This report has been created to provide strategic recommendations to the Vodafone Group Plc, in order to maintain its position as market leader in the markets where it operates. From the evaluation of the external and interior environment and the resources and capacities of Vodafone, tips were designed for strategy potentials for the future. The report focuses on the personal-use mobile telephony sector of the group, with a main focus on the united kingdom mother or father company of the group.
Through the examination of the macroeconomic environment, the industry and the business level examination, the industry generating makes and key success factors were revealed, and the external opportunities and dangers were listed. The primary opportunities identified were its concentrate on emerging market segments, Vodafone's market leadership, its global footprint and reputation, and the low risk of new competition through the highly controlled industry. As the external risks were its low earnings potential through its give attention to emerging marketplaces, the continual introduction of new technology and the issue and cost of maintaining, introduction of new companies stretching their products such as Apple and Microsoft, its global footprint which can lead to exposure of unstable hazards, the highly controlled Industry which has an impact on revenue as reported, and the saturation of the market.
The resources and features of Vodafone were recognized and analysed by using Value String and VRIO evaluation to recognize its internal strengths and weaknesses. The discovered strengths of Vodafone were its strong R&D, its exclusivities, its strong commercial culture, its strong financial bottom, its brand handsets and keeping it simple in conditions of its operation; as the weaknesses were the low differentiation between competitors, its short-term benefit through exclusivities, its scarce managerial resources anticipated to constant development, its low market electric power in Europe, the potential risks of clinging their own brand handsets and its own poor marketing.
The exterior and interior analyses were then helped bring together in a TOWS matrix to establish potential strategies to further develop and support Vodafone's market position. The strategies recommended are a online marketing strategy, a health insurance and safety research joint venture and a Bottom level of the Pyramid strategy in the newly acquired emerging market segments.
2. Introduction
Vodafone Group Plc is the world's leading mobile telecommunications company, with a substantial presence in Europe, the Middle East, Africa, Asia Pacific and the United States through the Company's subsidiary undertakings, joint endeavors, associated undertakings and assets. The organization offers a variety of services worldwide, but also for the goal of this report, the mobile telephony personal-use sector of the group will be analysed, concentrating on the main operating regions of the group, with a larger concentrate on the father or mother company in the united kingdom.
Mobile telephony has been thought as 'the manufacture, procedure and syndication of cell phones and any extra services that are straight facilitated by mobile telecommunications' (McWilliams, Mitchell, & Walley, 2004). Mobile phones are now seen as necessities somewhat than luxuries and market penetration is high and growing. Furthermore there can be an explosion of demand in the growing world, something Vodafone had determined and has expanded its collection to African countries, India and Turkey where the market potential is promising.
Mobile devices retail revenue come to '15. 4bn in 2008, representing a 2. 7% increase weighed against 2007, and a 29. 4% go up on the 2004 shape. However, earnings is no more growing as fast as it once did, partly due to the downturn and market saturation, but also as a result of powerful competition between a growing number of networks, led by O2, Vodafone and Orange, and handset brands led by Nokia, Samsung and Apple. Of the major players, only Vodafone has a UK mother or father company (Key Note, 2010).
The purpose of this report is to analyse the surroundings in which Vodafone works in, identify its center features and resources and its own advantages, weaknesses, opportunities and threats. By analysing the surroundings we will then have the ability to propose recommendations for strategic opportunities, as recognized from the examination.
3. External Environment Analysis
3. 1 Macro Level Analysis
To analyse the macro-environment, a PESTLE framework was used. Vodafone has been afflicted in conditions of its operations by the exterior forces. Shape 1 illustrates a summarised version of the key effects the exterior macroeconomic environment is wearing Vodafone.
As mentioned by Shape 1, the political/ legal, economical, sociological, technical and environmental factors of the external environment all impact the organization's functions. It has an effect on their day to day functions, in addition to an effect on their earnings.
3. 2 Industry Level Analysis
The industry analysis was done by making use of the Porter's Five Forces Model. The evaluation demonstrated that the industry has a sizable effect on how the company manages, in terms of competition, suppliers, their customers and new entrants in the market. The mobile telephony industry is highly competitive. A listing of the Five Causes Industry Level Research is illustrated in Amount 2. Appendix 1 offers a more detailed examination.
