Vodafone Business Strategy: A Comprehensive Analysis

BUSINESS STRATEGY
Vodafone

Table of Contents
INTRODUCTION..............................................................................................................2
TASK 1 (P1).....................................................................................................................3
1.1 PESTEL MODEL....................................................................................................3
1.2 ANSOFF GROWTH VECTOR MATRIX.................................................................6
TASK 2 (P2).....................................................................................................................7
2.1 EXPLAINING STRATEGIC CAPABILITY...............................................................7
2.2 APPLYING VRIO MODEL FOR DETERMINATION OF STRATEGIC
CAPABILITIES OF VODAFONE..................................................................................7
2.3 IDENTIFYING FIRM’S STRENGTHS AND WEAKNESSES................................10
TASK 3 (P3)................................................................................................................... 12
EVALUATION OF COMPETITIVENESS OF TELECOMMUNICATION SECTOR OF
UK WITH THE HELP OF PORTERS 5 FORCES MODEL.........................................12
TASK 4 (P4)................................................................................................................... 15
UNDERSTANDING AND INTERPRETATION OF STRATEGIC DIRECTION...........15
CONCLUSION............................................................................................................... 18
REFERENCES...............................................................................................................19
1

INTRODUCTION
The telecommunication sector involves the organizations that provide the provision for
communication at the global level. The firms operating in this sector are the satellite
companies, the wireless operators, the cable companies and the Internet Service
Providers. In the growing mobile telecommunication market in the UK, it is a
challenging task for the firms to uphold the current position and enhance the market
share in the global and national markets. Vodafone, which is among top mobile
telecommunication company in the UK, is taken here. The external environment of
Vodafone will be analyzed for its impact with the help of PESTLE for the environmental
analysis and the Ansoff matrix for the analysis of the strategic position of the firm.
Further, the internal environment of the firm along with its capabilities will be assessed
with the help of SWOT and VRIO framework. Furthermore, the analysis of
telecommunication sector will be done with the help of Porters five forces. Lastly, with
the help of the model, the strategic direction of the firm will be interpreted.
2

TASK 1 (P1)
Vodafone UK Limited is a subsidiary of Vodafone Group PLC established in 1982. It is
ranked the 2nd largest firm in the world. The firm in the UK has 17.5 million users (March
2018) and is ranked 3rd largest in the UK. The firm is planning strategies for achieving
the first position in both national and international markets (Vodafone Limited, 2018). To
facilitate this, the external and internal environment of the firm needs to be analyzed for
the strategic planning.
1.1 PESTEL MODEL
It is a framework used by the marketing individuals for analyzing and monitoring the
external marketing environment that impacts the companies. For this, the PESTLE
analysis of Vodafone is done.
Political Economic
European Union roaming regulations
Phone licensing
Impact of Brexit
High costs of spectrum
Trade barriers
Higher costs of labour in the United
Kingdom
Social Technological
High level of social acceptance
Demand increased for the mobile
telecommunication services
Change in work patterns
Increase use of social media
The advent of 5G technology
The emergence of alternative
communication platforms on Web
Environmental Legal
Social responsibility
Recycling events
Request for settlement of tax row by
government
Low rates of interest
Vodafone faced penalties
3

Political - The major aspect affecting the firm at the political level is the roaming
regulations by European Union. These are aimed towards minimizing the rates for the
use of phones in abroad by 70%. Also, it aims to enhance the rates of consumer rights
in Europe. Also, the phone licensing norms in the UK are supported by the government
which provides aid to the mobile telecommunication firms to operate smoothly (Hulme
and Sifaki, 2018).
Economic- The economic situation in the UK is well sound but is impacted by Brexit to
some extent. Due to Brexit, the business models may need to be changed and risks
may arise in the area of telecommunication business. The sales of cross-border
services may also get impacted and the free movement of staff among European Union
and the United Kingdom (Blackaby, 2018). The increase in the costs of spectrum and
the trade barriers formed can influence the company operations. Also, the costs of the
labour in the UK have risen which will increase the expense for the firm to the
employees.
Social- In UK, the demand for the telecommunication services has increased in the
recent times. This is due to the change in perspectives of the people and their change
in the living styles. The change in the work patterns of the people has increased the
demand for the mobile phone services in the UK. However, the rise in the usage of
social media services by the people has posed some threat to the mobile
telecommunication services.
Technological- The advent of 5G technology in the telecommunication sector has a
great impact on the services offered by Vodafone (Reynolds, 2018). This technology
has a great impact as it will be able to handle many Internet of Things (IoT) devices
connected by the same 5G network. But the advent of the alternates of the
communication medium can pose a danger to the smooth functioning and popularity of
the mobile telecommunication industry adopting the latest technology (Gillespie and
Goddard, 2017).
4

Legal- In the legal aspects, the firm has faced penalties regarding not paying to the
employees as per the norms. The impact of the taxation policies on Vodafone in the UK
is higher and the lower interest rates encourage the firm to increase their business
spending.
Environmental- the firm, Vodafone is being impacted by the campaigns launched for
social responsibility and the company is expected to follow and adopt the CSR activities
in order to contribute to the environment.
5