Vodafone UK Business Strategy: A Comprehensive Analysis

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Business Strategy
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Introduction
To formulate the business growth and development the role of the business strategies are crucial
which assist in reaching the objectives and goals of the company. In this assignment, the
Vodafone establish as the mobile communication sector that leads towards the business growth
and build up a strong competitive position and build a strong financial base. In this assignment,
the first task includes the analysis of the external factors and its impact on overall operations of
the business. The overall report is based on the Vodafone UK and to analyze its strategic position
the Ansoff’s growth vector matrix is discussed. Further, to assess the internal environment and
its capabilities the SWOT analysis is done that assist in analyzing the strengths and weaknesses
of the Vodafone and to analyze the strategic capabilities VROI model is analysed. Further, for
the improvement of the competitive edge of the company the suitable analytical and marketing
tools are analysed such as Porters five forces model, analysis of stakeholders and the Ansoff’s
product that assist in analyzing the business of Vodafone UK. Further, it includes the strategic
plan of management that provides clear direction to the organization by setting out the valid
strategic decisions.
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Task 1
Company Overview
Vodafone is one of the leading telecom companies in the UK and other parts of the world. It has
a significant position in India, the Middle East, and Europe. It is headquartered in London and
was established in the year 1991. Currently, it has nearly 75 million customers and over 111,000
employees. In 2018, the annual revenue registered by the company was the US $ 64. 5 billion.
The company forms a joint venture in the international market to expand itself and mark a global
presence (Singhania and Dastaru, 2012).
PESTLE of Vodafone
Talking about the external environment affecting Vodafone, it comprises political, economic,
social, technological, legal, and environmental factors. These have been discussed here:-
Political: These comprise political stability, government decisions and policies regarding the
wireless communication and telecom sector. In addition to this, Vodafone is affected by the
charges of cartelization. Moreover, BREXIT has also impacted the business of Vodafone
(Klauer, 2015).
Economic: Vodafone has to purchase the spectrum in order to provide telecom services. The
high cost of spectrum, taxes, and high ROI is offering high M&A opportunities. In addition to
this, the effect of Brexit on taxes and charges, licensing cost, the high cost of implementing
technology, the income level of the target audience, etc., are some economic factors affecting the
company.
Social: The social factors comprise the education level of customers, lifestyle, habits, and
demand pattern. Furthermore, Tech SME culture in promoting the digital economy along with
the local growth. Leisure interest, demographic, class structure, income level, skills level of the
employees and customers. These social factors can affect the business of Vodafone in the UK.
Technological: Being a developed nation, technology changes rapidly. In order to sustain its
market position, the company needs to consider rapidly changing technology. The demand for
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5G technologies, the rising rate of diffusion of technology, and cloud computing demand in
different sectors have put tremendous pressure. Global services division is also one of the
concerning factors for the Vodafone to accomplish economies of scale (Klauer, 2015).
Legal: Vodafone UK has to follow the guidelines proposed by Ofcom, the regulating body. In
addition to this, the taxation policies and longer payment tenure might impact the functioning of
the company. Apart from these, the UK has many regulations associated with the organisation.
These comprise employment law, health and safety law, Data Protection law, consumer
protection law.
Environmental: The pressure from the environmental agencies for reducing the carbon
footprint, environmental safety, sustainability culture, focus on renewable energy, etc., are
affecting the business. In addition to this, attitude toward an ecological system and support to
environmental protection initiatives also help the company in building a positive image.
Ansoff’s growth vector matrix
To evaluate potential and opportunities for the Vodafone in a current and future scenario, Ansoff
Matrix is used here. This helps in exploring the current and new market. There are four different
growth strategies that have been covered here.
Market Penetration: This comprises persuading the existing consumers to buy services of
Vodafone rather than its rivals. The company is offering 4G services at a reasonable cost and
investing in M&A for retaining market leadership. It has a product-led strategy and through its
continuous development of new products and services, it is acquiring the market share. In
addition to this, the latest technological advances and good distributor network across the UK is
contributing to the growth of the company.
Market Development
In the UK, Vodafone has 22% of the total telecom sector share. With its innovative and agile
strategies, the company is aiming at developing the market. The current approach is seeking a
new market to expand and keeping itself away from the saturated market, especially in the
developed countries. The company is taking the path of the joint venture, merger, and acquisition
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to expand itself and tap in the international market. The company is concentrating on market
growth by making the right product and business strategy. The company is taking advantage of
opportunities like investing in the niche-oriented market where there is a small competition in the
telecom industry.
