Strategic Management Level 3 Kensington College of Business, University of Chester

• In the current world, we are living in, mobile phones are not considered to as luxuries but are referred to as necessities. The rate at which mobile phones market is growing and their penetration are immense. The demand for mobile telecommunication is ever growing especially in the developing world like Africa and India. Vodafone has already identified this gap and enlarged its portfolio since the market potential is growing exponentially (BBC 2012).
• According to evidence, the retail of mobile phones has grown to 15.4bn in the year 2008 which translates to approximately 2.7% increase in comparison to the year 2007. When it is compared to the amount in 2004, it is a 29.4% increase. Despite these facts, revenue has since stalled and this can be owed to the recession and market saturation. There are also reasons brought by immense competition with Vodafone competitors.
• The competition is from network providers such as O2 and Orange and handset brands such as Apple, Samsung, and Nokia. The report will deal with the evaluation of the Vodafone's operating environment. Through this evaluation, it will be possible to point out key capabilities and resources, strengths, weaknesses, opportunities and threats. Through the knowledge gained, the appropriate recommendation will be proposed for strategic opportunities identified from the case study.

Vodafone's External Environmental Analysis

Macro-Economic Analysis

The project uses PESTLE analysis in the evaluation of the macro-environment. External factors have influenced how Vodafone operates. They usually include political/legal, economic, social, technological and environmental factors in the external environment of the company. All these usually have an impact on the way the company operates and ultimately the revenue.

Political Factors:

These usually include factors affecting the operation of the company such as tax policy, labor law, trade restrictions, and law on the environment, trade tariffs and the political stability of the environment of operation. Vodafone Company values the relationship it has with its clients and owing to this fact; the company has no problem shifting from unit pricing and tariffs units. It has gone ahead and adopted strategies that deliver the highest value to the consumers which in turn earns the company commitment, more balanced commercial expense or incremental penetration into the target market (MarketLine 2012).

Economic Factors:

Factors that constitute economic factors include interest rates, economic growth, inflation and exchange rates. Vodafone uses a pricing factor which ensures that customers get products and services at an affordable cost.

Social Factors: 

These factors include cultural factors especially due to health consciousness of the consumers. Other factors include the rate of population growth, the distribution of the customer age, career attitudes and focus on safety. Vodafone tries to generate products that are good and suitable for all age limits.

Technologic Factors: 

Technological factors are essential especially due to the technological orientation of the company's operations. They include automation, technology incentives and the rate of the dynamism of technology. The development of technology helps the Vodafone create more trust with the consumers due to the provision of high-quality services and products (MarketLine 2012).

Legal factor: 

There are different set of laws that are followed at diverse countries. It is important for Vodafone to make sure that they follow them sot that they will be able to develop positive perception among customers mind.

Environmental factors: 

When services are provided by the firm, then management of the organization should make sure that they do not perform any type of changes that might affect the environment negatively.

Key drivers:

Among all these the key drivers that has high impact over the firm is changes in technology. With time improvement in technology take place. There are similar organization like Vodafone which provide their customers with same products and services. When services provided by other firm is effective, then people make use of the services that are provided by them. In this context, it is important that cited firm make changes in technology as per the requirement.

Suggested: Strategic Management to Analyze Essential Business Elements

Competitive Analysis

About Mexican Telmex which covers the entire landline and mobile sector market, Vodafone has done really good. Other competitors include AT &T and WorldCom. To sustain the competition, Vodafone deals with both mobile handset and service sector. Now Vodafone is leading in the mobile telecommunication sector. For any industry and market, customers are always a key factor, and due to the high competition, customers may choose any products from the competitors. This has prompted Vodafone to develop various products such as Broadband and 3G. Due to the diversification of the products, the company can penetrate the market and earn revenue.

Vodafone is a recognized brand nationally and the largest mobile service provider in the United Kingdom. This makes it possible for the company to enter new markets which are promoted by the brand reputation.

In order to conduct competitive analysis for the company. This is possible with the help of Porter's five forces. In this context, below given are the Porters analysis done for Vodafone:

Bargaining power of customers: 

The bargaining power of customers is very high as there high competition. Further, the is not much differentiation among the services provided. The cost of switching to other firm is also low.

Bargaining power of suppliers:

Power of suppliers is medium as there few suppliers. Further, there are no substitutes. Moreover, the switching cost of suppliers is very high.

Threats of substitutes: 

There is high threat from substitutes as there are many firms that provide similar services. Moreover, there are few organizations that provide 4G cards to their customers.

