Vertical Integration Case Study: Verizon

Corporate Strategies
Vertical Integration
Verizon implements a value chain analysis to understand the parts of the daily operations that create value, and those parts that do not. The value chain analysis is used to determine the level of competition, the type of products and services the consumer needs, and to figure out the ways that Verizon can stay sustainable and remain the market leader in the industry. This is vital because if done correctly Verizon will be able to gain high returns within the telecommunications industry by creating greater value to the customer. Verizon breaks their value chain into primary and support activities. The primary activities are research and development, infrastructure, marketing and sales, and customer

This is because they look to interact directly with the final customers. The book states that a firm should vertically integrate business activities where they possess valuable, rare, and costly-to-imitate resources and capabilities. With competition consistently playing a factor, Verizon had to find a way to gain a competitive advantage. In this case, network reliability, products and services, customer service, and familiarity are the different paths Verizon has chosen to differentiate products and secure a competitive advantage. The forward integration strategy stands to benefit the larger cellular providers more. Verizon is the leader in the market for their cellular services, where their profits are considerably higher than its competitors, yet it falters in comparison to smaller companies, such as boost mobile, in their actual product sales. The gap between two such companies can be minimized, however, as the largest benefit for Verizon to implement vertical integration is to help lower their product costs, due to the ability to mitigate the distribution process, which would increase the volume of products

Verizon benefits from different types of economies of scope. 4G wireless communications act as an invisible common asset between all the telecommunication companies that offer it. Therefore, leading to cost complementarities, indicated as sufficient conditions for the presence of economies of scope. Marketing, distribution, and sales are also common sources of economies of scope that benefit Verizon.
Verizon has implemented a successful strategy up to this point. Although they are experiencing extreme competition among the market, Verizon remains on top. This is credited to the diversification strategy that Verizon has put in place. They have adapted to the changing environment, and created new and innovative ways to sell products in the market. New products and services consistently lead the industry and Verizon has continued to be the market leader. They have also acquired companies that have already proven to be successful, in order to help them thrive in online and streaming