Vodafone UK Market Analysis: Competitive Strategies and Future Outlook

Desklib provides past papers and solved assignments for students. This report analyzes Vodafone's business strategy.

Business Strategy on Vodafone
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Index
Introduction..............................................................................................................................3
P1...............................................................................................................................................3
PESTLE Model for Environmental Analysis.........................................................................3
Ansoff’s Growth Vector Matrix.............................................................................................5
P2...............................................................................................................................................6
VRIO Model...........................................................................................................................6
Strengths and Weaknesses of Vodafone................................................................................7
P3...............................................................................................................................................9
Porte’s Five Forces.................................................................................................................9
P4.............................................................................................................................................11
Conclusion...............................................................................................................................11
References...............................................................................................................................12
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Introduction
The assignment has put emphasis on the projection of analytical report that centres rounds the
organization of Vodafone situated in United Kingdom. The assignment ahs dealt with the
collaboration of that deals with the projection of various types of analysis of the organization.
The assignment has been divided into four parts that highlight the significance of different
analytical progress that channelizes the function upon an organization. It has come up with
the process that reflects the interpretation of external and internal environmental analysis and
its beneficial impact upon the organization towards the level of productivity and progress.
There is an involvement of PESTEL analysis and Ansoff Growth Vector Matirx that
highlights the significant factor on the organization. VIRO model and SWOT analysis have
been incorporated in the assignment to deal with the organization’s level of performance.
Porter’s Five forces have been used in the assignment for further development in the
assignment. The assignment has put emphasis on the selected organization of Vodafone,
situated in United Kingdom (Elias et al., 2018).
Task 1:
P1
PESTLE Model for Environmental Analysis
Political Economical
Political factor put a major impact the
collaboration of Vodafone Group PLC’s
sustainability in the global market.
Due to the involvement of political stability,
the organization has gained the power to
retain in the global market. Involvement of
the tax rate has put an impact on the
organization that tends to highlight the
collection based on the preservation of the
intellectual property of the organization.
Political factor associates with the mixture of
governmental policies that come up with a
Economical factor comes in progress after
the country serves with an optimization on
various services.
Governmental intervention begins to
interrupt and confronts the ratio of inflation
rate, which was highly affected after the
emergence of Brexit. After the invention,
which has been performed by the inflation
rate, saving rate, interest rate and foreign
exchange rate, it has affected the country
economic ratio with a major change of 71.1%
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rate of corruption (68%) in UK that affects
Vodafone on their productivity (MUTWA,
2016).
Occurrence of Brexit, have led the company
to run in loss due to the barriers in economic
form.
(MUTWA, 2016).
Due to the interpretation of such rates, the
labour cost, business cycle stages have come
up with less development.
Social Technological
Social factor comes up with the projection
that is based on the wireless connection of
the company.
Social factor is comprises of demographic
population that helps to comprehend the
various channels of the company’s
customers.
Interpretation of skill population also paves
way towards the collaboration of the
population that constructs the formation to
the organization’s customers (Pettinger,
2016).
Social factor can also be formed with the
help of structure based on the class and
power that has been prevailed from the
society. Social factor puts a major impact on
the segmentation of Vodafone.
Technological factor deals with the
adaptation of advanced level of technologies
that help to enhance the quality and level of
performance of the organization backed by
the economic power (Pettinger, 2016).
Technological factor put an emphasis on the
projection of the highlighted part of the
company that deals with the productivity in
order to maintain the sustainability of the
organization in the global market.
Technological factor has affected Vodafone
along with the collaboration based on the
value chain structure.
Environmental Legal
Environmental factor affects the ratio of
impact that affects the organization, due to
the involvement of the presence of extreme
weather conditions.
Environmental factor may emerge through
the specification of various weather
conditions that affects the productivity of the
organization (Pettinger, 2016).
Legal factor affects the organization through
the means of antitrust sequence that put
impacts on the wireless Communication
prevailed in the organization.
Legal factor comprises of the discrimination
law that the formation of the organization
with different variability (MUTWA, 2016).
The interpretation of copyright, patent helped
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The approach that takes place due to the
interruption of natural calamities may take
place in the form of flood, drought and
others.
The approaches for extreme weather
condition gates affected in the form of
renewable energy.
to maintain the intellectual property law that
retains the productivity of the organization.
Table 1: PESTEL Analysis
(Source: Created by the learner)
Ansoff’s Growth Vector Matrix
The roadmap for Vodafone based on the factors of market penetration, product development
market development and diversification do projects on an effective approach in search of
market share.
Market Penetration: Vodafone is subjected to numerous channels in the UK market based
on which the penetration parameter is been stabilities. The channel of Vodafone is found to
be inclined with the Television platform along with the media house in order to maintain the
existing gestures associated in the UK and thereby ensure the growth systematically and
logically. As per the opinion of Gurcaylilar-Yenidogan and Aksoy (2018), it can be stated
that market penetration of UK is mainly based on the advertising channels which is
streamlined for the offline sources. On contrary British Telecom possesses enough approach
to both the online and offline platforms. Thus, it is recommended that Vodafone needs to pay
immense attention to social media marketing such as Facebook, Twitter, etc. in order to
attract the youth generation efficiently.
