Strategic Management Report in Vodafone Group

Running Head: strategic management
Strategic Management

Strategic management
Introduction
Vodafone Group is a mobile telecommunication company. The company is present in
Europe, Africa and also in the United States. The company started the operations in 1984, and
now it is known as one of the world's leading mobile telecommunication company. Vodafone is
the market leader by taking into considering the current operations. The company offers effective
services so that the company can easily survive in the competitive environment. Vodafone is
usually selling the product and services on prices and promotion. The market trends are followed
by the company, so that the profitability can be enhanced easily. Vodafone is one of the major
global providers of telecommunication services. The company has a strong presence in the
Germany, Spain, and Italy. The global reach of the company is in more than 38 countries. The
company offers various ranges of mobile services like voice, data and roaming services to the
customers and business enterprises. Vodafone has a strong network infrastructure that consists of
2G and 3G networks. The activities are conducted over GSM and GPRS network standards. The
networks enable the group to offer high-speed data services.
Vodafone Group is one of the British multinational telecommunications company
headquartered in London. The Vodafone owns and operates in 21 countries and has partner
networks in over 40 countries. The company consists of 92,812 employees worldwide. The
mission of the company is that "The Company will be the leader of the communication and it is
connecting world".
(Source : Vodafone,2017).

Strategic management
Five forces analysis of Vodafone
Porter five forces analysis is a framework to evaluate the level of competition within an industry
and business strategy development is also taken into consideration. The porter five forces
analysis consist of:
a.) Bargaining power of consumers – High
b.) Bargaining power of suppliers – medium
c.) Threat of substitutes – high and medium
d.) Threat of entrants- low
e.) Industry rivalry- high
Bargaining power of consumers
Buyers often demand more and also they want the offers that can be easily available at the
minimum cost. This gives direct pressure on the company profitability in the long term. If the
customer base is smaller and more powerful, then Vodafone can easily attain higher bargaining
power of the customers and also the discounts and offers are given more (Mittal, Han, Lee, Im
and Sridhar, 2017). The buyer in the Telecommunication industry is strong. The powerful buyers
can easily minimize the cost leader prices. This helps the Vodafone Company to attain profit at
above-average returns as compared to its closest competitors. The buyer power gives direct
impact on reducing the cost of prices in the industry by taking into consideration the competitors.
If the company keeps reasonable profits, then it can be easy to attain profitability (Diaz, Perea
and Gutierrez, Vodafone Group Plc, 2015).
So, Vodafone will keep reasonable profits as compared to the competitors. The
bargaining of the consumers can be handled in many ways like: The Company can easily build a
large base of the customers so that many opportunities can be given to the firm. By increasing
the innovative product, the company can easily often seek discounts, so that the company can
easily come up with varieties of the products and services. New products and services will
minimize the defection of the existing customers of the Vodafone (Abd-El-Salam, Shawky and
El-Nahas, 2013).

Strategic management
Bargaining power of suppliers
Suppliers of the telecommunication industry are strong. Vodafone is one of the cost
leaders in the market that operates with the competitors within the margins. It helps to absorb
the price enhancement from the suppliers and also from the competitors. By having the large
share in the market the company can easily hold the cost of the suppliers. It is very easy for the
company to attain the profitability and also to compete in the competitive environment in an
effective manner. If the competitors are making profits, then also the company has the capability
to attain average profits (Kang and Park, 2014).There are many companies in the
telecommunication sector that take into consideration, various suppliers. Suppliers can give
impact on reducing the margins of the company and can easily earn profits in the market. The
suppliers who are powerful take into consideration negotiating power to extract the high prices
from the firm in the telecommunication field (Bavasso and Long, 2015).
The impact of the high supplier bargaining power is that it reduces the overall
profitability of the wireless communications. Due to the high market share of the company, it can
be easy to absorb price increments from the suppliers. Vodafone can easily maintain low prices
from its suppliers and also can make effective profits. The company should give focus on
creating supply chain with multiple suppliers. The Focus should be given to product design and
the materials so that the prices can be enhanced in a proper manner (Fox, Wong and Pudney,
Vodafone Group Plc, 2016).
Threat of Substitutes
When a product and services meet the similar needs of the customer, then the profitability
of the company suffers. Vodafone faces a high threat of product substitutes. As there are many
companies in the telecommunication sector. The landlines users are reducing day by day. The
trend of video conferencing is increasing day by day. The customers are given focus on yahoo
messenger and also on Skype. There are many few companies offering 3g card and DSL
services, the customers get attracted towards the services where the price is less. There are many
companies that offer effective services at fewer prices. Due to the high purchasing power of
buyer and effective economies of scale, the company does not pass down the cost attributes for
substitution of the products. The company should give focus on being service oriented rather
than just product oriented. It is important to make proper understanding about the need of the

