Vodafone Plc.'s Business Strategy: A Comprehensive Analysis

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BUSINESS
STRATEGY
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Table of Contents
INTRODUCTION............................................................................................................................. 3
TASK 1............................................................................................................................................ 3
THE EXTERNAL ENVIRONMENT..................................................................................................3
ANSOFF’s GROWTH VECTOR MATRIX........................................................................................4
TASK 2............................................................................................................................................ 5
THE INTERNAL ENVIRONMENT.................................................................................................. 5
STRENGTHS AND WEAKNESSES OF VODAFONE.........................................................................6
TASK 3............................................................................................................................................ 7
STRATEGIES TO IMPROVE ORGANISATION’S COMPETITIVE EDGE IN THE MARKET...................7
TASK 4............................................................................................................................................ 9
STRATEGIC MANAGEMENT PLAN FOR STRATEGIC DIRECTION AND OPPORTUNITIES
AVAILABLE TO THE VODAFONE..................................................................................................9
CONCLUSION............................................................................................................................... 11
REFERENCES.................................................................................................................................12
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INTRODUCTION
Mobile Telecommunications sector is one of the fastest and largest growing sectors in the UK as
well as in other countries of the world. In order to maintain the position and reputation of the
telecommunication company, the company is required to increase the value of its share in
domestic as well as in international market (Curven and Whally, 2016). For this purpose, the
company is required to have outstanding business strategies and plans that would help it to
perform well in the market and achieve its desired results. It is generally long-term planning of
the activities of a business which are needed to be performed by a business to earn profit and
promote its growth and development (Hair Jr, 2015). This assignment would be focusing on the
business strategy of Vodafone plc., which is a British multinational organization which generally
operates in Asia, Europe, Africa, and Oceania. The headquarters of the company is based in
London and Newbury, Berkshire. The company was established on 16th September 1991 by
Ernest Harrison and Gerry Whent. The company’s name has been taken from the initials of
“Voice Data Fone", which makes the complete name ‘VODAFONE'. It has its network in around
25 countries and in 47 other countries, it has its partner networks. Nicholas Jonathan Read is a
British businessman and the current CEO of Vodafone Group.
TASK 1
In order to achieve the business objectives or goals of a business, it is very essential for a
company to understand the environment which surrounds the activities and productivity of the
business. This environment can be classified into two categories: External environment and
internal environment.
THE EXTERNAL ENVIRONMENT
The External environment of a business consists of those factors which affect a business and its
strategies externally or on which the business have no control. These factors could be political,
social, economic or technological. The external environment of Vodafone Plc. can be analyzed
with the help of PESTLE analysis which is as follows (Klauer, 2015):
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 P (Political Factors)- It is very essential for a company to analyze the political factors
affecting its business strategies. Vodafone is highly dependent on the political status of a
country in which it operates. Vodafone is dependent on the political stability of the state in
which it operates. However, in the recent conflicts in Europe, Vodafone has to face the
negative impacts of the conflict resulting in the failure of establishment of infrastructure
due to areas prone to war. Also, factors like tax burden, strict entry policies, and regulations
and other charges also affect the company as a whole (Ang, 2016).
 E (Economic Factors)- Economic factors such as inflation rate, savings rate, foreign
exchange rate, etc. are some economic factors that affect the business strategies of
Vodafone Plc. to achieve its organizational goals. Due to sudden and immediate global
changes, the company has to change its business strategies within a short span of time
(Klauer, 2015). The earning and willingness of people to spend their money, unemployment
and currency fluctuations are also some important factors due to which the company is
negatively affected because of its dependency on these factors.
 S (Social Factors)- The social factors generally consists of population, local residents, their
values, their language, their needs, and their religion and beliefs. This is one of the most
important factors which are needed to be considered by the company. As provided that
according to the survey by Deloitte, around 22 million people, aged between 16-75 years,
use their smartphones while walking (Shafei and Tabaa, 2016). In order to grow its business,
Vodafone needs the acceptance of society and for this, it needs to provide satisfactory
services to its users or consumers.
