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Verizon's Strategy: Simple, Boring, Effective

Essay by   •  June 9, 2011  •  Case Study  •  1,113 Words (5 Pages)  •  2,810 Views

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Brief Summary of the article: Verizon's Strategy: Simple, Boring, Effective

In a turbulent and attractive telecommunication industry in the United States, several players are vying to become the leader in tapping the huge market. One of the most contested segments is the wireless communication where Verizon Communication Inc. is the market leader with an approximately 91 million subscribers and followed by its closest competitor, AT&T with approximately 87 million subscribers. Another two players, SprintNextel and T-Mobile , are just merely trying to sustain in the business mainly in the prepaid subscription category with a current subscriber levels of 48 million and 34 million, respectively.

Market challenger AT&T has recently gained grounds on Verizon with an exclusive licensing collaboration with Apple to enjoy the sole rights to market its most popular iPhone. Millions of brand faithful Apple fans had switched and subscribed to AT&T network to utilize the Smartphone. Prior to the iPhone venture with AT&T, Verizon was adding twice as many subscribers as AT&T but that figure has now been narrowed. Verizon's strategic response to AT&T's move is to hit back at AT&T's seemingly weak network infrastructure and 3G coverage to accommodate the large bandwidth required for the usage of iPhone. Verizon's strength has always been its excellent network coverage and it spends more than a billion dollars a year to send out a message that its network is robust and more reliable than any of its competitors.

Verizon too is well positioned to compete with AT&T with its leverage on phones like Droid, which is driven by Google's Android operating system and Blackberry phones. Verizon also went offensive over AT&T's key strength when it hit out at Apple claiming that the iPhone is pretty but guys do not need pretty phones.

Analysis of Competitive Strategies employed by Verizon

1. SWOT Analysis for Verizon

The SWOT analysis for Verizon (refer to Appendix A) reveals that the major strength lies in its robust and reliable network coverage. According to Datamonitor, Verizon's primary network technology platform is CDMA but it also provides for GSM services as a result of the recent acquisition of Alltel. It also plans to develop and employ 4G wireless broadband networks on top of its current stronghold of 3G coverage. As a result, the company's total wireless network coverage reached approximately 288 million people, which is nearly the entire population of USA. A threat in the form of severe competition comes from its major rival, AT&T, who is gradually gaining the edge.

2. Porter's 3 Generic Strategies Analysis

i) Cost Leadership: Generally, the cost is not the main driving factor in the almost saturated wireless network industry. Therefore, Verizon is not competing to become the cost leader.

ii) Differentiation: The main strength associated with Verizon is in its excellent and robust wireless network. Its network coverage outweighs its competitors tremendously. Therefore, Verizon has identified the robust wireless network services as its differentiation factor and intend to use it as a sustainable competitive advantage over its rivals. The wireless network subscribers' main concern is for an uninterrupted and high speed data transfer rate, for which the network of Verizon is capable to deal with.

iii) Focus: Verizon is also in the business of landlines as well as wireless networks. However, Verizon realizes its competitive advantage lies in the wireless services and sets out its focus to be the leading player in the wireless network segment.

3. Positioning (Trout Ries)

Verizon utilizes

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