Strategic management
customer rather than what the customer is buying. Vodafone can easily increase the switching
cost for the customers (Albers, 2017).
Threats of new entrants
New entrants in the wireless communication bring innovation and also many changes to
conduct the activities. Innovation strategy gives pressure on the company by introducing low
pricing strategy and also by giving new value proposition to the consumers. The company has to
manage all these challenges and create barriers so that proper safety can be taken from the
competition. To enter into this industry huge license fees is incurred, so it is not possible for
everyone to invest in this sector. High initial capital is required to start the business (Zablah,
Carlson, Donavan, Maxham and Brown, 2016). Vodafone has to face many complex regulatory
issues and also due to the change of technology, it is not possible for the different companies to
enter in this sector. The infrastructure cost is one of the essential factors. The cost of
infrastructure is high as compared to other sectors. So Vodafone faces low threats of substitutes.
It is not possible for the companies to enter into this sector, as the risk is also high. Every
business cannot survive in the competitive environment (Agnihotri, Dingus, Hu and Krush,
2016).
Industry Rivalry
If the rivalry among the existing players in an industry is intense then it can give downfall
in the prices and also on the overall profitability of the industry. Vodafone operates in the
competitive wireless communication industry. The competition level gives impact on the long-
term profitability of the organization. The company has an open market for competition and also
it has little discrimination other than cost. Vodafone can easily handle the industry rivalry among
the competitors by building a sustainable differentiation and also to compete in a better way. The
company can easily collaborate with the competitors to enhance the market size rather than just
competing in the small market. The competitors offer innovative products and services to the
customers that mean that Vodafone has to offer same to its customers (Labib, El-Salam and
Shaheen, 2016).

Strategic management
Recommendation
It is evaluated that the Vodafone has survived in the competitive environment. The ability
to diversify the products and services together has given success to the company. The financial
position of the company also contributes to growth due to the innovative strategies that are taken
into consideration and also the ability to explore new markets in the different geographical
regions. Vodafone has capitalized its opportunities and also eliminated the threats so that the
improvements can be made on the weaknesses. The company should adopt effective competitive
strategies, so that the company can easily survive in the market.
Vodafone must enhance its GPRS subscriber base due to the high demand in the market.
The value-added services and also the location-based services should be introduced. The
company should diversify its broadband network by introducing voice over internet and should
also tap the rural markets. In the telecommunication industry, it is essential that the consumers
should get effective services, so that they can easily get attracted towards the company. To
compete in the competitive environment it is important to provide good services at low cost, so
that the consumers can survive for a long time. Vodafone should remain innovative in the
market. It is seen that the more innovative the company is, the more profitability can be attained.
References
Abd-El-Salam, E.M., Shawky, A.Y. and El-Nahas, T., 2013. The impact of corporate image and
reputation on service quality, customer satisfaction and customer loyalty: testing the mediating
role. Case analysis in an international service company. Journal of Business and Retail
Management Research, 8(1).

Strategic management
Agnihotri, R., Dingus, R., Hu, M.Y. and Krush, M.T., 2016. Social media: Influencing customer
satisfaction in B2B sales. Industrial Marketing Management, 53, pp.172-180.
Albers, S., 2017. Competition dynamics of alliance networks. Managing Alliance Portfolios and
Networks, p.91.
Bavasso, A. and Long, D., 2015. The Application of Competition Law in the Communications
and Media Sectors. Journal of European Competition Law & Practice, 6(5), pp.365-380.
Diaz, A.G., Perea, R.M. and Gutierrez, J.L.T., Vodafone Group Plc, 2015. Method and system
for the improvement of routing in communications networks providing multimedia services over
IMS networks. U.S. Patent 9,036,547.
Fox, D.A., Wong, G. and Pudney, C.D., Vodafone Group Plc, 2016. Location based services in
communications networks. U.S. Patent 9,319,972.
Kang, D. and Park, Y., 2014. based measurement of customer satisfaction in mobile service:
Sentiment analysis and VIKOR approach. Expert Systems with Applications, 41(4), pp.1041-
1050.
Labib, A., El-Salam, E.M.A. and Shaheen, A.Y.M., 2016. Measuring the impact of service
quality and service personalization on customer satisfaction, trust and loyalty in
telecommunication sector: an application on Vodafone Egypt. The Business & Management
Review, 7(2), p.145.
Mittal, V., Han, K., Lee, J.Y., Im, B. and Sridhar, S., 2017. Attribute-Level Satisfaction, Overall
Customer Satisfaction, and Performance Outcomes in Business-to-Business Firms.
Olou, L.P. and Yeboah-Ofori, A., 2014. The Implications of Switching Barriers on Subscriber
Retention in Developing Economies.
Seo, D., 2017. Digital Business Convergence and Emerging Contested Fields: A Conceptual
Framework. Journal of the Association for Information Systems, 18(10).

Strategic management
Zablah, A.R., Carlson, B.D., Donavan, D.T., Maxham III, J.G. and Brown, T.J., 2016. A cross-
lagged test of the association between customer satisfaction and employee job satisfaction in a
relational context. Journal of Applied Psychology, 101(5), p.743.