Vodafone Case Study: Strategic Management and Competitive Analysis

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BUSINESS STRATEGY
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Table of Contents
INTRODUCTION................................................................................................................................................... 3
TASK 1- THE EXTERNAL ENVIRONMENT...............................................................................................4
PESTLE ANALYSIS......................................................................................................................................... 4
ORGANIZATIONAL AUDIT......................................................................................................................... 6
TASK 2- THE INTERNAL ENVIRONMENT AND ORGANIZATIONAL CAPABILITIES.............7
VRIO MODEL.................................................................................................................................................... 7
STRENGTHS AND WEAKNESS OF THE ORGANIZATION.............................................................8
TASK 3- EVALUATION OF COMPETITIVE POSITION.......................................................................11
PORTER’S FIVE FORCES MODEL..........................................................................................................11
BALANCED SCORECARD.......................................................................................................................... 13
TASK 4 - INTERPRETING AND UNDERSTANDING STRATEGIC DIRECTION.........................15
EXECUTIVE SUMMARY............................................................................................................................. 15
BACKGROUND STATEMENT.................................................................................................................. 15
PORTER’S GENERIC STRATEGIES.......................................................................................................16
STRATEGIC MODEL FOR VODAFONE................................................................................................18
KEY STRATEGIC GOALS OF VODAFONE...........................................................................................18
RESOURCE IMPLICATIONS.....................................................................................................................19
EVALUATION AND MONITORING OF PLAN....................................................................................19
CONCLUSION...................................................................................................................................................... 20
REFERENCES...................................................................................................................................................... 21
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INTRODUCTION
This assignment is prepared to have an understanding of the strategic management and
concepts with reference to the Vodafone. This will also analyse the impact of the macro
environment on the organization and also on the business strategies of the organization.
This will also provide an understanding of the capabilities and internal environment of
the organization. Further, the assignment will also evaluate and apply the different
theories and strategies for the evaluation of competitive force for the organization using
the five forces model. In the end, the assignment will also provide the understanding by
applying, concepts, theories and models that will help in devising the strategic planning
for the Vodafone.
Vodafone is a British Multinational telecommunication organization with headquarter
in London and it operates in the regions of Africa, Asia, Oceania and Europe. Vodafone
ranked fourth in the list of the number of mobile customers in the world as of 2018. It
also operates in 25 countries.
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TASK 1- THE EXTERNAL ENVIRONMENT
Strategy: it is the long term process of planning for the attainment of the objectives and
goals of the organization with the utilization of the different resources in the diverse
environment for the fulfilment of the need of the market and for the satisfaction of the
stakeholder (Johnson, 2016).
The strategy of Vodafone is to provide satisfaction to the customer with utilizing the
advanced product and technology that led to its aim the company is making continuous
development of the new products.
Role of strategy in achieving the business goals and objectives:
The strategy help in the long term planning and which is done for the achievement of
goals and objectives. It helps in analyzing the current market position and also helps in
gaining a competitive position in the market and that is the ultimate aim of every
organization.
ANALYTICAL FRAMEWORKS:
The strategic planning can be accompanied by Vodafone with the application of the
SWOT analysis and the PESTLE that will help the organization for the implementation of
the proper strategies to achieve the goals and objectives of the organization (Johnson,
2016).
PESTLE ANALYSIS
Political factors: The licenses of the mobile phone are strictly controlled and are very
expensive in the UK which adversely affects the Vodafone. The regulations of the
government are strict for the telecom companies due to the limitation on the frequency
and usage of spectrum. This will affect and suffer Vodafone with lower service delivery.
Environmental factors: Vodafone has set and introduced a recycling program for the
phone for helping the environment and also for reuse and recycle the materials that are
used in mobile phones. They also provide incentives and money to the customers for
exchanging the new phone with the old one. Thus this is the major challenge for the
Vodafone to deal with the recycling of the synthetic materials (Johnson, 2016).
Social factors: There are many social factors that are affecting the business functioning
and operations of the Vodafone. The constant and continuous changes in social trends
are important factors for the Vodafone. The trends of the social media have shifted the
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communication to the chat; internet telephony and reduced dependence on the network
calls have affected the profit of the Vodafone. There are many strategies also which are
being implemented by Vodafone and which are affecting the many strategically
implications of the organization.