Product Development: Vodafone by making use of its product development strategies is
creating an impact on market acquisition. With its rollout scheme, it is ensuring the
accomplishment of the business objectives. In addition to this, it is regularly updating its services
as per the market trend in order to fulfill the demand of the consumers. The company has
recently launched the tracking and analysis of the competition. This includes a comparative
analysis of tariffs, promotions, trade schemes, advertising, and using this data, they make
decisions and plans.
Diversification: In order to keep sustainability in the developed and saturated market, the
company is making use of diversification strategies. It is investing and exploring new markets.
Vodafone is investing in electronic industry and is currently coming up with Vodafone washing
machine, Vodafone microwaves, and Vodafone television. The diversification strategies are
grounded on three principles, namely suitability, feasibility, and acceptability.
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Task 2
The telephonic network of Vodafone communication is the largest network in all over the world
on the basis of turnover. For the formulation of the innovative capabilities, there are several
resources that make an essential contribution that directly links with the internal and external
factors that assist in setting out the business objectives and goals. These resources include
tangible and intangible resources where the tangible resources are classified into four categories
which include the structure of the organization, financial, technological resources and physical
resources. On the other hand, intangible resources include resources where people dependent and
independent. With these resources, it assists the company to formulate the numerous strategic
capabilities so as to support the activities of the company. Due to the above association between
the resources and its capabilities, the company has to handle the internal and external factors
which can be understood with the tools like VRIN model and SWOT analysis.
VRIN model
To measure the competitive power of the company the VRIO test assist in the measurement of
the resource and its capability of the competitive power of the Vodafone. VRIO stands for:
 Valuable- This factor assists the company to analyze the economies of scale due to the
large infrastructure of the company (Nusari, et. al., 2018).
 Rare- Due to the Global presence this makes the newcomers to the UK for the
recognition of the brand of Vodafone instantly and stuff are highly specialized for the
unified services of mobile. If the resources of the company are valuable and if it is not
expensive for the company to imitate it and if the other company imitate it then the
Vodafone lose its competitive advantage.
 Inimitable- To get easy access to the customers, the culture of the Vodafone is being a
leader in the market it is important that the company promote in ceasing the opportunities
as they arise.
 Organisation-It is important that to maintain the competitive advantage it is important
that the Vodafone use the resources of the effectively and efficiently at minimum cost.
SWOT analysis
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The Vodafone is a British company deal in the multinational telecom which has it's
headquartered in the UK. For offering the mobile technical services with the commencement of
the Vodafone brand with the partnership of Millicom Inc and Racal Electronics plc in the year
1984. This company finally established as an independent company in the year 1991.
In the Vodafone there is almost 470 million customers in all the over the world in the field of
mobile telephony and more than the 13 million customers that are fixed in the broadband and in
the cable TV more than the 10 million customer that are worldwide connected which make the
connection in different countries easier (Haile and Krupka, 2016). It has over 75 million
customers of 4G and more than the 111,000 employees as per the details according to the year
2017. At the end of the financial year 2017, the total revenue of the Vodafone Group was €47.6
billion.
To analyze the impacts of the internal factors on the working operations of the Vodafone Group
are mentioned below:
Strengths- The Company has a wide communication network which operates in more than the
25 countries across the world. The Vodafone zoozoo's been a brilliant campaign for the company
that attracts the customers and makes the fan of the company. Vodafone successfully plans out in
differentiating the services of the company with others regularly. This helps to retain the
customers for the company. The company brand valuation is 28 billion dollars as per the data of
2016. This company has extensive coverage in all over the marketing platform.
Weaknesses- Due to the Brexit and other conditions of economy in the Europe, this leads to the
poor performance of the Vodafone in the Home market and not able to generate much revenue in
the market which means that the 40% of the revenue of coming out of the UK (Feili, et. al.,
2017). The performance of this company is weak in the markets of Europe which declines the
base of the subscribers.
Opportunities- The Company has great potential in the African market where the telecom
company plays an important role in the emerging market of developed and developing countries
like Africa. It is a challenge for the company to attract and retain the customer’s base. On the
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other hand, 5G brings market growth and connectivity (Orlando, 2016). With increasing in the
investment it enhance the revenue growth of the company.
Threats- With the Brexit impact the British pound is devaluated and increases the competition in
all over the market. With increasing in the cut-throat competition between the telecom
companies which strongly affect the Vodafone brand. In the last 3 to 4 years the revenues
generated by the company are steadily dropping. The brand has to spend more on the acquisition
of the customers and the threat is losing the brand equity.