 T (Technological Factors)- Technological factors emphasize on innovation, improvement
and up gradation of technology, setting up towers, improving services, etc. Technological
advancement is one of the areas where it is difficult to make predictions. It is very necessary
for the company to focus on providing good internet speed and mobile network to its
customers and plan its business strategies accordingly focusing on improvising its services
(Ang, 2016).
 L (Legal Factors) - As the market of telecommunications services is growing vastly, the
competition in the market is growing highly as well. In order to maintain its reputation and
growth in the market, Vodafone shall be aware of the legal issues and piracy which might
affect its business as a whole (Klauer, 2015). Also, Vodafone has been accused of not paying
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enough salary to its employees as compared to its competitors in the market. The company
should abide by the legal dimension of the country and try to minimize the risk of
exploitation of human and natural resources (Ang, 2016).
 E (Environmental Factors)- With the increase in environmental damage and depleting
natural resources, people are getting aware of the elements to protect the environment.
They are getting more ethical and ethics oriented. In such situations, the company needs to
modify its business strategies in such a way that it serves and satisfy its customers, by being
socially and environmentally responsible and focusing on promotion and encouragement of
sustainable development, abiding by the local and international environmental laws
operating in the country (Lueg et al, 2015).
ANSOFF’s GROWTH VECTOR MATRIX
The Ansoff’s Matrix is a tool, introduced by Sir Igor Ansoff in 1957, which is used by the firms to
plan their business strategies for growth. It is commonly known as Product/Market Grid or
Matrix (Martinet, 2016). He provided with the four growth alternatives, which are as follows:
 Market Penetration
In this strategy, the company focuses on increasing its existing products or services in its
existing market. Vodafone has resources to penetrate its existing market to satisfy its
customers and gain customer’s loyalty through various marketing and promotional
campaigns supported by heavy advertisements (Loredana, 2016). Market penetration
can also be achieved by decreasing the price of the existing product or services,
acquiring a competitor in the same market or introducing modest product refinements.
Here, the main aim of the company is to increase its sales in the existing market for its
same existing product or service. Market Development
This strategy involves entering and expanding the business into new marketing with the
same existing products or services of the company. This could be implemented by
targeting different segments of customers in the market, or entering and exploring new
areas or parts of the country as well as foreign markets. Vodafone has gained huge
profit by following this strategy. It has expanded its network to around 25 countries
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reaching out to around 302.6 million customers around the globe (Navarra and Scaini,
2016). Product Development
This strategy focuses on new and innovative ideas for creating new products and
providing new services to customers in the existing markets (Porter and Kramer, 2019).
Vodafone has a strong brand value which will attract its customers towards its new
products or services introduced by it. The company also has its partner networks in
around 47 countries. It also did a partnership with the local telecommunication known
as ‘Safaricom’ in Kenya, in 2005 (Mpuga, 2017). However, this strategy is very uncertain
and may negatively affect the company as a whole. Diversification
Diversification refers to introducing new products in new markets. This strategy is the
riskiest among all of the other strategies. The company could diversify its business
through related or unrelated diversification. Related diversification can be referred to
the diversification of a business having a relationship or potential synergy between the
firms and new market space. However, Vodafone does not follow this strategy strictly
(Dawes, 2018).
TASK 2
THE INTERNAL ENVIRONMENT
The internal environment of the business consists of those factors which affects the business
strategy of a business internally and on which the company has control (Danso, 2016). The
company can develop and implement its business strategies and determine its goals according
to these factors of the internal environment. The internal environment can be analyzed by
using VRIO analysis, established by Sir Jay B. Barney. According to this analysis, the resources of
the company shall be valuable, rare, hard to imitate and perfectly organized. This analysis
would help us to determine the competitive potential of Vodafone and its internal strengths
and weaknesses by determining the question of Value, Rarity, Imitability and Organization,
which are as follows (Klauer, 2015):
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 V (Value)- This dimension of the analysis helps firms to determine whether they offer a
valuable resource to its customers; how much does a resource cost and how easy is it
accessible in the market. The analysis shows that the patents, the employees, financial
resources, and distribution network of Vodafone are a valuable resource for the
company and will also help the company to combat external threats and enjoy external
opportunities that arise. However, the cost structure and research and development at
Vodafone are not that much value as it costs more than the benefits provided by the
firm in the form of innovation (Vodafone annual report, 2018).