When analysing the mobile telephony industry it is important to look at both aspects of the industry, as they are inextricably interlinked mutually ' the mobile handset manufacturers and the network providers. In both instances the industry is oligopolistic. The main rivals are Nokia, Apple and Samsung in conditions of handsets and O2 and Orange in terms of these network competitors in the UK.
The industry research shows that there is certainly extreme competition within the industry, both in conditions of manufacturers and network providers. The risk of new entrants to the industry is low as it is highly regulated. Buyer and provider electric power are both modest, as the industry is fairly oligopolistic. The risk of substitutes in conditions of a substitute to mobile phones is poor; however a substitute to Vodafone handsets is more powerful.
Figure 2: Porter's Five Pushes Analysis of the Mobile Telephony Industry
3. 3 Business Level Analysis
The External analysis previously completed allows us to identify the main element driving causes and key success factors of Vodafone and relate them to the opportunities and dangers that Vodafone face. Table 1 below provides brief description of what these are.
Table 1: Industry Driving Forces and Vodafone's KSFs
INDUSTRY DRIVING Pushes Description AND IMPLICATIONS KEY SUCCESS FACTORS EXPLANATION AND IMPLICATIONS
Fast paced technical advances to stay competitive Continual investment in R&D. Have to remain ground breaking and up-to-date with styles, i. e. Smart mobile phones Strong brand value The Vodafone brand is ranked as the 7th most effective brand, offers them a competitive advantage
Rise in polices and regulatory body Important to follow regulations which vary from country to country, can impact revenue and businesses Strong resources Vodafone has a large profile, strong resources and market know-how which is one of the greatest strengths
Economic problems Has an impact on revenue, need to adopt low-cost ways of e able to remain competitive Vodafone own brand Vodafone's own brand handsets allows these to adapt to customer demands for safer handsets and keep maintaining a competitive advantage
Rising consumer consciousness in cancer connect to mobile phones and environmental issues Important to be sustainable and need for R&D in 'greener' handsets and safer handsets Vodafone sustainability Vodafone show understanding to environmental and honest issues which increases their brand image
From Desk 1 we can now identify the risks and opportunities of Vodafone. These will be identified in Desk 2 below.
Table 2: Vodafone's Opportunities and Threats
OPPORTUNITIES Justification Dangers EXPLANATION
Focus on growing market segments Vodafone has discovered the opportunities in the emerging market segments such as India and African countries, which gives them great prospect of increased income and larger market share Concentration on emerging marketplaces Highly competitive as most opponents have realised the potential in the appearing markets.
Market leaders Vodafone have had the opportunity to be market leaders in the majority of the markets where they operate as they have an extensive collection and market know-how Continual emergence of new technology Continual improvements on the market make it problematic for Vodafone to stay innovative, and very costly in terms of resources to stay up-to-date. Smart devices such as Apple's i-Phone make it difficult to compete with their own brand.
Global footprint Vodafone's global footprint helps it be a far more powerful brand and provides them bigger market share Emergence of new companies Companies such as Apple, Microsoft and Blackberry who are newcomers to the mobile industry have become a risk to the Vodafone handset brand in terms of competition
Highly controlled industry Makes the threat of new entries low, therefore regulates competition Global footprint Vodafone's global footprint may present contact with unpredictable economic, political, regulatory and legal risks
Highly regulated industry New regulations can affect Vodafone's earnings and threaten new services
Saturated market
The mobile telephony market is saturated with little differentiation between challengers. Hard to stand out from competition and become innovative.
Although the threats identified are greater than the opportunities within the organizations' exterior environment, they have still managed to remain market market leaders in most countries where they operate and maintain a large collection.
The above concludes the external environment examination. From the above findings Vodafone is working within an oligopolistic, saturated market, characterised by low differentiation, and few challengers. The industry is highly controlled which can present both a danger and opportunity. Vodafone however have a great global existence, with a focus on emerging markets that allows great revenue probable and increased market share. The external environment of the mobile telephony industry however is competitive, technologically advanced and risky.
