Applied Corporate Strategy: Vodafone Plc

This report focuses on the acquisition strategy of Vodafone Plc and includes an external analysis, PESTLE analysis, Porter's Five Forces analysis, internal analysis using TOWS framework and VRIO analysis.

APPLIED
CORPORATE
STRATEGY

Table of Contents
INTRODUCTION...........................................................................................................................1
EXTERNAL ANALYSIS................................................................................................................1
PESTLE Analysis........................................................................................................................1
Porter's Five Forces Analysis......................................................................................................3
INTERNAL ANALYSIS.................................................................................................................5
TOWS Framework......................................................................................................................5
Value Chain Model.....................................................................................................................6
VRIO...........................................................................................................................................7
EVALUATION................................................................................................................................8
SAF Framework..........................................................................................................................8
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Corporate Strategy refers to a combination of all the procedures, processes and
techniques which an organisation uses in order to gain competitive edge within the marketplace,
along with enhanced sustainability (Zerfass, and Viertmann, 2017). Furthermore, it is necessary
that organisations develop and apply such strategy to gain a better market position and higher
scope of profitability and revenue. Hence, in this relation, the report below is based on Vodafone
Plc, which is one of the most recognised and preferred telecommunication organisations in the
United Kingdom. The assignment would be focussing on the acquisition by the company of
European Liberty. Moreover, a detailed external environment analysis would be covered within
the report, along with an internal analysis to find out the firm's internal strengths, weaknesses
and capabilities. In addition, the report would also be addressing evaluation of its strategy of
acquisition through application of SAF Criteria.
EXTERNAL ANALYSIS
PESTLE Analysis
One of the most important considerations of a business organisation is that they are
required to analyse their external business environment which actively or passively influence the
working and functioning of a company. Hence, in this relation, below is an application of
PESTLE analysis in context of Vodafone which would be helping in identifying opportunities
and threats:
 Political:
This is one of the important factor in the external environment and industry as a whole is
influenced through factors available in the political environment of UK. Introduction of BREXIT
brings huge amount of instability in the political environment of telecommunication sector in
UK. In the present time telecommunication services has turned out to become necessary services
in different sectors such as education, employment and all business ventures. Political instability
that BREXIT has introduced in UK has hampered different businesses. Establishment of new
businesses and expansion of current business become quite unreasonable. Instability in the
businesses are termed as an threat as in long run all the activities will be suffered. In order to
cope with the political threat in UK business organisations like Vodafone may acquire other
organisation to become more stable (Zhu, and Chen, 2015). As each organisation is strong at
1

some factor and by acquiring such organisation which is strong in area in which Vodafone is
lacking then this instability can be minimised.
 Economical:
Their are several factors combined to make a economy work as desired and targeted.
Certain economical factors such as foreign exchange rate, inflation rate, rate of interest and
savings possess grate impact on the economy. These factors may generate positive or negative
impact on the economy. For example- Tourism industry is contributing 217 Billion British
Pounds in UK and providing huge amount of employment opportunities. Economy of UK is
facing grate amount of deflection due to BREXIT. Telecommunication industry is getting threat
with this unstable economical condition of UK's economy. When rate of Pound is decreasing
then purchasing power and capital contribution of businesses in telecommunication sector is
affected in negative manner. Growth rate of telecommunication sector is decreasing and due to
high rate of inflation organisations like Vodafone is suffering huge amount of losses. As rate of
Pound is decreasing and Vodafone while dealing at global level is facing huge amount of losses.
This issues can be controlled to a certain level by merging two organisations to become more
financially viable.
 Social:
Their are number of social factors that creates a grate impact on telecommunication
business in UK. Age distribution, change in taste and preference of consumers, consumer buying
pattern, level of education and income level are some of major social factors that affects business
of organisation like Vodafone in UK. In UK population which uses services provided by
telecommunication organisations is increasing with higher rate as usage of internet and mobile is
boosted. High demand, preferable age distribution and favourable change in taste and preference
of consumers brings a growth opportunity for business. To grab this opportunity in better and
preferable manner two or more organisations can join their hands. Providing more technological
services with this merger will provide better services to consumers in the industry and generate
better results.
 Technological:
These factors are related to all the technological advancements within the overall country
that has a direct impact on the telecommunication sector of the UK. Hence, in this context, there
are certain technologies such as SD-WAN, along with AI and Automation, that could be
2

