Vodafone Business Strategy Report

This report analyzes Vodafone's business strategy using various frameworks, including PESTLE analysis, VRIO model, and Porter's Five Forces. It examines Vodafone's strengths and weaknesses, identifies opportunities for competitive advantage, and outlines a strategic management plan for future growth. The report also includes a detailed discussion of Vodafone's market positioning, operational direction, and tactics for achieving its business objectives.

BUSINESS STRATEGY

Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
1.Pestle model for environment analysis.....................................................................................3
2. Ansoff’s growth vector matrix to analyse the organisation’s strategic positioning................5
TASK 2............................................................................................................................................6
1.‘VRIO/VRIN’ model to analyse the strategic capabilities possessed Vodafone......................6
2.Strength and weakness of the organization..............................................................................7
TASK 3............................................................................................................................................8
Devising appropriate strategy to improve competitive edge.......................................................8
TASK 4..........................................................................................................................................10
Understanding and interpreting strategic direction....................................................................10
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
Business strategy can be defined asset of decisions which are taken by company to accomplish
its objectives. Management has to make master plan that may support organisation in securing its
competitive position in the market. Mobile telecommunication industry has generated huge
revenue over a period of time worldwide. Vodafone is the leading firm that offers mobile
services, network services to consumers across the world. Present report will carry out
environmental analyses of Vodafone. It will apply VRIO model for analysing strategic
capabilities of Vodafone. Strength, weakness of Vodafone will be described in this assignment.
In addition, report will apply analytical tools such as Ansoff matrix, stakeholder analyses. Study
will produce a strategic management plan for organisation in order to show its clear strategic
direction that may support business in growing well in this market.
TASK 1
1.Pestle model for environment analysis
Figure 1 Pestle analysis
Source: (Pestle analysis of Vodafone, 2016)
Vodafone is affected by various environmental factors that can impact on the profitability
aspects of company. It can hinder or foster growth of organization. Factors includes following:
Political factor- This includes the factors like saving rate, exchange rate, economic
condition of country, laws, rules and regulations given by country in which company is going to
operate. This factor can affect Vodafone in both positive and negative way (Alexandru, 2015).
Positive impact- Success of Vodafone is fully based on political scenario of country. These
factors can be influential for development of firm like Vodafone, as political factors help
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enterprise in developing infrastructure for company to be operational and effective in a particular
state or country.
Negative impact- Political instability can lead to a situation like war, which can disrupt network
and also good infrastructure cannot be established for Vodafone that can hamper profitability of
firm.
Economic factor- It includes the factors such as inflation rate, labour rate, interest and
many more that can impact Vodafone.
Positive impact: If economic condition of country is high and also there exists good GDP which
means that people over there have more income and high purchasing power by which they
become more prone to adopt good communication technology.
Negative impact- Economic crisis can cause serious occurrence of issues like rise in labour rate
that can affect Vodafone negatively.
Social factor- These factors include attitude, belief and thoughts of consumer related to
product and service sold by company.
Positive impact: This is a very dynamic domain and for the success, the company must show
flexibility in its policies pertaining to the local culture. Vodafone is basically a purely European
company but it has changed its preferences and the related policies as per the local social factors
in which the company is being operated.
Negative impact: If company do not follow belief, attitude and thoughts of consumers and is
engaged in activities which hurt their sentiments then this can lay negative impact on operational
efficiency of Vodafone.
Technological factor- This is one of the most important factor which needs to be
followed by Vodafone in order to grow.
Positive impact- Making use of advancing technology like company is engaged in providing 4G
network services in Countries like UK has laid positive impact on their profitability. It has
attracted huge amount of customers towards them.
Negative impact- If Vodafone is not involving in making use of advancing techniques and latest
trends then this can hamper goodwill of firm. It can reduce their profitability.
Legal factor- It includes the laws, rules and regulations which has been given by the
government that needs to be followed by company.
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Positive impact- Vodafone is engaged in following laws like health and safety in which firm is
involved in providing safe working conditions to their employees. This has helped them in
attracting large number of customers towards them.
Negative impact- It has been analysed that various states have imposed penalties on Vodafone on
not following laws related to infrastructure. They are also being involved in paying less to their
employees in comparison to other companies. This has affected goodwill of Vodafone.
Environmental factor- With the rise of globalisation people of country have become
more and more environment friendly. Vodafone is highly dynamic in nature.
Positive impact- Vodafone is involved in performing corporate social responsibility in which
they give 2% of their profit in saving the environment and utilising resources effectively.
