Vodafone Expansion Strategy Analysis

This assignment analyzes Vodafone's potential expansion strategies into Germany and China. It evaluates the economic landscape, competitive pressures, technological advancements, and investment climate in both countries. The research aims to identify the most favorable location for Vodafone's expansion based on a comparative analysis of risks and opportunities.

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Market Entry Strategy Report
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MARKET ENTRY STRATEGY REPORT 2
Market Entry Strategic Report
Executive summary
For every company to increase its income growth must be embraced and for growth to
be achieved different things within the company need to grow. Expansion entails the
venturing of the business into new markets so as to increase the market cover of the
company. Vodafone is one of the leading telecommunication companies in Australia and
intends to capture more market by expanding into other countries within Asia and Europe.
For this to happen a market strategic report is needed which helps understand the markets of
these other areas and help in the evaluation of the company’s chances to success in those
market. This report conducts an extensive research on the two markets specifically between
China in Asia and German in Europe and this will help the management in picking the best
country for the company to set up its new branches.
Introduction
Vodafone is an Australia is an Australian telecommunication company that provides
both mobile and fixed broadband services to the customers. This is one leading markets in the
industry and most of the companies within the market have been significantly expanding
internationally. Within Australia, Vodafone provides services to over 22 million Australians,
this shows the significant market share the company has. This has led to the need for
international expansion of the company to the other regions around the world. For this case
two countries have been selected for analysis which is the best pick for the company to
adventure into. China and Germany are the company’s pics hence the need for an extensive
research to identify which is the best pick for the company to advance into. Both countries
being among the worlds developed countries, Vodafone’s research needs to be extremely
exhaustive since this means the company’s choice will determine whether the expansion or

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growth will impact its revenue (Zhou, 2017). The main reason for companies to venture into
new markets is usually to increase their customer base and provide their services or products
to more people hence in return increase the company’s income. But incase a wrong decision
or strategy is taken during the expansion, this means the company incurs losses or slow
returns from the growth venture. The report will cover different areas these includes the
discussion section which will cover the macro environment and the geo political forces
impacting each country that may affect Vodafone’s venture in the country, the business
policies in both countries, the potential dangers, risks and opportunities in each country,
conclusion and finally a recommendation of the best pick for Vodafone.
Discussion
China
China is an Asian country which is among the leading companies with its rapidly growing
economy. Most of the global companies have been investing and opening their multinational
companies in the country due to multiple reasons such as the availability of resources and
labour in the country. For Vodafone it is important to analyze different aspects with the
country that would favour the company’s success in the country (Zhou, 2017).
The current macro-environmental and geo-political forces in the country
Macro-environment forces can be defined as the external or uncontrollable factors that
influence an organization’s decisions and end up affecting the performance and strategies of
the company. These factors include legal policies in the country, political, social conditions
and economic factors, natural forces and technological changes of the country (Toppinen, et
al., 2014). On the other hand, geo-politic factors can be defined as the topographic,
demographic factors, the natural resources factors that would affect the expansion of
Vodafone into the country. In china there are multiple macro environmental and geo- political

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factors that would affect the expansion of Vodafone into the county, these factors are
discussed below:
1. Red Tape
In china many of the administrative and bureaucratic tasks that have been significantly
simplified in western countries are yet to be simplified in the country. This can simply fall
under the macro-environmental factor that would affect the expansion of Vodafone in china,
these processes in the china take an exaggerated amount of time to be accomplished.
Research by (Zhou, 2017), shows that minor processes as seen in the western countries such
as company legal registration in the country would take a month or more before they can be
accomplished. The country lacks strong legal policies as well as inconsistent application of
regulations which implies the processes of first establishing the company in the country are
not well designed for international company’s convenience. For the company to successfully
have its operations ready and running in china, an administrative office needs to be in place
to handle the tedious company’s paper work (Zhou, 2017).
Regulatory Environment
In china, the national government enforces rules and policies that are aimed at favoring state
entities at the expense o the privately held firms where Vodafone comes in. Such polices are
detrimental to initiatives that aim to attract foreign companies from expanding in to the
country. Excessive regulations tend to hinder economic activities and entrepreneurial
activities in the county since they lead to excessive expenses for the business (Allen, 2017).
This seems as a major issue of concern for the company intending to expand in to china due
to the excessive policies within the country. Some few examples of these include, the
mandatory joint venture partnership in the country. The policy stipulates that the foreign
investor or business is expected to have a Chinese government agency or local company as a

