AT&T set to acquire BellSouth for $65b
The article of AT&T set to acquire BellSouth for $65b illustrates a number of components. If this deal goes ahead as planned, the result will be a HUGE player in the communications industry.
First, this deal will raise the game bar for AT&T. The article mentions that this deal will be "dwarfing rival Verizon Communications". This means that AT&T will start to play in a total different league. This deal will enable AT&T to create a higher entry barrier through the high capital requirements and access to distribution channels.
The financial capital that this deal will end up with is immense; moreover, the organizational capital makes a perfect fit. If we refer that to Barney's framework and try to answer the Question of the VRIO framework, we see that this deal is there to achieve sustained competitive advantage. It is valuable because it can implied that it will DEFINITELY take advantage of opportunities of the need of continuous communications solutions. It is rare because AT&T is already a huge communications company. Adding BellSouth to its portfolio will make it even larger. In this case it seems like 1+1=3! (the merged company would have a total of 70 million local-line phone customers) There aren't many huge communication companies. It is hard to imitate as well because you need huge capital to undergo such a deal. Thus, it's not the kind of resource that can be easily duplicated. This is complicated material! Then, to answer the question of organization, I can imply that this deal will exploit full competitive potential of its resources and capabilities. They were able to exploit their financial capital and buy BellSouth, so I can assume correctly that they have a coherent future plan make the most of the deal. With all the questions answered positively, the formula leads smoothly to a sustained competitive advantage.
Imagine if this becomes another 'Etisalat'- the UAE monopoly in communications- in the American Market. I would envision that if the government sees that AT&T is even trying to become a monopoly, then this deal or future similar ones may be stopped by law. Whether we will see another similar deal in the future or not is not for me to answer, it's for the future to show!
First, this deal will raise the game bar for AT&T. The article mentions that this deal will be "dwarfing rival Verizon Communications". This means that AT&T will start to play in a total different league. This deal will enable AT&T to create a higher entry barrier through the high capital requirements and access to distribution channels.
The financial capital that this deal will end up with is immense; moreover, the organizational capital makes a perfect fit. If we refer that to Barney's framework and try to answer the Question of the VRIO framework, we see that this deal is there to achieve sustained competitive advantage. It is valuable because it can implied that it will DEFINITELY take advantage of opportunities of the need of continuous communications solutions. It is rare because AT&T is already a huge communications company. Adding BellSouth to its portfolio will make it even larger. In this case it seems like 1+1=3! (the merged company would have a total of 70 million local-line phone customers) There aren't many huge communication companies. It is hard to imitate as well because you need huge capital to undergo such a deal. Thus, it's not the kind of resource that can be easily duplicated. This is complicated material! Then, to answer the question of organization, I can imply that this deal will exploit full competitive potential of its resources and capabilities. They were able to exploit their financial capital and buy BellSouth, so I can assume correctly that they have a coherent future plan make the most of the deal. With all the questions answered positively, the formula leads smoothly to a sustained competitive advantage.
Imagine if this becomes another 'Etisalat'- the UAE monopoly in communications- in the American Market. I would envision that if the government sees that AT&T is even trying to become a monopoly, then this deal or future similar ones may be stopped by law. Whether we will see another similar deal in the future or not is not for me to answer, it's for the future to show!
posted by Nothing is crystal clear at
9:55 PM
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