Negative impact- In order to expand its market and increase its share, Vodafone has constructed
infrastructure at various places in country that has created huge amount of pollution, due to
which people of locality has suffered. It laid negative impact on growth of company.
2. Ansoff’s growth vector matrix to analyse the organisation’s strategic positioning
Ansoff growth vector matrix can be used to analyse the Vodafone’s present capability and future
potential customers. It helps company in growing through existing products and services or by
developing new goods or services. This model consists of four different growth strategy. It
includes the following:
Market penetration- In this type of strategy, firm try to sell out and penetrates the
market through its existing products. Also they make use of existing market to sell out goods and
services. In order to penetrate the market and increase the market share Vodafone needs to
involve in existing market share. This strategy can be successful when firm is involving in
selling their existing products to existing consumers and even creating new customers in existing
market. To penetrate the market, Vodafone can also reduce the price of their services so that
consumers are been attracted towards them (Zhong and Li, 2018).
Market development- In this strategy, firm is engaged in expanding its market share into
new segments of market. This technique can be successful as Vodafone is engaged in making use
of innovative and creative techniques to expand its market share. It has also been analysed that
firms 5G services is going to be launch in UK in July. For this company has targeted seven cities
that includes Birmingham, Manchester, Bristol, Cardiff, Glasgow, Liverpool and London. It will
help them in increasing profitability.
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Product Development- In this type of strategy firm is engaged in increasing the sales
through developing new products and services. They are going to launch new 5G services fort
their consumers. Vodafone said that to use this service, user will not have smart compatible
phone. They also have the plan to expand the service in dozens of localities. This will help them
to increase market share. Also the market share of company is going to increase.
Diversification- In this type of strategy firm try to grow by creating new products and services
in the new market. It is one of the riskiest strategy that can be opted by Vodafone. For this, firm
needs to engaged in analysing needs and demands of customers in new market. This can help the
firm in growing.
TASK 2
1.‘VRIO/VRIN’ model to analyse the strategic capabilities possessed Vodafone
VRIO model can be used by Vodafone for re-shaping the new strategic scheme. It helps the firm
in determining competitive potential.
Value- Value can be created by Vodafone by exploring the opportunities. Company can identify
valuable resource and gain competitive advantage by it. Vodafone has continued to build brand
value by delivering a superior, consistent and differentiated customer experience.
Communication activities are focused on delivering the promise of “helping customers make the
most of their time”. The Group’s vision is “to be the communications leader in an increasingly
connected world” expanding the Group’s category from mobile only to total communications.
Also the firm has been able to create value by providing products according to needs and
demands of consumers. Vodafone sell out its services with help pf franchising that has also given
them opportunity to provide services at more fast and better rate.
Rarity- Vodafone needs to make sure that services and products provided by them is rare. If they
are not rare then any new entrant or competitor can take their place. By This company can face
huge amount of loss. Vodafone makes sure that their branded devices meet out the needs and
demands of consumers. They have also engaged in building up the rare product like Vodafone
handset. Vodafone 150 is available to consumers for less than pound 15. It provides number of
consumers to have advantage of advancing technology. This has given Vodafone the opportunity
to expand its market share and gain competitive advantage.
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Imitability- This implies that Vodafone must also be engaged in developing products and
services that can-not be copied by any other competitor or firm. Like for example Vodafone is
going to launch Zoo-zoos in global market too. This advertising campaign of company was
unique and is not been copied by any other company. It has helped them in gaining potential
consumers and creating brand equity for firm. Enterprise has merged with Hutchison Essar in
2007, by which they have enhanced their marketing campaign.
Organization- Vodafone is being engaged in positioning its brand by analysing and evaluating
consumer behaviour. This has also helped them in gaining competitive advantage. Firm has also
set up their vision so that they can easily face challenges that occurs in their way. Also Vodafone
is involved in providing leadership and training to their employees, so that they can become
skilled. They are going to launch 5G network in global market.
2.Strength and weakness of the organization
Strength- Vodafone has numerous strength that has enable the company to be established and
make its place in market. It has helped firm in penetrating market and develop existing market.
Some of the strengths of enterprise are as following:
 Company has faced success by opting for go to market strategies for its products and
services.
 It has been analysed that firm provides high level of consumer satisfaction. Vodafone is
involved in providing best quality services to their customers. It has helped them in
retaining consumers and also attracting new customers. They have a good brand equity
among potential customers (Rumelt and Lamb, 2017).