4. Internal Environment Analysis
4. 1 Resources and Capabilities
Figure 3 below gives a brief summary of Vodafone's tangible and intangible resources.
Figure 3: Vodafone's Tangible and Intangible Resources
As Shape 3 shows, Vodafone has strong resources, both tangible and intangible. They may have very strong financial resources with gains exceeding hundreds of millions pounds per calendar year. This allows those to reinvest in R&D and increasing their collection through M&As, which allows for a more substantial market talk about. Vodafone secures huge investment through their reorganisation of property which further raises their profits. The business's formal reporting composition and formal planning, controlling, and coordinating systems are strong, as noticeable by their successful M&As, high creativity and low priced base. In addition they operate a significant amount of mobile telephony network base channels and own the spectrum licences of several mobile telephony marketplaces.
Vodafone developed the next generation wireless standard, UMTS, which allows for tone and data on a single wireless network. This gives evidence on the innovative character and strong intellectual property. Because they focus only on mobile telephony it allows these to bolster their resources and their role on the market.
Their recruiting are strong plus they have a great workplace brand. This year 2010 Vodafone won the 'Best Customer Care Honor 2010' in Greece. This further increases their brand image both as an employer so that a network operator. In 2010 2010 on it's own Vodafone hired around 85000 people worldwide. Vodafone employ a diverse workforce, with over 26 nationalities in their top older management, and have a strong corporate and business culture with wide open stations of communication. This year 2010 Vodafone achieved a 76% employee engagement score.
Their resources connect to their competitive advantages as their strong R&D, exclusivities and own brand products allow Vodafone to have control over their resources, which makes it harder because of their competitors to gain access to. Their strong intangible resources, such as their strong global brand offers advantages that local rivals don't have. Furthermore Vodafone put into action a low-cost strategy, which though it causes lower margins, can be subsidised by its other procedures. Their annual revenue permit them to reinvest in R&D which profits them more intellectual resources and for that reason more reference control.
4. 2 VRIO Analysis
Figure 4: VRIO Research of Mobile Telephony Market
Figure 4 illustrates a VRIO Evaluation. From the examination we can determine that Vodafone, as well as their competition have a non permanent competitive benefit. This edge could be lost if opponents bring out more complex products which Vodafone cannot imitate immediately or if exclusivities go out or gained by opponents.
4. 3 Talents & Weaknesses
Table 3: Vodafone's Advantages and Weaknesses
STRENGTHS Reason WEAKNESSES EXPLANATION
Strong R&D Enables Vodafone to get competitive benefits by becoming market leaders in new technology Low differentiation between rivals The saturated market makes it hard for Vodafone to stick out from its competitors
Exclusivities Vodafone have gained exclusivities of Blackberry in 11 different marketplaces worldwide Exclusivities Exclusivities only provide company temporary advantages because they are only short-term as is the product life cycle of mobile handsets
Strong Corporate Culture Has allowed Vodafone in becoming successful with M&A and JVs. Managerial resources thin scheduled to rapid development Credited to Vodafone's continual growth managerial resources are skinny and difficult to find, which brings about continuous reorganizations within the group
Strong financial platform Offers Vodafone room for mistake without the company becoming bankrupt, and potential in reinvest Low market electric power in European countries A consequence of to extensive competition in Europe, Vodafone do not have much effect in the marketplaces where it operates
Own brand handsets Own brand handsets offers Vodafone the versatility of providing cheaper handsets and even more control over cost. Allows them to design according with their consumer's demand Own brand handsets As Vodafone is the only real name on the handsets, anything that goes wrong can cause great brand harm ' i. e. lawsuit over cases of cancerous handsets. On top of that, as Vodafone subcontracts the manufacturers with their handsets, that can create a potential risk as deals can be withdrawn.