Threats of new entrants: 

New entrants to this sector is low as there is huge license fee. Further, the initial capital required is also high. In addition to this, the infrastructure cost is also high.

Industry rivalry: 

The rate industrial rivalry is high. This is because customers are not loyal towards signal brand. They sift on to other depending upon the services that are provided by the firm. Further, there is open market for competition.

Internal Analysis: Strategic Capabilities

Resources and Capabilities 

Vodafone is considered to have strong resources which can be divided into tangible and intangible.  Company financial reports have shown that the company has strong resources regarding finance with considerably high profits generated from its operations. This has made the company be able to do investments in R&D and extension of the company portfolio using M&As. Over time, this has allowed to company to have a larger market share in comparison to the competitors. The way the company has reorganized its assets makes it possible for the company to invest more and this increases the revenue generation (Mobile Network Providers, 2012). The successful extension of the company portfolio shows the strength of the company's reporting structure, formal planning, controlling and coordinating strategies. This success can also be outlined through the high rate of company innovation and low-cost base. The company has operations in a large size of the mobile telephony network and also claims ownership of the license for many mobile telephony markets.  

It can also be seen that Vodafone was responsible for the development of UMTS a next generation wireless standard which has made it possible to access voice and data in a common wireless network. This shows the company innovative nature and its strong intellectual property. The company can enhance their resources and their duty in the market through its emphasis on mobile telephony (Financial Times 2012).

Vodafone is a strong employer brand, and its human resources are great. For example, the company was awarded the award for the best customer care. The company employed 85000 people globally in 2010. Through this, the company brand is enhanced both as a network operator and an employer. Its workforce is diversified in that it has approximately 26 nationalities occupying the senior management positions. The organizational culture is also great with the provision of open communication channels. It evidenced by the 76% employee engagement score in 2010.

Vodafone has control over its resources, and this has made it hard for competitors to prosper. The company resources are linked to its competitive advantage. The local competitors lack strong intangible resources in comparison to Vodafone, and this has guaranteed the competitive advantage. The company has also implemented a low-cost strategy which despite low revenue margins and is compensation from other operations (BBC 2012).

VRIO analysis: 

This can be determined as an analytical technique in order to evaluate the resources of organization and to identify the competitive advantage. Below given are the dimensions of VRIO:

Value: 

The cost resources is very high as Vodafone needs to develop their tower so that people can be provided with high quality services.

Rareness:

The services provided by Vodafone is rare but there are firms that provide similar services. This makes the organization to focus on their quality of services so that more and more customers can be attracted.

Imitability:

It is difficult to imitate the resources as there are no other substitutes.

Organization: 

The firm is supported by many other services and these are helpful for the firm to grow.

Value analysis:

This a type of analysis that enables to identify the best value for the alternatives for process, design and system. This is generally done in order to reduce the cost and to make it use for other activities.

SWOT Analysis for Vodafone:

Strength: · They have diversified geographical portfolio · They make use of promotional tools to raise their brand awareness · Their network is infra structured	Weakness: · The present of US is very weaknesses · Most of the business in Europe is soley
Opportunities: · Making innovations · Emerging market · New technology	Threats: · High competition · Growth of monetized mobile data

Strategic Choice 

There are various strategic options for Vodafone. They include:

Marketing Strategy

From the evaluation, it is evident that the company has a weak marketing strategy. The company has mostly used generational marketing theory and demographics to appeal to its consumer section. It would be recommended that the company use a campaign where they would endorse a celebrity. This is line with ‘Power to You' which is the company's motto. The motto will be improved through the endorsement of a global persona participation in the advertisement campaign. It is essential to note that this strategy will, however, go against the company's aim of remaining simple in its business undertakings. The cons to this option are that the campaign may fail thereby wasting a lot of financial resources.

Health and Safety RJVs

The company can collaborate with Research Joint Ventures with other associations and independent organizations in the development of handsets which are safer. Vodafone has been known to use some of its revenue for the Vodafone Foundation. The company can join hands with RJVs which would improve its brand image. This strategy is in line with the sociological factors, and this will be a global brand which shows concern for local issues and cultural and legal requirements (Financial Times 2012). The strategy will also improve the company's corporate social responsibility. The disadvantage of this strategy is that the population may think that the company is recognizing the link of mobile products to cancer and this would consequently ruin the brand image.

Bottom of Pyramid Strategy in the emerging markets

Mobile Products Companies have recognized that most of the future customers will emerge from the rural area. Vodafone can adopt this strategy in that they develop an Internet-based phone service. It should have advanced Wi-Fi technology which will prompt demand from the developing country, especially in the rural areas. This will rhyme with the vision of the company which is to keep people better connected. This will sell the low-cost smartphones (Financial Times 2012).

