PESTLE Analysis of Vodafone Plc

This article provides a PESTLE analysis of Vodafone Plc, a UK based multinational telecommunications company. It discusses the organizational governance and structure of Vodafone, the significance of PESTLE analysis for the company, and a detailed PESTLE analysis covering political, economic, social, technological, legal, and environmental factors.

PESTLE Analysis Of
Vodafone Plc

Table of Contents
INTRODUCTION...........................................................................................................................3
Task 1...............................................................................................................................................3
Organizational Governance of Vodafone....................................................................................3
Organizational Structure..............................................................................................................4
Task 2...............................................................................................................................................7
Significance of Pestle analysis for Vodafone company ..............................................................7
Task 3...............................................................................................................................................8
PESTLE Analysis of Vodafone...................................................................................................8
CONCLUSION..............................................................................................................................12
REFERENCES................................................................................................................................1

INTRODUCTION
PESTLE analysis is a framework and tool used for identification and evaluation of the
macro environmental factors that impact an organization's performance. The acronym stands for
external factors of Political, social, technological, economic, legal and environmental nature. The
report will highlight the PESTLE analysis for the company Vodafone plc which is a UK based
multinational company of telecommunications headquartered in London. It majorly operates in
the regions of Europe, Africa, Asia and Oceania and is leading global mobile company. The
report will also describe the governance, structure and management of Vodafone the key external
environmental constraints in the company.
Task 1
Organizational Governance of Vodafone
Organizational Governance, according to the international standard on social
responsibility, ISO 26000, is “a system through which a company makes and implements
decisions for pursuing its objectives.” (Crowther and Seifi, 2017)
Vodafone encompasses UK Governance Code and applies its principles and complies with all
the codes. The Board of Vodafone ensures high standards of corporate governance, which is
considered critical for maintaining the trust of investors in the company and ensure its business
integrity. The company expects all its employees and senior managers and directors to act with
fairness, integrity and equity. The company strives to act in accordance with the laws and
customs of UK; adopt appropriate standards in business practices and procedures and observe
and respect the culture of countries where it operates.
The code of conduct of Vodafone
The company establishes importance of trust in its operations. The code of conduct sets out their
expectations from every employee, partner and shareholders. The company acts with integrity,
honesty and fairness both internally and externally and abides by laws.
The values, purpose and culture
Vodafone believes in connecting for a better future. The board recognizes the importance
of a healthy corporate culture. It believes in enabling a digital society to include facilities for all

and at the same time protect the planet. Its culture is determined by its digital way of unique
operations and adherence to ethics.
The leaders play a crucial role in establishing the tone of the company by leading campaigns and
employee engagements around the year. (Kraus and Strömsten,2016)
There is conduction of programmes and activities in the company premises with proper practices
of employee engagement, health, well- being, safety and diversity. A regular assessment is done
via compliance reviews and behaviour addressal. The board also conducts diversity and
succession planning.
Responsibility of the board
The board is responsible to ensure effective leadership and oversight and review of its layed
down strategies with an aim to deliver sustainable stakeholder value for long term. It also
ensures the implementation of proper risk assessment by systems and processes which help in
identification, management and overview of the principle risks of Vodafone. The board also
deals in matters regarding finance, audit, reputation, corporate governance, succession and
diversity plans, audit and overall control through its principle committees. (Hamilton and
Webster, 2018)
Vodafone has ensured the application of all provisions of the 2016 Corporate governance code of
UK by adhering to:
 Accountability
 Relations with shareholders
 Leadership
 Effectiveness
Organizational Structure
An organization structure refers to the attitudes, policies, strategies, moral values and
basic framework which creates the organizational or work culture.
(Gaganis, Pasiouras and Voulgari, 2019) In general, the different types of organizational
structures are:
1. Functional: This is one of the most popular structure where there is departmentalization
of the organization based on common job functions. Such structure will have divisions