prominent opportunities within the overall industry, due to enhancement in effectiveness in
processes, as well as products.
 Legal:
Different rules and regulations are implemented on businesses while performing business
activities in different nations around the globe. Various laws such as health and safety laws,
employment laws, discrimination laws, equality law are applicable on all the business
organisations. In UK laws and regulations that are applied on telecommunication businesses are
strict and each business needs to follow such rules in order to perform in legal and valid manner.
At the present time there is high amount of legal instability in UK in all form of business
organisations. The high amount of uncertainties in the legal environment of business is served as
a threat to business because business losses their power to anticipate future in more certain
manner. When anticipation of laws become complex then threat of legal compliances arises for
organisations like Vodafone working in the telecommunication industry. As frequent changes as
per political and environmental situations are made in the legal policies of the business and
complying with all these changes become difficult and threat in long run.
 Environmental:
The UK business environment has been currently very much focused upon the
environmental concerns that are being evident within the nation. Moreover, there are
environmental protection policies and legislations that are required by the companies within the
telecommunication industry to follow as part of their CSR activities. This represents the sector
and companies like Vodafone with an opportunity to gain government and communal support
through enhance their sustainable networking practices which would contribute in protection of
the environment (Rugman, and Verbeke, 2017).
Porter's Five Forces Analysis
This framework is associated with essential analysis of the industrial attractiveness of the
sector based on several forces which have an impact on the working of companies. Hence, in
relation to the telecommunication industry of the United Kingdom, Porter's Five Forces Analysis
is applied below:
 Supplier's Bargaining Power:
These are the individuals who supply the company with effective and essential raw
materials that are essential to manufacture the finish goods. In relation to the telecommunication
3

industry within the UK, the number of suppliers are quite large due to ample number of buyers
and organisations. This leads to a moderate bargaining power of the suppliers due to the fact that
the switching cost in this industry is quite low. Moreover, the suppliers provide their materials at
fairly standardised pricing, which again reduces their bargaining power with respect to the
industry and companies like Vodafone.
 Buyer's Bargaining Power:
These individuals are the reason for existence of an organisation as they buy the offerings
of the company. In context with the telecommunications industry, the switching cost for buyers
is very low due to the competitive pricing strategies by organisations such as Vodafone. This
enhances the bargaining power of suppliers for the industry and its companies. However, in order
to deal with the same, Vodafone is required to differentiate its offerings and innovate in relation
to ensure decrease in this bargaining power.
 Threat of Substitutes:
These are the products and service that could be used in place of the offerings by an
organisation. Furthermore, in context of telecommunication industry, there are several substitutes
within the sector such as Instant Messaging, IP telephones, etc., which enhances the threat for
businesses within the sector such as Vodafone. Hence, in order to deal with the same, the firm
could ensure merging or acquiring similar smaller scale companies to enhance its market share
and cope with the trend (Parawansa, 2015).
 Threat of New Entrants:
Setting up a business organisation is very difficult within the sector due to heavy
investment, supply chain management and marketing activities. Hence, it reduces the threat for
new entrants for the sector. However, there are certain companies such as BT Group which are
bringing in new ways of doing business by SD Wan Technology which is a coming of age
technology being used by new organisations. Hence, this threat is high for Vodafone. To ensure
decrease within this, the firm must continuously work upon innovation of its services and
processes to access new breakthroughs in technologies to enhance its competitive positioning.
 Existing Competition:
There are certain organisations within the UK, such as Virgin Mobile, EE and U2. These
organisations work with effective innovation and better quality services within the United
Kingdom. Moreover, due to competitive pricing within the industry, these companies offer their
4

services at somewhat medium to lower price range, which enhances their threat for other players
such as Vodafone. Thus, to tackle this issue, the organisation must focus on differentiating its
offerings which would allow the firm to exercise better functioning within the marketplace.
INTERNAL ANALYSIS
TOWS Framework
INTERNAL
ANALYSIS
OF
VODAFONE
STRENGTHS (S) WEAKNESSES (W)
 Effective Brand Image
 Diverse Range of Products
 Innovative Capacity
 Inappropriate Marketing
 Unethical Functioning
 Reduced Investment Capacity
OPPORTUNI
TIES (O)
 New cellular trends within the
UK
 Emerged technologies like SD-
WAN and AI
 High emphasis of the sector
on CSR
THREATS
(T)
 Political Instability
 Inappropriate Economical
Environment
 Uncertain Regulations
For an organisation like Vodafone, it is very much necessary that the internal strengths
and weaknesses of the company are evaluated and analysed against the threats and opportunities
which the firm experiences externally. Thus, the TOWS analysis of the company below provides
an insight of how the firm could ensure enhancement of opportunities and reduction in threats:
 Strengths/Opportunities (SO):
As reflected above, there are certain strengths, as well as opportunities that are available
with Vodafone, which could appropriately be accumulated together for the company to enhance
its performance within the marketplace (Minár, 2016). For instance, the firm has an opportunity
related to new domestic trends within the UK associated with telecommunications, which could
appropriately be achieved by the company through diversifying its products and services.
Furthermore, another strategy available with the firm is related to emerging technologies such as
5