Market Development: Vodafone targets for the development of the European market by
targeting the corporate sector immensely. As opined by Dawes (2018) the services offered by
Vodafone often lies to the premium pricing sector. It is evident to note that Vodafone services
charges are nearly 5-7% higher than the market competitors. Thus, the company needs to lay
strategy in order to attract the youth segment accordingly so that the market can be
diversified and developed in order to foster sustainability accordingly.
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Product Development: Implementation of 5G services has been an effective move for the
firm in order to restore competitive advantage within the European market. However, due to
the premium pricing strategies the target market of the 5G service is considerably low.
Customers generally seek for substitutions such as 4G services which remain to their budget.
Thus, it can clearly be analysed that although the firm has invested in developing the product
it failed to bridge the gap for the same.
Diversification: Vodafone does not possess much emphasis on the diversified products and
clearly maintains the root products only.
Task 2
P2
VRIO Model
Valuable: Vodafone is found to have effective financial resources in order to combat threats
accordingly. Employees associated with Vodafone are considered to be the primary resource
of the firm. Hence the company invests heavily to train the same and thereby maximise the
output accordingly. Secondly, the patents associated with Vodafone are considered to be
valuable for the firm and thereby scrutinize the competitive interferences to a subjective
level. Thirdly, the distribution channel of the firm is effectively analysed by the firm (Lopes
et al. 2018).
Rare: The financial resources are found to be significantly less as compared to the market
competitors in the UK. On this note, it is evident to state that the firm needs strong planning
in order to maintain a strong financial resource. Secondly, though the company has skilled
employees the issue of rare compensation and working environment often leads to a high
turnover rate. The patents are also rare resources and these are not found to be possessed by
the competitors. Finally, the distribution channel is a rare resource as there requires effective
investment and time which is possessed by a very low number of market competitors
available in the European market (Vargas-Hernández et al. 2019).
Imitable: The financial resources of Vodafone are found to be costly and are also subjected
to imitation. These resources are acquired by the firm through a prolonged profit over the
years. Thus new companies associated with the identical field would require time to
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accumulate the identical financial resources accordingly. Secondly, the employees of the firm
are found to be imitating. The main reason for the same is that these employees can be easily
trained by the competitor companies and thereby maximise their capabilities and skills.
Hence the factor of offering better packages, benefits, growth facilities and opportunities
becomes the key factor in making the difference. A temporary competitive advantage is
gained on this perspective. Thirdly, patents are difficult to imitate and thereby remains
confidential as Vodafone property only. On this note, it can be stated that competitors would
be subjected to legal projections if they try to imitate the patents available with Vodafone as a
factor of Data Confidentiality. Finally, the factor of the distribution network is found to be
effectively costly in order to imitate the same. The distribution channel of Vodafone has been
developed for over the ages and thus there are almost impossible parameters on which
imitation of the same can be processed by the competitors (Lopes et al. 2018). The
competitors can pave for investigating on the amount associated with the development of the
distribution channel in order to gain a replica of the same, though complete imitation is still
not possible.
Organisation: The financial resources of Vodafone are found to be effectively organised in
order to capture the real value, as identified by the VRIO of Vodafone. It can be stated that
these resources are effectively used for strategically invest in the right places and developing
opportunities along with combatting threats. Thus, on this note, it can be stated that these
resources to prove to be an imminent source of sustained competitive advantage for the firm.
Secondly, the patents associated with Vodafone are found to be not well organised, which
clearly projects on the fact that the organisation would not be using the patent rights to the
ultimate potentials (Vargas-Hernández and Garcia, 2019). On this note, it can be analysed
that the unused competitive advantage does exist within the market which can be altered by
changing the sustainable competitive advantage of the firm. Thirdly, the distribution network
associated with Vodafone is found to be effectively organised and thus projects to reach out
to the customers. This is accomplished by reaching out to all the available customers and
thereby ensuring that it is effectively available in the retail stores of Vodafone. Thus, these
resources provide a sustained competitive advantage to Vodafone in a significant and logical
manner.
Strengths and Weaknesses of Vodafone
STRENGTHS WEAKNESSES
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 Extensive Market Coverage
 Innovative Advertising Strategy
 The success of the M-Pesa advent
 Declined Subscriber Base
 Poor performance in the European
market
OPPORTUNITIES THREATS
 Proposed merger along with the idea
of cellular in the international
market
 The rise in the investment in order
to drive the revenue growth
 Augment of 5G connectivity along
with market growth
 Immense potentiality in the African
market
 Impact of Brexit along with the
devaluation of the British pound
 High competition in the European
market
Strengths
Vodafone, being a mega-giant in the telecom sector of the UK do possesses numerous
strengths in order to promote sustainability. The exclusive parameters involving the same are
as follows:
Extensive Market Coverage: The company is found to be associated with an effective
customer based on an international platform. It is found to be operated in 30 different nations
based on effective synchrony with the partner operating firms. As per the data attained by
Niaz and Medina (2018), it can be stated that Vodafone Groups is subjected to a distinctive
market share as depicted in the table below:
Country Market Share
South Africa 50.9%
India 22.7%
United Kingdom 22.6%
Italy 32.3%
Germany 33.9%
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Moreover, it can also be stated that the company is currently ranked in the 6th position as per
the Value Global Telecom Brand database.