Technological factors: The trending and emerging technologies of the phone are
affecting the range of Vodafone for older phones. There are many competitors and
mobile phones that have affected the phone usability of the older generation and
promoting the manufacturers for the adaption of the newer technology. The adaption of
the Vodafone for the newer platforms like 4G is also affecting the future operations of
Vodafone (Armstrong et al. 2015).
Legal factors: There are many regulations which are affecting the Vodafone like
telecommunication act, Sale of Goods Acts and newer ones are affecting the Vodafone.
Also the strictness and prohibition of using phones while driving will also affect the
usability of the network and will decrease the revenue.
Economic factors: The telecom industry of the UK is prone to economic factors because
it is the business of the high investment and with the large dedication of resource in the
infrastructure dedication. Vodafone UK has merged with O2 for cutting their expenditure
on the infrastructure. The implication of the 4g is the major and main capital project for
the Vodafone (Wall, 2014).
STRATEGIC POSITIONING
Ansoff matrix for the analysis of the strategic positioning of the organization
The Ansoff matrix also helps in the analysis of the strategic position of the Vodafone
which are as follows:
Figure 1: Ansoff matrix
[Source: Wall, 2014]
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Market development: This is the strategy which is being implemented for the
development and expansion of the market area. Vodafone has also expanded its
business environment with the help of new channels of the distribution and to attract
the customers in the new market. Vodafone main focuses revolve around to expand the
business all over the world. With understanding the needs of the market of UK
Vodafone has developed the strategies for market development (Wall, 2014).
Market penetration: Vodafone is executing and implementing the long-term growth
strategy and also using the pricing strategies, advertising and other sales promotion for
selling the products and services in the existing and current market.
Product development: Vodafone has ensured to adopt the growth strategy by making
the expansion in the other sectors also and it has also introduced and implemented other
services in the existing market.
Diversification: This is the procedure of investing in the new markets by using the new
services and products and Vodafone must also understand the risk that is in this
process and efforts can also be made for the intensive research and development
program (Wood et al., 2016).
ORGANIZATIONAL AUDIT
SWOT ANALYSIS
Strength
 The size of the organization is big
with the global presence
 Reputable organization
 The standardized customer relation
management
Weakness
 Expensive technologies
 Reducing the subscriber base
 Very weak performance in some
countries
Opportunities
 Further growth and expansion
 Rising investment for deriving the
revenue growth
 Market growth to 5G for bringing
Threats
 Impact of Brexit on the Vodafone
 Devaluation of the British pound
 Intense and heavy competition
across the markets (Wood et al.,
2016).
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TASK 2- THE INTERNAL ENVIRONMENT AND ORGANIZATIONAL
CAPABILITIES
VRIO MODEL
VRIO analysis is the analytical method that is used for evaluating the resources of the
company and to gain a competitive advantage. This was developed by Jay Barney as a
method and way to evaluate the organizational resources and which are as follows:
Figure 2: VRIO model
[Source: Vargas-Hernández and Garcia, 2019]
Vodafone has the strong resources both intangible and tangible and the formal
reporting structure of the Vodafone and formal controlling, planning and coordinating
system are strong with the high innovation and the low base of the cost and they also
operate as the significant amount of mobile. Vodafone has also developed the wireless
standard of the next generation that allows for data and voice on the same wireless
network. This provides evidence of the innovative nature and the strong intellectual
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property of the Vodafone. The focus of the Vodafone is on only to the mobile telephony
that has allowed them to strengthen the resources of the organization and also their
role in the market of the organization (Vargas-Hernández and Garcia, 2019).
Vodafone has the strong financial resources with high profits that exceed hundreds of
millions of pounds every year and this allows the organization to reinvest in the
research and development activities and to extend the organization portfolio that
allows the larger and bigger market share. It secures the highest investment with assets
reorganization that further raises the profits of the Vodafone.
The human resource of the Vodafone is also so strong and having a great and big
employer brand. Vodafone has also won the best customer care award which increases
the brand image both as a network operator and employer (Vargas-Hernández and
Garcia, 2019).
The resource of Vodafone is linked with the competitive edge as it is having the strong
research and development team and own brand products allow Vodafone for having the
control over their resources which makes very harder for their competitors for gaining
access also organization (Vargas-Hernández and Garcia, 2019). Their strong intangible
resources like strong global brand offer benefit that are not being offered by the local
competitors. It also implements the strategy of the low cost that results into the lower
margins which can be subsidized by its other company operations and the annual
profits of the organization allows organization for reinvesting in the research and
development that helps them in gaining more intellectual resources and also more
control over the resources.