 Vodafone also have a good track record relating to mergers and acquisitions. They have
been integrated with many technological advances company that has also helped them in
bringing new and innovative products and services in market.
 Vodafone is also engaged in providing training to their employees, that has helped them
in making their workforce more skilled. They have invested huge amount of resources
and money in training and learning programs to make their employees more skilled.
 Vodafone is involved in developing new products through product innovation techniques.
This has created brand equity for them.
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 Vodafone has also marked its success by entering new market. The expansion has
assisted firm in making new revenue stream and also diversifying economic cycle risk in
markets they operate in.
Weakness- Vodafone also have certain areas in which they need improvement. It is essential for
their growth and strategic positioning.
 It has been analysed that success rate of Vodafone outside the core business is low. They
have faced several issues in shifting from one product segment to another.
 Vodafone success rate in collaborating with firms with other work culture is also low.
They are successful in merging with small companies but not with different work culture.
 Firm is also not involved in advanced marketing of products and services. They have not
defined the unique selling point of services while promoting them.
 Vodafone has also not able to manage properly, the threats coming from new entrants in
market. To overcome this company needs to build up feedback mechanism. This can help
them to overcome the challenges.
 It has been analysed that attrition rate of Vodafone is quiet high. This can act as a
weakness for them. So their costs also increase on training and learning. It also reduces
profitability of firm.
 Researchers has also evaluated that the financial planning of Vodafone is not been done
properly. They also do not forecast challenges nicely.
TASK 3
Devising appropriate strategy to improve competitive edge
Porters five forces is a frame-work that helps company in taking strategic decision, so that firm
can gain competitive advantage.
Bargaining power of suppliers- All the telecommunication company are engaged in buying raw
materials from various suppliers. Suppliers who are in power can decrease the cost of raw
material, so Vodafone can increase its profit by it. Also the dominating suppliers who are in good
position can make use of their negotiating power, so that they can gain higher prices from
company (Grant and Jammine, 2018). This situation can reduce profitability of firm. Bargaining
power of supplier is high. In order to maintain this Vodafone can have built effective chain of
supply with various suppliers. They can also experiment with design of products, so that if cost
of any one good increases, company can opt for other raw material. They can also have built up
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by good relationship with suppliers, in which the business of suppliers is totally dependent on
Vodafone. Company can develop third party suppliers for them.
Threats of new entrants
New entrants bring innovation, it helps in new ways of doing things and put pressure on
Vodafone group. Through lower price strategy. Reducing cost providing new strategy. Providing
new values to customers. Vodafone group has to manage challenges and build barriers to safe its
competition. By providing new product and services. It not only brings new customers. Give old
customers to by Vodafone product. Vodafone product provide new and innovative product.
Vodafone lowers the fixed cost. Building capacity and spending money on research and
development is less likely to occur in Vodafone industry. Threat of new entrants is high for
Vodafone.
Bargaining Power of Buyers
buyers are often demanding a lot. They want to buy the best product at minimum price. They put
pressure on Vodafone for long term profit. By developing a number of customers. It will reduce
the bargaining power of buyers and provide opportunity of sales and production process. By
rapidly growing new product. discounts and offerings are provided to customers. If Vodafone
group provide new product. It can limit the bargaining power of buyers. New product will reduce
the defection of existing customers Vodafone group to its customers.by building a large based
customer. Bargaining power of buyer is low (Covin and et.al., 2015).
Threats of Substitute Products or Services
When a new product or services has its similar customers in different ways Vodafone
profitability suffers. Like Dropbox and google drives are substitute of each other. It affects the
profitability of a company. The value of one product is high another is low it definitely the
customer will buy the product which has low price. it is service oriented rather than a product.
Vodafone company helps in understanding the needs of customer what they want. The Vodafone
company focus more on needs of customers. New product or service. Vodafone company
increase the cost of customers. The threat of substitute products and services is low.
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Rivalry among the Existing Competitors
If the competition among the existing player s of an industry is intense. It will lower down prices
and decrease the profitability of Vodafone industry. Vodafone is a wireless and competitive
industry. Rivalry among the existing competitors is high. Company can face high range of
competition. It is depending on the long term profitability of an industry. By building a
differentiation. Vodafone company can compete better (Raisch and Tushman, 2016). Vodafone
company compete with competitors by increasing the market size. Rather than competing for
small market. If competition is intense it is difficult for other player of Vodafone company to
earn profit will lower down prices decrease profitability of the industry. It lowers down the price
by decreasing profitability.