Keeping it simple Vodafone's purpose is to keep its services simple yet impressive; therefore resources are centered on its R&D rather than luxurious marketing campaigns. Their strong brand allows them to take action without it learning to be a risk with their business Poor marketing Vodafone is as yet not known for its marketing activities, regardless of the demographics they aim for, mainly Technology Y users, in terms of generational marketing are characterised by their pursuits in movie star endorsements
Table 3 suggests Vodafone's talents and weaknesses. As it suggests, some strengths can also become weaknesses and vice versa, such are exclusivities and Vodafone's own brand handsets. Vodafone overall have an equal amount of strengths and weaknesses. Some of its strengths can become potential risk factors for the group if conditions in the market change. Evenly some its weaknesses can become strengths, for example if Vodafone commit a few of its resources in processing its handsets, or through research joint endeavors (RJVs) strengthening their own brand handsets by causing them safer, greener or working along one of its competitor handset manufacturers to become listed on their know-how and be more impressive.
4. 4 Summarised Value Chain
Figure 5 shows a short description of Vodafone's Value Chain. From the body we can see the group has especially strong support activities and a strong corporate communal responsibility. This gives them a good general population image, which is another of the company's strengths. And also the principal activities allow Vodafone to possess increased control over their resources and an potential to look at a low-cost strategy in order to be able to compete whilst there continues to be a tough economy.
Figure 5: Vodafone Value Chain
5. Recommendations
The above analysis of the internal and external environment has discovered Vodafone's opportunities and advantages, in addition to its main hazards and weaknesses. Vodafone's greatest potential lies in its control over its resources and great market knowledge and global footprint. However increasing competition and pressures from regulatory bodies provide its ideal risks and weaknesses. Figure 6 runs on the TOWS Matrix to demonstrate the strategic options avaiable to Vodafone, from the analysis of its advantages, weaknesses, opportunities and risks that arise from its external and internal environment.
Figure 6: TOWS Strategic Alternatives Matrix
From the TOWS Matrix, we can now identify the best strategic options for Vodafone as identified by the analysis.
5. 1 Recommendation 1: Marketing Strategy
The analysis shows that Vodafone currently have a weak online marketing strategy, mostly in terms of its advertising. Based on generational marketing concept and the demographics which Vodafone concentrate on as its main customers, the suggestion is that they invest in a celebrity endorsed marketing campaign. This will participate in Vodafone's motto 'Electric power to you!' which will be enhanced by a worldwide persona advertising their services, in addition to making their own brand handsets better known. This however will counteract with the aim of left over simple in their businesses. Potential risks to this can be that financial resources can be misused in an unsuccessful campaign, risks of celebrity scandals or selection of the wrong superstar that will not fit in with the business's image.
5. 2 Advice 2: Health insurance and Safety RJVs
Research Joint Ventures with associations such as Cancer tumor Research and other unbiased associations to join knowledge for R&D in safer handsets. Vodafone uses part of its resources for the Vodafone Basis, therefore a proportion can be used in such RJVs as it improves brand image, it ties in with the sociological factors of the external analysis and by doing so they would apply a global strategy which recognises the importance of local concerns and social and legal requirements. This can further improve the group's corporate interpersonal responsibility. Potential risks could be that maybe it's perceived as Vodafone admitting to the link of mobile phones and tumor and instead ruin the brand image.
5. 3 Suggestion 3: BoP Strategy in appearing markets:
'Mobile companies all around the producing world are arriving to grips with the actual fact that virtually all of their future customer growth will come from rural areas' (Hammond, A. 2008). The suggestion is the fact Vodafone implement a Lower part of the Pyramid strategy by providing an internet-based phone service with advanced Wi-Fi technology so that rural areas in growing countries can get in touch. This fits in with the group's perspective of 'Keeping people better connected'. In this manner Vodafone may use their own-brand, low cost smart phones. This strategy could lower the investment required, lower operating costs and would boost the volume of users. This strategy can be carried out by providing solar panels to supply the WiFi sites and give you a chance to help make the mobile build out 'green', which also fits in with Vodafone's sustainability goals. Potential risks are large amounts spent in the network build-up with low earnings because of this.
Based on all these it is safe to state that Vodafone are one of the more important players in the mobile telephony industry. However, you may still find areas in which they can improve and strategies which they can implement to further increase their income; enhance their brand and general population image and additional kick off and make their own-brand handsets a menace to their competition. It is clear from the examination that even though Vodafone are technologically onward in conditions of the services they offer, they however lack invention in their handset making. By implementing these recommendations there is prospect of them to promote their hand-sets and be more competitive overall.