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partner. The policy evidently shows the biasness of the country’s governing system in
protecting the Chinese locals. In most cases, these partners have been reported to conduct
unfair, illegal and other unethical business policies which in return makes the investors or
international companies skeptical of joining the china market.
Despite all these regulations the Chinese government has other favorable policies such as the
provision of attractive financial incentives to the investors in the nature of tax breaks grants,
subsides and low-cost government loans. Such a policy would be extremely effective for any
company willing to invest in the country hence favoring the Vodafone’s need to invest in the
country (Allen, 2017). The financial sponsored financial inducements provide the possibility
of making a business gin more profits in investing the country within a small-time span.
Potential dangers, risks and opportunities in the current or short-term policies in china.
These include other general factors that affect a company the decision weather to
invest in China but they are normally short term that can change randomly. These include
things such as competitions in the country, communication in the country, human resource
among other factors, these are also excessively sensitive matters in relation to the success of a
company after its launched in another country.
Competitiveness
China has been one of the most attractive destination for investors due to its
development in infrastructures, resource availability such as labor productivity as well as the
workforce skills. The country has significantly matured in the above sectors making it a top
pick for the investors (Yan & Ferraro, 2016). These maturities have led to a change in
multiple factors most investor look up for investing, the advanced infrastructure system lead
to the reduced cost of transport in the country, the availability of labor leads to low charges
also (Allen, 2017). This in return reduces the cost of running the business in the country for

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the investors as compared to investing in other countries. With these factors this results to a
rise of the profits generated by the company. Vodafone significantly needs to consider this
since the profit margins in the country will be increased in the country. Vodafone also relies
on skilled labour force so as to enable the company provide services to all its customers,
china has a leading rate of the most skilled work force at a low cost due to the competition,
this also significantly makes the country more favourable for investing by the company.
Communication
Cultural misunderstanding is one of the main challenges that has been arising as a
result o miscommunication in china. This has significantly affected so many international
companies that have ventured in to the chines market (Wooster & Paul, 2016). For a
company to find a team which is proficiently competent with the chines culture and the
western culture has been also a major challenge hence establishing communication hinders
the investments of most companies since this leads to increased expenses on the HR sector of
the company so as to ensure this does not affect the company’s productivity. In return this
reduces the company’s profit margin (Allen, 2017). Vodafone needs t put this factor under
consideration since this is a significant risk in entering the Chinese market.
Germany
This is one of the highly developed countries in relation to its social market economy,
in the whole of Europe Germany has the largest national economy and the fourth largest by
nominal GDP in the entire world. As for the case of china, Vodafone needs to carry out a
research in respect to different areas to enable the management identify the advantages of
investing in the country as compared to china or does china stand a better position (Glänzel &
Scheuerle, 2016). As seen in the other country analysis it is important to address the macro

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environmental and geopolitical factors as well as the Potential dangers, risks
and opportunities in the current or short-term policies in china (Allen, 2017).
Macro Environmental and Geopolitical Factors
Inviting government incentives and Competitive tax policies and conditions
Germany has multiple favourable macro-environment factors that are extremely welcoming
for investors to expand their businesses in the country. Some of the government policies have
significantly increased the number of investors in the country for instance different policies
such as inviting incentives. The German government has placed attractive incentives to
investors in the country by setting uncomprehensive programs that support the broad
spectrum of business activities al all stage of investment process in the country (Carè, &
Wendt, 2018). These incentives range from cash incentive program via reimbursement of the
direct investment among others such as labour incentives. Unlike the chines government
policies such as the joint venture, the German government ensure the launching of the
business in the country is less complicated which reduces the amount of funds needed for the
international business launch in the country. When compared with the Chinese government,
most of the investors would rest with German macro- environmental factors (Hill, et al.,
2007). Other factors such as the country’s competitive taxes; as per the new policies in the
country, the corporate taxes have been reduced. This reform has greatly helped companies
invest in the country due to the new reforms. Vodafone needs to consider such policies which
shows the country’s interest in the growth of businesses in the region. The government raft of
reforms to improve the general tax framework and keep indirect labor cost down is opening
up opportunities for every investor (Yamey, Campe, & Fewer,2015). This is such a great
opportunity the any company can grab and utilize for the expansion of the business. Germany
being a leading economy country makes it Europeans economic engine. The investors in the

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country profit from the economic performance of the world’s number for leading economy.
The country has the advantage of offering a large domestic market and an easy access to
growing market especially for the investors in the country. This means more profit for a
company such as Vodafone that would wish to invest in the country.
The demography o the country also provides the geo-political factors that contribute the
decision of whether to invest in the country. Germany has a high population which provides
market for the services the company offers. Vodafone being a telecommunication service
provider a large population implies an increase in the levels of serves the company provides.
The other worth addressing factor is the quality of life in the country. The country is a
modern, cosmopolitan and tolerant society which has an excellent standard of life. This
shows the high opportunities for the growth of any investor interested in growing the
company.
Potential dangers, risks and opportunities in the current or short-term policies in Germany.
There are several risks involved in investing in the country such as the increased levels of
competition. The telecommunication industry in the country has a number of competitive
companies which have already capture the market and established their market share.
Vodafone needs to be ready to address such competition (Bock, Huber & Jarchow, 2017).
Despite the seen risk there exists their opportunities such as the county’s advancement in
technology.
Conclusion and recommendation
From the research it is evident that both countries have shown that there is an existent market
for Vodafone to expand but it has been evident that for the company to success German
would be the correct pick due to its advancement in economy and its value for investors

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(Smith, 2015). The management is supposed to consider all the covered factors during the
selection of the right strategy on how to expand.

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References
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Hill, R. P., Ainscough, T., Shank, T., & Manullang, D. (2007). Corporate social responsibility
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