Merge between 3Mobile and Vodafone

There is a proposition for the two companies to merge and this would allow customers of both companies to enjoy great value.

Ansoff matrix: 

This can be determined as road-map that enables the organization make their firm grow. There are four type of strategies that are included in this which are as follows:

Market penetration:

This is type of strategy in which improvement are made in their existing products and services.

Product development:

In this strategy, organization will launch a new services that are not been provided by them before.

Diversification:

New product is delivered at new location.

Market development:

In this strategy, firm will provide their services at new location.

Among all these strategies, cited firm can make use of Market development as there are many potential markets in which business can be established. Moreover, they can also make use of product development in which improvement can be made in the services provided by Vodafone.

Strategy Evaluation and Selection

Evaluation of Options 

This is a vital part of the strategic process irrespective of being incremental, implicit or an explicit stage within the process of planning. The evaluation of the strategies can apply the SAF module. Use the model that evaluates the strategic options against three major success criteria. These are:

• Suitability which answers the question would make it function
• Feasibility which answers the questions can it be made to work
• Acceptability which answers the question will they work it
• Selected option: Merge between 3Mobile and Vodafone

Suitability

Is the strategy viable? Yes

Is the strategy achievable? Yes

Does the strategy create competitive advantage? Yes

Feasibility

Are there resources and capabilities for development of this strategy? Yes

Does the company have previous experience in such a strategy? Yes

Acceptability

• Would there be financial returns? Yes
• Will the strategy be supported by the management? Yes
• Will the strategy be supported by the staff? Yes
• Will the strategy satisfy customer needs? Yes
• Will there be non-compliance with the law? No
• The strategy would bring returns and hence be selected.

Conclusion

There has been continued growth in turnover for the Vodafone Company of the years in addition to it being the largest mobile network dealer globally. The company has continued to innovate and develop new products and services. To be in line with the company's competitive advantage, there need be a continuous update of company products and services. This is consideration of the dynamic change in technology. The update will ensure that the company survives in the long-term.

The intangibles resources can be described as Vodafone's strongest resource. These intangible resources include human resource and help the company stay ahead of other market competitors. The company's managerial objectives have been aligned with the organizational goals. It has been possible for the firm to create awareness of the market and technology which it operates in. Due to the reputation of the brand, the company can still foster a better relationship with the consumers. The most important resources of the company are the huge knowledge and the knowledge it has in the mobile telecommunication industry.

Bibliography

• BBC, 2012. Vodafone agrees takeover of C&W Worldwide.
• Financial Times, 2012. Vodafone confirms talks with C&WW. obile Network Providers, 2012. Mintel.
• MarketLine, 2012. Vodafone Group Public Limited Company, SWOT Analysis.    