like Marketing, Sales, Customer service, finance, Human Resources etc. as different
departments.
2. Centralized: In a centralized management a few individuals makes most of the decisions.
It is usually seen in a family business and follows a top-down approach. As the company
grows, there is addition of new levels of middle managers who are answerable to the
superior and the roles are strictly defined.
3. Decentralized: In this structure, the upper management transfers certain decision-making
tasks to lower levels. The overall authority is maintained by top-level management but
roles are not restricted. It is also known and a bottom-up approach model.
4. Divisional: This structure comprises multiple functional structures where each division
will have its own departments. This is ideal for organizations dealing in multiple
products. Another variety of this is market-based divisional structure where divisions are
according to market types, industries or customer types.
5. Matrix: This is a hybrid structure which is a blend of organizational structure and the
projected functional structure. In this structure, the employees may have to work under
two or more bosses. It is challenging because of the communicational barrier and
multiple managers may add confusion about an employee's priorities.

The organizational structure of Vodafone is a Matrix structure. The management system works
in a way where employees report to multiple persons effectively having more than one
supervisor. (Cornforth, 2020) A high level of Centralization is present in the company as
Vodafone board remains the final decision-maker and merged companies might not be able
enjoy powers of legal nature.
 The board
 The chief executive- Executive Committee
 The chief financial officer- Disclosure Committee
 Audit and Risk committees,
 Nomination and Governance Committees,
 Remuneration Committee
 Risk & Compliance Committee
Illustration 1: Organisational structure of Vodafone
Source: (Vodafone Group Plc Annual Report, 2019)

Task 2
Significance of Pestle analysis for Vodafone company
Pestle analysis is a strategic planning tool that is used to analyse external environment of
the business through it’s macro environmental factors. This model is proposed by professor
Francis Aguilars and stated that it is a scanning tool because it scans entire business environment
effectively. This model is basically used by various organization to analyse the environment in
which they operate or plans to launch new products or service or project or may possible plans to
entry into new market with their franchises. This model is also known as analytical model
because it analyses all significant factors of business environment and raises opportunity for the
company. With this framework organization can successfully launch it’s new product or can
entry in new market. This framework also helps company to determine risk factors which can
impact organization’s profitability, productivity and operations as well. Currently all MNC’s and
medium sized scale business implements this model before investing in new market or product
so that they can achieve profitability instead of loss. The model comprises six factors like
political factors, economical factors, socio-cultural factors, environmental factors, legal factors
and technological factors (Düerkop and Huth, 2017). These factors support to analyse external
environment of business and impacts on decision-making ad performance of the company. For
example, political factors include governmental policies, employment ratio, tax rate etc. which
can directly impact on organization image and it’s performance negatively or positively. So it is
mandatory for the organization to comply with all policies and rules which are imposed by
different geographical government then organization can achieve profitability as it’s manager
prior expect. As same case implements for the Vodafone company which is British
multinational telecommunication organization. It is headquartered in London, UK. This
analytical tool will support Vodafone plc to evaluate all external factors such as political,
economic, socio-cultural, technological that directly impacts on business performance with legal
and environmental factors. With the implication of pestle analysis organization can be
highlighted the different extrinsic scenario which can affect business and it’s brand in it’s
business sector.Vodafone can implement this model on it’s business successfully to analyse
profitable opportunities for the business and determine risks which can lead financial loss within
company. Apart from this company can identify significant current changes in politics,
economics and others due to Brexit. Such examination of current scenario will support