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Task 3
For improving the competitive edge of the Vodafone in the market the company is applying the
suitable tools and models. In this context, the Porters Five Forces Model assists the Vodafone
Group Plc so as to expand its profitability and productivity for the development of the strategy
and sustain the long term profitability in the industry of wireless communication. To analyze the
profitability of the company the Porters five forces model analyses that are explained below:
The threat of New Entrants- Vodafone has to manage the challenges in relation to the cost
reduction, strategies of lower pricing and providing the new propositions for the value to the
customers. To save the competitive edge, the company has to build effective barriers. With the
development of new and innovative products and services this attract not only new but also the
old customers (Owusu and Duah, 2018). This also discourages the new players because it
reduces the profitability margin of the new entrants. The impact of this threat is low on the
business operation of the company as per discussions above.
Suppliers Bargaining Power- In the sector of the technology, the suppliers has a dominant
position which reduces the profit margin that the Vodafone earn in the market. With the increase
in the supplier’s power of bargaining, it reduces the overall profitability in the field of wireless
communication. The impact of this is moderate as the customers are important to determine the
profitability of the company.
Buyers Bargaining Power- To increase the demand of the buyers it is important that the
Vodafone offers discounts and sets out the minimum price and offers (Villas-Boas and
Chambolle, 2015). With the introduction of new and innovative products, it is essential that the
company offers discounts on the already established products. The impact of this factor is high
as it determines the revenues and success of the company.
The threat from alternate Products- To meets the needs of the customers it is important that
the company has to be served and product-oriented both and enhancing the switching customers
cost. The impact of this threat is high for this it is important for the other organization to make
innovation in the products and services.
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Rivalry among the existing players- The Vodafone Company operates its function in the
competitive world in the industry of wireless communication where it is important for the
company to make sustainable differentiation so as to compete better and collaborating with the
customers so as to expand the size of the market (Havard and Hutchinson, 2017). The impact of
this factor is low as it is not easy to enter the market.
Stakeholder Analysis
Stakeholder analysis one of the widely used approaches that are used to determine the key people
that are being targeted by the company in order to win them over. This is all about understanding
and analysing the key stakeholders' interest and demands. In addition to this, it also emphasises
on mapping the interest effects and their viability. One thing to note here is that the extent of
stakeholders' influence depends on the relationship between the organisation and various
stakeholders of the company (Dave, et.al, 2015). This helps the management to identify the
wants of the consumers of Vodafone and develop a response strategy for the same. The primary
stakeholders of the Vodafone comprise internal and external stakeholders. The former consists of
employees, managers, supervisors, investors, shareholders, etc. The latter contains government
agencies, consumers, telecom partners, banks, etc. From the stakeholders’ analysis of Vodafone,
the following strategies are suggested for the company:-
 The company should make efforts to gain supports form powerful business organisation
and stakeholders in order to win a large number of funds and resources. This would help
in providing better services and expansion of the business (Mizuo, 2015).
 It should consider the opinion of the stakeholders and their reviews in shaping their
policies and business decisions. This can help in improving the quality and products
offered by the company.
 By keeping regular contact with the stakeholders through a well-developed
communication network, the company can make huge benefits as this would result in
better understanding and loyalty. They can support Vodafone when necessary.
 In addition to this, the company can anticipate the success or failure of the product or
service and take necessary measures to make plans to hit the service in the market and
win people’s support.
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Ansoff’s product/market matrix
By making use of Ansoff’s product matrix, the following recommendations have been provided:-
 Based on the demographic study and generational marketing theory, it has been seen that
Vodafone is targeting its main customers. For that purpose, it is recommended that
Vodafone should make use of celebrity promotion in its advertisement campaign (Mizuo,
2015). The advertisement should fit in with the motto of the company “Power to You."
The only consideration that the company must focus on is the risk of scandals associated
with celebrity and selection of celebrity. The campaign might fail if the celebrity does not
fit in with the image of the organisation.
 For the emerging markets and investment in developing countries, the company should
make use of BoP strategy i.e., Bottom of the Pyramid strategy. It should provide the
internet-based service along with wireless technology and Wi-Fi equipped devices (Dave,
et.al, 2015). This will fit in with the organisational objective “keeping people better
connected.” Through this way, the company can make use of their own, low-cost cell
phones in the emerging market. This will help the company to lower the operating cost,
investment of the company, and increase the consumer base.
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Task 4
Strategic Management Plan
Goal: The main goal of the company is to achieve a competitive market position in the nextyear
and increase market share.
Objective: The objective of the company Vodafone is to maintain its current position in the
market and to increase its market share in both the national and international market.
Strategy: The company ‘Vodafone’ can use the ‘Bowman’s Strategic Clock’ for the Strategic
Positioning of the organization. It is a model that helps in exploring the options for strategic
positioning of the company in market and industry.
Topic: Bowman’s Strategic Clock
Source: Riley, 2016.
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