AI and SD-WAN. This opportunity would be grabbed by the organisation through its innovation
capacity, by innovating new products and processes through which would be using these
technologies in an effective manner.
 Strengths/Threats (ST):
Alongside certain opportunities, there are several threats with the organisation as well,
which must be analysed against the strengths within the company. As an example, there has been
political instability prevailing within the United Kingdom. Hence, this threat could be reduced by
the firm's brand image, which would allow the firm to maintain its supply chain even after
uncertain policies (Marková, and Lesníková, 2015).
 Weaknesses/Opportunities (WO):
This quadrant deals with how the opportunities within the marketplace could help the
company in improving its weaknesses. For instance, the overall telecommunication sector within
the United Kingdom has started to get very much inclined towards effective CSR practices that
are related with effective working with each and every stakeholder of the company. Hence, this
would allow to firm to improvise its ethical work frame associated with several tax issues which
the firm faced sometime ago.
 Weaknesses/Threats (WT):
One of the biggest threats with the company is associated with uncertain regulations due
the events of Brexit. Hence, this would lead to further challenges related to the weak investment
capacity of the company, as well as ineffective marketing.
Value Chain Model
PRIMARY
ACTIVITIES
DISTINCTIVE
COMPETENCES
SUPPORTING
ACTIVITIES
COMPETITIVE
ADVANTAGE
Inbound Logistics Supply Chain
Management
Procurement of Raw
Material Reduction in Cost
Operations Manufacturing of
towers and SIM Cards Innovation in services Improvement in
operational efficiency
Outbound Logistics Facilitation of Network Infrastructural Improved Service
6

across UK Development Quality
Marketing & Sales
Promotion through
Social and Traditional
Media
Introduction of new
marketing techniques
Enhanced Brand
Awareness
Services After Sales Services Customer Service
training Customer Retention
VRIO
This framework is associated with determining the company's capabilities and resources
which would allow the firm in gaining competitive edge within the marketplace. For Vodafone,
this analysis is performed as under:
COMPETENCIES VALUE (V) RARE (R) INIMITABLE
(I)
ORGANISATION
(O)
COMPETITIVE
ADVANTAGE
Supply Chain
Management
Supply Chain
Management - - - Temporary
Competitive
Infrastructure Infrastructure Infrastructure - - Temporary
Competitive
Technological
Capabilities
Technologica
l Capabilities
Technologica
l Capabilities
Technologic
al
Capabilities
- Partially
Competitive
Human
Resources
Human
Resources
Human
Resources
Human
Resources
Human
Resources
Sustainable
Advantage
It is an effective tool which is associated with appropriate and effective evaluation of
several resources, along with the capabilities of the company in getting appropriate competitive
edge within the marketplace. Hence, as per the above display, below is an analysis of the most
competent resource within Vodafone:
 Valuable:
7

Human Resources are very much valuable within the organisation, as they support the
company towards their logistics and operations.
 Rare:
It is quite rare for other companies to find employees with similar intellect and
competence, which enhances the uniqueness of this resources in context of Vodafone (Keyes,
2016).
 Inimitable:
One of the major attributes within the human resources of Vodafone is that they are very
much inimitable. The reason for this is because it is practically impossible for employees of other
organisations to imitate the talents and skills which are possessed by these individuals. In
addition to this, the innovation through which they manage the activities associated with
facilitation of network within the United Kingdom is also very much untraceable due to
uniqueness of these ideas.
 Organisable:
Human Resources within Vodafone are very much organisable. The reason for the same
is that different types of trainings are provided by the organisation to these individuals, such as
training related to new technologies and equipments for manufacturing purposes, affiliation with
new marketing techniques, along with after sales services needed by the company, which helps
these resources to support the activities of the firm in an effective manner (Hong, and et. al.
2019).
EVALUATION
SAF Framework
Managers and other executives within an organisation are required to evaluate the firm's
strategy which the company has undertaken appropriately. In context with Vodafone, the firm
has quite recently announced its plans to appropriately and effectively acquire European Liberty
by acquiring its shares in CEE and Germany (VODAFONE COMPLETES ACQUISITION OF
EUROPEAN LIBERTY GLOBAL ASSETS, 2019). This phenomenon refers to acquiring the
shares and other resources of an organisation to work together with the firm to achieve corporate
objectives effectively (Scholes, Johnson and Whittington, 2002).Hence, it becomes necessary for
the organisation to evaluate the same, for which SAF criteria is being utilised below:
8

