fleet management solutions. The CEO of Verizon Telematics, Andres Irlando, believes this
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strategic acquisition “strengthens Verizon Telematics’ market position, accelerates growth and
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allows the expansion of our market-leading solutions and services.”

2. Explain how these resources enable Verizon to improve one or more of the
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following: efficiency, quality, customer responsiveness, and innovation.

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Network Performance: This resource allows Verizon to improve on efficiency and quality.
Despite, an already exceptionally low churn rate, indicating that most customers are happy with
Verizon’s service, there is undoubtedly a way to improve. By refining the efficiency/quality
aspects, Verizon can limit the amount of dropped calls for users and dead zone space.
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Additionally, faster downloads and highspeed performance is a crucial factor for luring in and
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retaining customers.

Customer Care: This resource deals primarily with customer responsiveness and quality. Due to
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Verizon’s automated software the individual can have a more personalized experience, which
bolsters the overall quality of the product. Moreover, when a company goes out of its way in the
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customer care sector, the customers will be responsive, and a good image/brand can be built.

Recent Acquisitions: The recent acquisitions point to Verizon’s desire to innovate. With several
major purchases in the Internet of Things sector and the Telematics portion of the company,
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Verizon is not just a service provider. In fact, Verizon Telematics plans to add Fleetmatics’
REVEAL™ to the portfolio of software solutions available to Spanish fleet operators. Verizon
Telematics provides world-class vehicle tracking and business intelligence solutions designed to
help generate cost savings, improve productivity and help monitor driver safety for virtually any

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 mobile workforce (http://www.verizon.com/about/news/verizon-telematics-continues-european-
expansion-its-acquisition-movildata-internacional).

3. Apply the VRIO framework and describe to what extent these resources can be
considered valuable, rare, inimitable, and well organized.

Valuable: The three resources listed above for Verizon can all be considered valuable for
Verizon. To some extent, they either exploit opportunities or defend threats (sometimes
simultaneously).

Rare: Most of Verizon’s network performance features can be considered rare, but not because
of the resource itself, but rather the scope of the resource. For example, cell phone towers and
fiber optic usage are not unique to any one phone company, however, the sheer volume of cell
phone towers and amount of fiber optic usage provided by Verizon is. By providing so much
additional speed and service a competitive advantage is established, therefore

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the argument can be made for Verizon’s network performance to be a rare resource. Likewise,
acquiring Yahoo, AOL and Movildata International all represent rare resources, as no other

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company has access to these subsidiaries. However, the customer care portion of the company
discussed in the text does not seem to be a unique facet for a phone company, as all phone

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companies have some sort of customer service. Yet, J.D. Power’s ranking system found that
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Verizon had faster customer service with greater satisfaction. Thus, the resource generates a
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competitive advantage and can be considered rare.

Inimitable: For similar reasons as described above, most of Verizon’s resources are inimitable as
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it would cost other companies way too much capital to successfully reproduce the competitive
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advantage. How many phone service companies can just buy Yahoo or create a 95% covered
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network? AT&T, Verizon’s largest competitor, might be the only entity (aside from China mobile
Ltd.) with this possibility. But the customer service portion may be imitable, and while it seems
no company has been able to serve quite like Verizon, the potential for companies to create
efficient (yet cost-effective schemes) to rival Verizon’s seems possible (unless of course aspects
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of Verizon’s customer care are proprietary).

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Well Organized: The three resources can all be considered well-organized, evidenced by the
fact that Verizon has sustained competitive advantage.
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4. What must Verizon do to maintain its competitive advantage going forward in the
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increasingly competitive U.S. wireless telecommunications industry?

To maintain competitive advantage Verizon needs to continue to do several things. Primarily,

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Verizon should attempt to push costs and churn rates lower. By reducing fixed costs, the
company can put forward a more lucrative bottom line. Also, Verizon should keep expanding and
improving its coverage and network performance. By perfecting these facets, Verizon will
continue to have a relatively happy customer base. Finally, the company needs to keep striving
for innovation (like with their Fleetmatics’ REVEALTM), because innovation in a saturated

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 market is a great way to get additional market share. Consequently, Verizon needs to keep doing
what it is doing, not deviate too much, but also not be fearful to step off the beaten path
momentarily to chase an innovative idea.

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