TASK 4
Understanding and interpreting strategic direction
Strategic management plan can be defined as the document which can be used to communicate
within the company. Interaction can be related to organizations goals, objectives, mission, vision
etc. It helps stakeholders in knowing about strength and weakness of company. Also the plan
helps company in working towards achievement of common goals and objectives. Strategic
management plan also assists in setting out priorities for firm. This process also helps in
strengthening position of company (Erdil and Özdemir, 2016). Vodafone can get advantage by
preparing strategic management plan for them. This can help them in gaining competitive
advantage. This plan includes following steps:
Mission- Company has the mission to make their 434 million consumer believe that the
advancing techniques and services which are digital will help them in transforming their lives in
positive way. This will also enhance society and make the quality of life of consumers better.
Vodafone also thinks of increasing their profitability every year (Fitriany and Abidin, 2018).
Vision- Vodafone vision is to provide breakthrough connectivity and innovative goods
and services to consumers. They aim to enhance quality of life of people by providing them best
services. Company has vision to manage their operations effectively and ethically.
Core Values- Vodafone is engaged in providing flexible working condition to their
employees, so that the turnover reduces in company. They provide workers an environment that
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is flexible so that people start loving their job. Firm is also engaged in hiring people from diverse
culture, so that employees start valuing culture of one another. Vodafone is a consumer based
organization, their main priority is their consumers. They to provide high quality of services to
them and make their life better. Company also provide training and learning to workers so that
they can develop an ambitious team. This also assist Vodafone in achieving their objectives and
gain competitive advantage. They are involved in providing safe and secure working conditions
to their employees so that they can create employee loyalty in organization.
Aim- The aim of company is to attract, retain and train best people for their organization.
Also Vodafone is trying to create job opportunities for large number of people. There aim is also
to increase the market share.
Objective- To increase market share by 30% till the end of year 2030.
To enhance consumer experience till 2020.
To increase use of 5G network till the end of year 2021.
Strategic direction- Vodafone in order to expand its market share and to increase its
goodwill and profitability can make use of porter’s generic strategy. This strategy is mainly used
to gain competitive advantage and achieve its business objectives.
Cost leadership- In this type of leadership firm can establish its market share by keeping price of
products low. This can help Vodafone in setting its market in new area. It will help them in
building its brand equity. In order to complete this, firm needs to exploit all type of low cost
resources which can assist them in achieving and sustaining overall cost leadership (Bettis and
Hall, 2016).
Differentiation- In this type of strategy, firm can provide unique products at lower price so that
they can gain competitive advantage. They try to position themselves as unique. This strategy
can help Vodafone in attracting and retaining more consumers. They create a base of consumer
for them. In this firm also requires to analyse needs and demand of customers, so that they can
establish their name.
Focus- The focus strategy consists of two variants that includes Cost focus and differentiation
focus. In cost focus technique Vodafone can take cost advantage by lowering down cost of their
products. Differentiation focus can help company in analysing different needs of consumers and
buyers. They need to fulfil buyers unusual need, to establish their market share.
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Market analysis- For Vodafone to launch 5G network for their consumers, they need to
analyse market. It has been analysed that consumer preferences—and from the first large-scale
rollouts of 5G technologies, which are expected to create significant business opportunities for
telecom companies. So Vodafone needs to analyse taste, preference and trends that is going on
the market. It will create wider opportunity for Vodafone.
Operational direction- Vodafone can improve its training and learning process of
employees so that they can provide high quality service to consumers. This will also help them in
gaining competitive advantage and establishing their business.
Tactics- Vodafone to establish their market can make use of various promotional strategies
like advertising products through public events, radio, television or any other means. This will
help them in covering large range of market share.
CONCLUSION
From the above report it can be concluded that companies have to make effective strategies
that may help them in achieving their business goal. Political, economic conditions of country
impact on overall working of organisation, hence it is very important for the firm to emphases on
these elements and implement correct directive approach that may aid in securing competitive
position of organisation. Vodafone pay attention on its consumers and competitors, this supports
the enterprise in retaining its buyers by offering them quality products and services and building
strong relationship with suppliers. Market and product development strategies are helpful for the
company in order to meet the needs of different consumers and expanding its business
internationally.
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Online
Pestle analysis of Vodafone. 2016. [ONLINE] Available through: <
http://fernfortuniversity.com/term-papers/pestel/nyse4/4028-vodafone-group-plc.php>
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