management of Vodafone to create strategic planning for the expanding it’s business and
product’s demands in UK. The major advantages of the Pestle analysis framework is that it is
cost-effective and gives deep understanding of business (Vallati and Grassi, 2019). Even with
this strategic model Vodafone plc can aware about threats and methods to explore opportunities.
Apart from this it comprises six factors and each one gives different scenario that can impact on
decision making process of manager and leaders within company. So, this framework will prove
highly effectively for the Vodafone plc. From the above discussion , it can be analysed that
pestle analysis is actual effective model which will help Vodafone to analyse its external
environment more effectively.
Task 3
PESTLE Analysis of Vodafone
PESTLE is a structured analysis which is imperative for Vodafone, as it helps in
determining, understanding and evaluating the market dynamics & continual improvement in its
business. (Perera, 2017) The PESTLE Analysis highlights multiple extrinsic factors which
impact the business of the company. The positive and negative impacts of these factors are also
stated in context of the telecommunication sector where Vodafone operates.
1. Political Factors:
Political forces keep growing in the context of international business and effect a
company's core operations and decisions. There is a high level of government
intervention for telecommunication sector via bureaucracy, level of corruption in the IT
sector, favoured trading partners, pricing regulations and trade regulations and tariff.
Political decisions like Brexit from the European Union has majorly impacted the sector.
Benefits: There will be more freedom of decision-making and creation of own trade deals
and regulations and UK will exercise full control over activities by regaining sovereignty
and giving up access to the single market and customs union.
Drawbacks: Brexit may create a 'data frontier' between UK and European Union which
will mean inability to move data freely among countries causing movement of technical
facilities and negative impact on future network designs.

2. Economic Factors:
Performance of regional and global economies directly impact the IT business. Various
factors influence the purchasing power of customers which is mainly controlled by macro
economic factors like rate of inflation, foreign exchange rate, interest rates, savings rate
and economic cycle. (Kerrand and Moloney, 2019) It also determines demand and
investment of aggregate nature in the economy.
Benefits: Vodafone is already having a large customer base across globe, and they
continuously modify their cost base by taking advantage of certain economic relaxations.
The company is accelerating the implementation of “digital vodafone” programme and
decided to reduce its net expenses. The company is focussed around realisation of
important synergies like opex and capex.
Drawbacks: Incarceration in tax regime, customers, procurement systems and insufficient
information about post- Brexit terms and arrangements leading to ambiguity in drawing
conclusions about the probable impact. A lower value of pound, volatility and lack of
confidence among investors, unattractive fixed-income assets and foreign direct
investment. Effects on the supply chain, data flows, broadcasting, mobile roaming and
cross-border trade of telecommunication services, export controls and commercial
contracts of the company.
3. Social factors:
The changes in sociological and cultural factors of an economy can have significant
impact in the profitability of business in certain regions. These factors mainly include-
demographics of the country or region, Lifestyle changes, tastes and preferences of
customers, dynamic needs and changing social trends.
Benefits: Vodafone has always been updated about sociocultural trends across Europe
and adapt new ways of marketing and promotions according to the situation of particular
region or country. European countries have shown a highly positive attitude and response
towards the company. More and more customers are using internet services for shopping
online, connecting via social media, entertainment services like netflix, youtube and

prime videos which have societal trend. This has led to the increase in the customer base
of the company.
Drawbacks:Cultures come with various restrictions in terms of marketing the brand and
promotion of telecom services and benefits. Mobile etiquettes, demographic trends,
saturation site, gender roles and social conventions, education level, class structure,
health and safety consciousness do become barriers in smooth functioning of business.
4. Technological factors:
The fast growing technology is disrupting and changing many organizations across the
world. IT and telecommunication sectors have to be more than ever conscious regarding
the dynamics and keep updating and adapting itself according to the recent
developments.
Benefits:
 Advantage over its competitors in terms of assets ans technological infrastructure
 Huge IT teams and outsourcing of customer support employees.
 Success of My-Vodafone App
 Leading global loT platform for successful business partnerships
 High content distribution and around 22 million active users
Drawbacks:
 Recent developments in the technology of competitors
 Technology's effects on offers of products
 Effect on structure of cost in Wireless Communications industry
 Effect on the value of chain structure in Technology sector
 The changes in the degree of diffusion of technology.
5. Legal factors: The laws and legal framework of a country or county can impact the
growth of the business by interfering through legal and regulatory pressures,
unfavourable tax laws, intellectual property rights and labour laws.
Benefits: Vodafone has focused upon the enormous violation fines in its business plans to
avoid any probability of violation or non-compliance. The Patent rights, trademark rights,