 Suitability:
The suitability of this strategy could appropriately and effectively be evaluated against
the above mentioned TOWS analysis. As analysed, the company has certain opportunities lined
up in context of new technologies such as SD-WAN and AI, which could be better accessed by
the company through using new and innovative mindsets of individuals of European Liberty.
Moreover, its weakness associated with ineffective investment capacity could also be overcome
through pooling its financial resources with that of the acquired organisation, making
improvements within the organisation and its investments. Thus, in this context, the strategy of
Vodafone of acquiring European Liberty is very much suitable for the organisation.
 Acceptability:
In context of Acceptability, the firm must evaluate the strategy in context of stakeholder
analysis to ensure that this new step by the firm is very much accepted by all the associated
individuals of an organisation.
Hence, in this regard, the stakeholder analysis of the company is performed below:
LEVEL OF INTEREST
LEVEL OF
POWER
High Low
High Investors Customers
Low Employees Suppliers
As per the above analysis, there are three stakeholder groups within Vodafone which
would be impacted the most by the acquisition of European Liberty. In this aspect, the impact of
the same are evaluated below:
◦ Investors: This stakeholder group has high power, as well as high interest level. This
means that each strategy of the company would be having a major impact on these
individuals. Moreover, their agenda is to appropriately get high returns on their
investment. Hence, in terms of acquisition, the firm would be getting more customers
who are loyal to the acquired company, better infrastructure and human resources
which would allow the firm to gain higher returns (Grant, 2016).
◦ Employees: These individuals have high interest as well as low power, which means
that they do not have much say in decisions of the company, however, their interests
9

are high (Cabrelli, 2016). After acquisition, the new employees would be required to
work as per the rules and working of Vodafone, which might cause resistance.
However, this could be dealt by the company through effective training and
persuasion.
◦ Customers: These individuals have high power and low interest, which means that
these individuals are very much capable enough to mould the strategies of the
company, however, requires fulfilment of their interests. Hence, the acquisition would
allow the firm to present high quality products and services at fair prices, which
would allow them to accept this strategy effectively.
 Feasibility:
There are several skills and competencies which are needed within Vodafone in order to
execute this strategy effectively. Such as due diligence, analytical and negotiation skills. Hence,
this strategy is very much feasible due to the firm having necessary technical, financial and
human resources within the same (Frandsen, and Johansen, 2018).
CONCLUSION
Thus, it is concluded from the report above that applied corporate strategy is one of the
most essential concepts which must be analysed and implemented within an organisation in order
to ensure accomplishments of its organisational objectives. Frameworks such as PESTLE
Analysis and Porter's Five Forces helps in analysis of the external environment of a business
which derives opportunities and threats for the same. Moreover, TOWS, Value Chain and VRIO
analysis enables a firm to determine its internal strengths, weaknesses and capabilities. Lastly, it
is necessary to apply SAF criteria, along with stakeholder analysis to ensure evaluation of the
strategy which is being adopted by the organisation.
10

REFERENCES
Books and Journals
Cabrelli, D., 2016. Employment Law in Context: Text and Materials. Oxford University Press.
Frandsen, F. and Johansen, W., 2018. Corporate communication. The International Encyclopedia
of Strategic Communication. pp.1-10.
Grant, R.M., 2016. Contemporary strategy analysis: Text and cases edition. John Wiley & Sons.
Hong, H.G., and et. al. 2019. Crime, punishment and the value of corporate social
responsibility. Available at SSRN 2492202.
Keyes, J., 2016. Implementing the IT balanced scorecard: Aligning IT with corporate strategy.
Auerbach Publications.
Marková, V. and Lesníková, P., 2015. Utilization of corporate sustainability concept at selected
enterprises in slovakia. Procedia Economics and Finance. 34. pp.630-637.
Minár, P., 2016. Goodvertising as a paradigmatic change in contemporary advertising and
corporate strategy. Communication Today. 7(2). pp.4-17.
Parawansa, D.A.S., 2015. Customers Perpetuation as Main Variable For Corporate Strategy in
Banking Industry. Australian Journal of Basic and Applied Sciences. 9(27). pp.715-721.
Rugman, A.M. and Verbeke, A., 2017. Global corporate strategy and trade policy. Routledge.
Scholes, K., Johnson, G. and Whittington, R., 2002. Exploring corporate strategy. Financial
Times Prentice Hall.
Zerfass, A. and Viertmann, C., 2017. Creating business value through corporate
communication. Journal of Communication Management.
Zhu, D.H. and Chen, G., 2015. CEO narcissism and the impact of prior board experience on
corporate strategy. Administrative Science Quarterly. 60(1). pp.31-65.
Online
VODAFONE COMPLETES ACQUISITION OF EUROPEAN LIBERTY GLOBAL ASSETS. 2019.
[Online] Available Through:
<https://tools.eurolandir.com/tools/Pressreleases/GetPressRelease/?
ID=3629768&lang=en-GB&companycode=uk-vod&v=>
11