STRENGTHS AND WEAKNESS OF THE ORGANIZATION
Strengths:
Strong Research and development enable Vodafone for gaining a competitive advantage
to become the market leader in the new technology. Also, the low differentiation
between the competitors is also the strength of the organization.
Strong culture of corporate has also allowed the Vodafone to become successful in the
market and in the industry and also with the rapid growth of the Vodafone it has been
successful in the market of the industry. Own brand handset provides Vodafone with
the flexibility to provide the cheaper handsets and more control for the cost and it also
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allows them to design as per the demand of the consumers. A strong base of the finance
also provides the opportunity to the Vodafone to not become bankrupt and it enables
the organization to reinvest in the low market power (Indartono and Wibowo, 2017).
Weakness:
Due to the high competition in the UK market, Vodafone has not much affected the
market in which they operate. Vodafone is the only and single name on the handsets
where if anything went wrong then it causes the great damage of the brand. Also the
subcontractors of Vodafone manufacturers the handsets that can create and develop the
risk of withdrawing of the contracts. The aim of the Vodafone is to keep their services
simple but innovative and therefore the resources are focused on its research and
development instead of extravagant marketing campaigns (Indartono and Wibowo,
2017).
.
VALUE CHAIN
Figure 3: Value chain analysis of Vodafone
[Source: Mudambi and Puck, 2016]
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Vodafone has the strong and capable support activities and also the strong corporate
social responsibility and this gives the organization for the good public damage that is
another strength of the company and along with this the primary activities allows
Vodafone to have the higher control over their resources and capabilities and am ability
for adopting the low-cost strategy for competing in the market still in the recession
period (Mudambi and Puck, 2016).
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TASK 3- EVALUATION OF COMPETITIVE POSITION
Vodafone is one of the world’s most known telecommunication companies. To
understand the competitive edge of an organization, there are several models applied
on them for the detailed study of the competitive environment in the industry and the
standing of the organization in it (Cadle, 2014). Here, to study the detailed analysis of
Vodafone’s competitive environment, Porter’s five forces model is being applied.
PORTER’S FIVE FORCES MODEL
Porter’s 5 Forces is a model named after Michel E. Porter which is used to inspect and
analyze the competitive environment in any industry and estimate profitability that can
be generated from it (Dobbs, 2014). According to this model, there are five forces
existing in the environment that control the structure and competition level in the
industry. Following is the application of the model on Vodafone:
 The threat of New Entrants
This force deduces how easy it is for a new firm to enter the industry. On
studying the industrial market of Vodafone, the threat to new entry is very low
as the industry is currently dominated by major leaders. However, Vodafone
requires to increase the implementation of developing technology in its
operations so that its costs are reduced and any new entry would not affect the
market share of Vodafone.
 Threat of Substitutes
This force deduces the menace a firm holds from the existing products/services
of the competitors in the industry (Huggins and Izushi, 2011). Vodafone’s threat
of substitutes is moderate because with the increase in technology, landlines
have been disappearing and a rise in broadband has been seen. However, the
services offered by Vodafone's competitors are somewhat similar to what the
company offers itself. Thus, a major threat might arise if a product/service is
offered to provide more outputs at a lower cost.
 Buyer’s Bargaining Power
Buyer's bargaining power is very high in the industrial environment of Vodafone
as similar services are being offered within a similar price range to the customer.
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Because of this easy availability of products from other service providers,
customers hold a high bargaining power.
 Supplier’s Bargaining Power
The suppliers of Vodafone hold a high bargaining power. The price of the
company’s services is majorly dependent upon the cost at which the raw
materials are supplied. Since Vodafone operates at a higher margin, its prices are
directly affected by the rise in price by its suppliers (Dälken, 2014). Therefore, a
small change in the bargaining power of suppliers would hold a huge impact on
Vodafone’s profitability.
 Rivals in the Industry
Vodafone has been operating in an industry with a high competitive rivalry. The
cut-neck competition in the telecommunication sector has led to the downfall in
the profitability ratios of the company. The major reason behind this is the lack
of brand loyalty and less discrimination in the products/services offered by the
participants in the telecom industry.
Figure 4: Porter's Five Forces Model
[Source: Dälken, 2014].
There are several other strategies that could be applied on Vodafone to understand and
improve the competitive edge and market position of the company. Following is the
application of additional strategies on Vodafone:
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