design rights, copyrights obtained via UKIPO remain unchanged after Brexit and
initiatives such as digital single market to harmonize the laws. (Kerl, 2018)
Drawbacks: UK's eligibility to stay in the UPC system post Brexit in unclear. Proprietors
of existing community registered designs will likely rely on transitional provisions. The
rules of certain copyright protected works can be exploited in certain contexts which is
governed by the EU law like software directive and the InfoSoc directive.
6. Environmental factors: Environment and sustainability are impacting the focus of
business processes in the present times. Factors like climate change, laws regulating
environmental pollution, waste management, renewable energy may affect smooth
functioning of the company.
Benefits:Vodafone's focus on carbon footprint management, robust management systems
that minimize environment impact. It recycles and reuses most of its electronic and e-
waste. The company has also declared to reduced its environmental impact by 50% by
2025.
Drawbacks: High expenditure for environmental programmes and severe environmental
regulations in Wireless Communication industry. Non- compliance can result in heavy
fines.

CONCLUSION
The organizational structure and governance of Vodafone is ideal for any
telecommunication company in the industry. Vodafone follows the UK code of conduct without
any problems and adheres to a system of values and culture for corporate governance. It follows
a matrix organizational structure which is focused on centralization and the board remain in
power. The importance of Pestle analysis was highlighted. The extensive evaluation gave the
conclusion that Vodafone is suffering in political, legal and economic dimensions due to the
uncertainty after Brexit. The company is up to date and robust in dealing with the external
factors of sociocultural, environmental and technological nature.

REFERENCES
Books and journals
Cornforth, C., 2020. The governance of hybrid organisations. In Handbook on Hybrid
Organisations. Edward Elgar Publishing.
Crowther, D. and Seifi, S., 2017. Modern Organisational Governance: Re-Examining
Governance: The Evidence. In Modern Organisational Governance. Emerald Publishing
Limited.
Düerkop, S. and Huth, M., 2017. Transportation under Threat–A PESTLE Analysis for Critical
Logistical Infrastructures. ICTA2017.p.14.
Gaganis, C., Pasiouras, F. and Voulgari, F., 2019. Culture, business environment and SMEs'
profitability: Evidence from European Countries. Economic Modelling. 78. pp.275-292.
Hamilton, L. and Webster, P., 2018. The international business environment. Oxford University
Press.
Kerl, A., 2018. Development of an Innovation Ecosystem in a Fast-Paced Economic
Environment: The Case of the Vodafone Open Innovation Program. In Entrepreneurial,
Innovative and Sustainable Ecosystems (pp. 305-321). Springer, Cham.
Kerr, W.R. and Moloney, E., 2019. Vodafone: Managing Advanced Technologies and Artificial
Intelligence.
Kraus, K. and Strömsten, T., 2016. Internal/inter-firm control dynamics and power—A case
study of the Ericsson-Vodafone relationship. Management Accounting Research. 33.
pp.61-72.
Perera, R., 2017. The PESTLE analysis. Nerdynaut.
SHTAL, T.V., BURIAK, M.M., AMIRBEKULY, Y., UKUBASSOVA, G.S., KASKIN, T.T.
and TOIBOLDINOVA, Z.G., 2018. Methods of analysis of the external environment of
business activities. Revista ESPACIOS. 39(12).
Vallati, M. and Grassi, A., 2019, July. AI to Facilitate Legal Analysis in the PESTLE Context.
In The EMerging Technology conference (EMiT) 2019 (pp. 66-68). IET.
Online
Vodafone Group Plc Annual Report, 2019 [Online]. Available
through<https://www.vodafone.com/investors/investor-information/annual-report/
downloads/Vodafone-governance-2019.pdf>
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