 R (Rarity)- This dimension of the analysis involves determining whether the company
controls scarce resources or capabilities; or whether the company owns something
which is rare but is in demand or not. The VRIO analysis of the Vodafone shows that the
financial resources owned by the company are strong and are rarely possessed by other
companies in the market. The analysis also shows that the employees of Vodafone are
highly skilled and trained and thus, the employees of the company are also a rare
resource for the company (Vodafone annual report, 2018).
 I (Imitability)- The imitability dimension of the VRIO analysis of Vodafone lays emphasis
on the question that whether the duplication or finding the substitute of the resource of
the company is easy/expensive or not? The analysis shows that the patents of Vodafone
cannot be copied or imitated as per laws relating to patents and copyrights (Ang, 2016).
However, the employees as a resource are not that much costly or hard to imitate as
other competitors can also train their staff like Vodafone.
 O (Organisation)- It determines the question of arrangement and proper usage of
resources available to the firm. The analysis shows that the financial resources of
Vodafone are well organized and used with proper strategy. Also, the distribution of
network is also utilized to its full potential and is being proved as an important source of
sustained competitive advantage for the company.
STRENGTHS AND WEAKNESSES OF VODAFONE
After analyzing the value, rarity, imitability, and organization of the resources of Vodafone, its
strengths and weaknesses can be determined on which the company needs to work and then
develop and implement its strategies accordingly.
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STRENGTHS:
 Strong financial resources: Vodafone has very strong and distinguished financial
resources which are being strategically utilized and invested in the right places
(Sammut-Bonnici and Galea, 2015). These financial resources help the company to
identify and make complete use of the opportunities available and to combat threats
which may negatively affect the organization and its strategies.
 Distribution of network: The network has touched and served 302.6 million people
approximately all over the globe. This shows that the distribution of the network of
Vodafone is highly organized and the company aims to reach out as many customers as
it can. It also ensures that the products and services provided by Vodafone are available
at all outlets so that customers do not have to face any problems while accessing the
goods and services of the company (Vodafone annual report, 2018).
 Strong marketing strategies: The pug and Vodafone zoo zoo's are famous across the
globe. Vodafone has possessed strong and innovative marketing strategies which have
helped it to attract and gain recognition from its customers and making it stand out
from its competitors in the market (Ang, 2016).
 Standardized customer relation management: Vodafone has always strived to establish
a strong relationship with its customer. It also encourages customer awareness and try
to understand their preferences and needs to provide them satisfaction and ensuring
effective and efficient sales (Porter and Kramer, 2019).
WEAKNESSES
 Low or no network coverage in rural areas: One of the major drawbacks of Vodafone is
it's low or no network coverage in the rural areas (Orlando, 2016). Although, Vodafone
has diversified and a huge network area, yet it fails to cover the rural areas of different
states or countries. Consequently, the subscriber base and the brand valuation of the
company drop because of poor connectivity and network (Ang, 2016).
 High-cost technology: The technology that is being used or developed by the company
can turn out to be very expensive leading to huge loss to the organization. Also, the
technology which is being introduced or developed by the company might not get
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enough return on the assets which would lead to high expenses and low profits (Klauer,
2015).
TASK 3
STRATEGIES TO IMPROVE ORGANISATION’S COMPETITIVE EDGE IN THE
MARKET
As provided, the Mobile Telephony sector is one of the fastest growing sectors in the UK. In
order to survive in the market, it is very essential for an organization to improve its strategies
and plans to give a tough competition to other organizations in the market. This improvement
could be done by using several different and suitable analytical tools and models of analysis
explained below:
Porter’s Five Forces
Porter's five forces analytical tool were created by the professor or Harvard Business School
Michael Porter, which helps an organization to determine its competitiveness in the business
environment. It also helps the organization to look closely to the factors that impact the
business environment apart from the actions of the rivals in the market. It mainly focused on
five things:
 COMPETITIVE RIVALRY: This generally focuses on the number of competitors of rivals a
company have in the market. If the number is high, the companies can attract the
suppliers, customers, and buyers by implementing high impact marketing plan and
offering highly competitive prices. If the number of competitors is low, there are huge
chances for the company to earn heavy profits (Bell and Rochford, 2016).