Innovative Advertising Strategies: Vodafone has always been acclaimed to have an effective
advertising strategy based on various third-party companies. According to Haselwanter et al.
(2016) it can be stated that Yahoo was the primary advertising company associated with
Vodafone, which was replaced by Ogilvy based on the youth brand named VOXI. The
rebranding of Hutch to Vodafone along with the change from pug to zoozoos developed a
brand awareness among the mass.
The success of M-Pesa: Vodafone has aligned to the world’s successful money transfer
platform enabling millions of people to have distinctive service of sending and receiving
money, top up airtime bill payments, accessing bank account and many more. The company
is subjected to gain a total profit of 614 million US dollars based on the transactions done by
M-Pesa.
Weaknesses
Declining Subscriber Base:Vodafone has been subjected to a declining subscriber base due
to the lack of strategies and focuses on the contemporary market. Due to the advent of British
Telecom, it can be stated that the company has been facing a serious threat in the European
market in recent times.
Weak Performance in European Market: The performance of Vodafonein the European
market in the contemporary market has declined to 17% in the UK market. This is mainly due
to the advent of the market competitors associated with the same.
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Task 3:
P3
Porte’s Five Forces
Porter five forces can be considered as the holistic strategy framework and it is effective in
order to analyze the current competition. These porters’ five forces analysis can be effective
to build a sustainable competitive advantage in the industry of wireless communication.
Threats of the new entrants
A new entrant in the wireless communications brings the innovation along with various
creative thinking (Satyanarayana et al., 2017). This is the reason behind the increase pressure
on vodafoen UK and enforces them to apply strategy of low price, reduce the costs and
offering the new value propositions toward the consumers. In order to deal with the threats of
the new entrants, Vodafone, UK needs to follow few steps.
 With the help of innovating the new products along with services
 With the help of building the economies of the scale and it can reduce the fixed cost
 Vodafone, UK needs to spend more money on their research and development to
solve this issue
Bargaining the power of the suppliers
Vodafone, UK purchases their raw materials from different suppliers. Powerful suppliers in
the technology industry remove their higher prices by using their power of negotiation. In
order to deal with the Bargaining the power of the suppliers, Vodafone, UK needs to follow
few steps.
 With the help of building the effective and useful supply chain from the multiple
suppliers (ADONGO et al., 2017)
 With the help of experimenting the new product design by utilization of various
materials
 By developing the suppliers, who are dedicated for the organization and in this regard,
Vodafone, UK can follow the Wal-Mart
Bargaining Power of the Buyers
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Purchasers are always demanding and their demands along with requirements are changes
according to time. They want to buy the best thing with an affordable price. In order to deal
with the challenges, which are raised due to the bargaining power of purchaser, Vodafone,
UK needs to follow few steps.
 With the help of creating a large and loyal consumer base as this can be effective to
minimize the bargaining power of the purchasers (ADONGO et al., 2017)
 With the help of innovating new products rapidly as new products are effective to
minimize the defection of the current customer of the Vodafone, UK
Threats of the substitute services and the products
Due to the challenges of the new substitute products and services, Vodafone, UK faces many
challenges in their profitability (Akama-kisseh, 2016). For example, Google dive and drop
box are the substitute for storage the drives in hardware. There are few steps to avoid these
issues.
 With the help of being more service oriented comparing to product oriented
 With the help of gathering knowledge on the major needs and requirement of
consumers
Competition between the present competitors
As the competition is raised, this is the reason, which crates issue to sustain the business and
that can be solved with few ways.
 With the help of creating the sustainable differentiation
 With the help of creating scale (Akama-kisseh, 2016)
 Working together with the rivals
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Task 4:
P4
Figure 1: Bowman’s Strategic Clock
(Source: Haselwanter et al. 2016)
While determining the strategic position of Vodafone UK, differentiation should be chosen.
According to Echchakoui (2018), this strategy mainly aims to offer customers the highest
level of added value. Branding is the key factor in this strategy. Thus, Vodafone is already a
reputed brand in market. Even, the product quality is also satisfactory from customers’ views.
It offers a high quality product with the strong awareness of brand consciousness. Now, the
company should understand that loyalty is the best way to achieve the prices as well as values
in differentiated strategies.
On the other hand, if focusing on the result of SWOT analysis, it has been noted that
Vodafone UK does not perform well in European market. Additionally, the PESTEL analysis
has mentioned that Brexit effect has affected the economic condition of the market. In that
case, Vodafone should offer some lower prices or some additional beneficial schemes for the
customers. It would strengthen their position in the market and the company would also get
the chance to increase profit.
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