Appendix

Appendix 1	2007 Financial Year Compared to 2006 Financial Year								Â
Â	Â	Â	Â	Â	Â	Â	Â	Â	Â
Â	Â	Â	Â	Â	Â	Group	Group	Â	Â
Â	Â	Europe	EMAPA	Common	Elimina‐	2007	2006	% change
Â	Â	Â	Â	Functions	tions	Â	Â	Â	Â
Â	Â	£m	£m	£m	£m	£m	£m	£	organic
Voice revenue	Â	17357	5089	Â	‐70	22376	21405	Â	Â
Messaging revenue	Â	2925	667	Â	‐5	3587	3289	Â	Â
Data revenue	Â	1300	138	Â	‐10	1428	1098	Â	Â
Fixed line operators revenue		1397	75	Â	Â	1472	1290	Â	Â
Other service revenue		8	‐8	Â	Â	Â	Â	Â	Â
Total service revenue		22987	5969	Â	‐85	28871	27082	6.6	4.7
Acquisition revenue	Â	1004	381	Â	Â	1385	1295	Â	Â
Retention revenue	Â	354	21	Â	Â	375	448	Â	Â
Other revenue	Â	247	70	168	‐12	473	525	Â	Â
Total revenue	Â	24592	6441	168	‐97	31104	29350	6.0	4.3
Interconnect costs	Â	‐3668	‐1045	Â	85	‐4628	‐4463	Â	Â
Other direct costs	Â	‐1914	‐784	‐66	3	‐2761	‐2096	Â	Â
Acquisition costs	Â	‐2604	‐677	Â	Â	‐3281	‐2968	Â	Â
Retention costs	Â	‐1543	‐212	Â	Â	‐1755	‐1891	Â	Â
Operating expenses	Â	‐5462	‐1472	206	9	‐6719	‐6166	Â	Â
Acquired intangibles	Â	Â	Â	Â	Â	Â	Â	Â	Â
amortisation	Â	‐22	‐392	Â	Â	‐414	‐157	Â	Â
Purchased licence amortisation		‐849	‐43	Â	Â	‐892	‐947	Â	Â
Depreciation and other		Â	Â	Â	Â	Â	Â	Â	Â
amortisation	Â	‐2888	‐779	‐181	Â	‐3848	‐3674	Â	Â
Share of result in associates		5	2719	1	Â	2725	‐2411	Â	Â
Adjusted operating profit		5647	3756	128	Â	9531	9399	1.4	4.2
Adjustments for:	Â	Â	Â	Â	Â	Â	Â	Â	Â
– Non‐operating income of		Â	Â	Â	Â	Â	Â	Â	Â
associates	Â	Â	3	Â	Â	3	17	Â	Â
– Impairment losses	Â	‐11600	Â	Â	Â	‐11600	‐23515	Â	Â
– Other income and expense		1	508	‐7	Â	502	15	Â	Â
Operating loss	Â	‐5952	4267	121	Â	‐1564	‐14084	Â	Â
Non‐operating income and		Â	Â	Â	Â	Â	Â	Â	Â
expense	Â	Â	Â	Â	Â	4	‐2	Â	Â
Investment income	Â	Â	Â	Â	Â	756	353	Â	Â
Financing costs	Â	Â	Â	Â	Â	‐1579	‐1120	Â	Â
Loss before taxation	Â	Â	Â	Â	Â	‐2383	‐14853	Â	Â
Income tax expense	Â	Â	Â	Â	Â	‐2423	‐2380	Â	Â
Loss for the financial year		Â	Â	Â	Â	‐4806	‐17233	Â	Â
Loss for the financial year from		Â	Â	Â	Â	Â	Â	Â	Â
discontinued operations		Â	Â	Â	Â	‐491	‐4588	Â	Â
Loss for the financial year		Â	Â	Â	Â	‐5297	‐21821	Â	Â

 

Appendix 2	PEST factors, examples				Â	Â	Â
Â		Â	Â	Â	Â	Â	Â
Political (incl. Legal)		Economic	Â	Social	Â	Technological	Â
Environmental		Economic	Â	Â	Â	Government	Â
regulations and			Â	Income distribution	Â		Â
		growth	Â		Â	research spending	Â
protection	Â		Â	Â	Â		Â
	Â	Â	Â	Â	Â	Â	Â
Â	Â	Interest rates &	Â	Demographics,	Â	Â	Â
Â	Â		Â		Â	Â	Â
Â	Â		Â	Population growth	Â	Industry focus on	Â
Tax policies	Â	monetary	Â		Â		Â
	Â		Â	rates, Age	Â	technological effort	Â
Â	Â	policies	Â		Â		Â
Â	Â		Â	distribution	Â	Â	Â
Â	Â	Â	Â		Â	Â	Â
International trade		Government	Â	Labor / social	Â	New inventions and	Â
			Â		Â		Â
regulations and			Â		Â		Â
		spending	Â	mobility	Â	development	Â
restrictions	Â		Â		Â		Â
	Â	Â	Â	Â	Â	Â	Â
Contract enforcement		Â	Â	Â	Â	Â
		Unemployment	Â	Lifestyle changes	Â	Rate of technology	Â
law	Â	policy	Â		Â	transfer	Â
Consumer protection			Â	Â	Â		Â
		Â	Â	Â	Â	Â	Â
Â	Â	Â	Â	Work/career and	Â	Â
Â	Â	Â	Â		Â	Life cycle and speed	Â
Employment laws		Taxation	Â	leisure attitudes	Â	of technological	Â
Â	Â	Â	Â	Entrepreneurial spirit	Â	obsolescence	Â
Government	Â	Exchange rates	Â	Education	Â	Energy use and	Â
organization / attitude			Â		Â	costs	Â
Competition	Â	Â	Â	Â	Â	(Changes in)	Â
	Â	Inflation rates	Â	Fashion, hypes	Â	Information	Â
regulation	Â		Â		Â		Â
	Â	Â	Â	Â	Â	Technology	Â
Â	Â	Â	Â	Â	Â		Â
Â	Â	Stage of the	Â	Health consciousness	Â	(Changes in)	Â
Political Stability			Â	& welfare, feelings on	Â		Â
		business cycle	Â		Â	Internet	Â
Â	Â	Â	Â	safety	Â	Â	Â