 SUPPLIER POWER: It refers to the power of suppliers to bargain to deal with you. It is
very necessary for an organization to have potential suppliers that provide raw
materials, components, labor and other services (Sutherland, 2017). There might be
chances where suppliers wouldn’t work with the organization which is charging
extremely high prices for unique resources.
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 CUSTOMER POWER: It refers to the bargaining power of the consumers. It specifically
deals with the power of the customer to drive prices down and look for lower prices and
better deals. The smaller and powerful the customer base is, the more powerful their
bargaining power would be (Min et al, 2016).
 THREAT OF SUBSTITUTES: Those products which can easily replace or substitute the
original products or services of the company possess a huge threat to that organization.
The rare the products or services are the more chances of increasing the price of the
particular product or services, in favorable terms increases and vice versa (Luttgens and
Diener, 2016).
 THREAT OF NEW ENTRANTS: The sector which yields high profits will attract the other
organizations towards that sector as well. This increases the threat of competition in the
market because of new entrants or organizations. The sector having strong entry
barriers attracts different organizations so that they can charge high prices and
negotiate in better terms (Moreno-Izquierdo et al, 2016).
STAKEHOLDERS ANALYSIS
Stakeholders are those individuals or organizations whose interests are directly affected by the
performance and productivity of a company. Stakeholder analysis is an important technique to
identify and understand the needs of the stakeholders (Cuppen, 2016). It also helps to
determine and develop such strategies and plans where interests of the stakeholders are
protected while achieving the organizational objectives. The analysis involves the following
steps:
 Identifying stakeholders: In the telecommunications sector, it is very essential for the
organizations to identify who their stakeholders are and how their interests are related
with the performance of the company (Eskerod and Jepsen, 2016). By performing this
step, it is easy to determine that upon whom the organization has influence or power to
exercise.
 Prioritizing stakeholders: After identifying the stakeholders, the organization shall
prioritize them on the basis of their power and interest in the organization. Stakeholders
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with high power and high interest in the company must be managed closely and those
having low power and low interest shall be monitored to achieve the goal of the
organization (Andriof et al, 2017).
 Understanding key stakeholders: Once stakeholders are prioritized, it shall now ensure
that the needs of the key stakeholders are understood and considered while making
different strategies and plans. Every organization in the telecommunications industry
shall consider the opinions of the stakeholders and fulfilling their demand and protect
their interests (Cairns et al, 2016).
KEEP SATISFIED
MANAGE CLOSELY
MONITOR
(Minimum effort)
KEEP INFORMED
 uN
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HIGH
LOW INTEREST HIGH
POWER
LOW

BALANCED SCORECARD
A balanced scorecard is a strategic management tool or metric which is used to determine the
consequences of the actions performed while implementing or executing business plans or
strategies. This helps the managers to collect and analyze information from the four aspects of
the business (Akkermans and Van Oorschot, 2018). These are:
 Analyzing learning and growth: Learning and growth of the employees of the company
are analyzed through training and research. It is used to determine the efficiency and
leaning capability of the employees of the organization.
 Evaluating business processes: Business processes are analyzed to determine the
effectiveness and efficiency of the operational management of an organization. Any
delays or gaps or other problems are evaluated and further strategies are planned
accordingly (Cooper et al, 2017).
 Collection of customer’s perspective: Feedback and opinions of the customers are
taken to determine the level of satisfaction of the customers and to improvise the other
areas where a customer is unsatisfied.
 Understanding financial data: Lastly, the sales and other financial data is utilized in
order to understand the overall financial performance of the organization.
Thus, it is clear by analyzing and understanding the above tools that each of them plays a
different role in strategic management. On one hand, Porter's five forces are used to analyze
the competitive potential of the business in the business environment; while on the other
hand, the stakeholder analysis helps in determining and understanding the needs of the
stakeholders. Furthermore, the balanced scorecard helps to determine the overall
performance of the organization by collecting and analyzing the information gathered from
the aforementioned aspects.
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