Vodafone PLC Business Strategy: A Comprehensive Analysis

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BUSINESS STRATEGY
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Contents
INTRODUCTION.......................................................................................................................................4
LO1.............................................................................................................................................................5
P1............................................................................................................................................................5
M1...........................................................................................................................................................7
LO2.............................................................................................................................................................9
P2............................................................................................................................................................9
M2.........................................................................................................................................................13
L03............................................................................................................................................................15
P3..........................................................................................................................................................15
M3.........................................................................................................................................................17
L04............................................................................................................................................................19
P4..........................................................................................................................................................19
CONCLUSION.........................................................................................................................................26
REFERENCES..........................................................................................................................................27
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Figure 1-VRIO Framework.........................................................................................................................9
Figure 2-Value Chain Analysis.................................................................................................................12
Figure 3-Porter's Five Forces Model.........................................................................................................16
Figure 4-Porter's Generic Strategy Model.................................................................................................18
Figure 5-Ansoff Matrix.............................................................................................................................21
Figure 6-Bowman's Strategy Clock...........................................................................................................24
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INTRODUCTION
The telecom industry has grown many folds in the last decade and the advent of the internet has
impacted the growth rate positively. There are various sectors of it; mobile communication,
internet service, and broadband communication, etc. in the UK the telecom sector is growing at a
very fast pace since the days of telegraphs. According to the market research telecom sector
across the world is growing at an approximate rate of 4%. The telecom sector can be said created
by international companies who facilitate global communication (Lopes et al., 2018).
This assignment devises the business strategy of Vodafone PLC. In the L01 it covers the analysis
of the external environment of Vodafone PLC with the help of PESTEL analysis and Ansoff
matrix. The second section of the assignment will provide an understanding of the internal
environment of Vodafone PLC. It will also assess the strengths and weaknesses of the
organization's internal capabilities. And in the L03 with the help of Porter's five forces model the
current market position of Vodafone PLC will be evaluated based on certain parameters. And at
the end in L04, this report will devise a strategic and long-term plan for the organization’s
growth and development (Vodafone logo, 2019).
Vodafone Group is a UK based telecommunication conglomerate. It is mostly active in the
regions of Asia, Africa, in both the Americas and the Middle East. It headquartered in Newbury,
England and operates its communication network in approximately 70 countries (Abdel Wahab
Al-Atiqi, 2014).
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LO1
P1
PESTEL ANALYSIS OF VODAFONE PLC
PESTEL analysis of Vodafone will be based on the analysis of various factors that affect the
functioning of Vodafone directly and indirectly.
POLITICAL: AS Vodafone headquartered in the UK, political stability affects business
operations and functioning positively. Though Brexit has affected the business operations of
Vodafone for a while the other political factors like the trade regulations, the pricing norms, the
co-operative trading partners and the strong protection to innovation has impacted the business
unit’s functioning positively (Abdel Wahab Al-Atiqi, 2014).
ECONOMIC: both the macro and micro-environment factors are responsible for leading the
changes in the business environment of Vodafone. The rising trend in inflation, labor market
factors, saving rate and reduction of the interest rates by BoE has contributed positively to the
business model of Vodafone. And the present-day skillfulness of the workforce and the
unemployment rate are the potential areas for the business prospects of the Vodafone (Ang,
2016).
SOCIAL: the British society being the multi-cultural society is divided into various classes. And
this class-division offers numerous opportunities for Vodafone PLC to business diversification.
British society also has a higher educational level and skillfulness meets the demand for the
workforce (Haseeb, 2017).
TECHNOLOGICAL: many cities in the UK are technologically very advanced and the
dynamic nature of the telecom industry requires continuous up gradation of technical
infrastructure. It affects the cost-construction and the distribution network positively. But the
vulnerable nature of technology led the development and challenges of data theft and
cybersecurity needed to be tackled with the augmentation of cutting edge technology (Haseeb,
2017).
ENVIRONMENTAL: Every industry and sector has different environmental standards and
regulations. And there are also some local and national governmental norms for the reduction of
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carbon footprint and environmental damage. So, fulfilling all these requires an effective plan
from Vodafone. It has also launched various recycling and eco-friendly products along with
fulfilling its environmental responsibility as per the government norms in the UK. And it earned
lots of favors for Vodafone PLC in the UK (Haseeb, 2017).
LEGAL: The Vodafone PLC has to abide by different laws of the land like; anti-trust laws, laws
to protect intellectual property and trade laws. At the same time, Vodafone has pledged to bridge
the gender pay gap and to ensure corruption-free distribution networks. And also ensure the
welfare of its employees (Vodafone logo, 2019).
SWOT analysis:
STRENGTHS WEAKNESSES
 Its wide-ranging market analysis and
the success of M-Pesa in the Asian
market.
 Value-added capital strength.
 Ground-breaking marketing campaigns.
 Resilient distribution network.
 Robust product portfolio (Mudambi
and Puck, 2016).
 Fragile performance in the European
market
 Declining customer base.
 Draining productivity in the European
market (Lopes et al., 2018).
OPPORTUNITIES THREATS
 A proposed merger with the other
telecom services suppliers.
 Rising investments in exploration and
enlargement (Lopes et al., 2018).
 Effect of Brexit.
 Volatile exchange rates.
 Ever-increasing market completion
(Echchakoui, 2018).
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M1
The macro environment factors influence the business operations of the Vodafone in multiple
ways and their critical evaluation is as follows:
The political factors impact the growth and expansion strategies of it. And Vodafone has a
strong geographical presence globally. So, the political instability in fragile and conflicted
regions impacts the availability of the workforce, changes in the business infrastructure and
productivity. For instance, the recent conflicts in the Middle East have affected the company
completely (Ang, 2016).
Economic factors play an important role in the formation of business strategy. These factors
affect the balance sheet and profit margin of a company. The rise in the inflation rates and
declining saving rates and cash crunch in the market has to be dealt with the appropriate business
model frequently Kraus and Strömsten, 2016).
Technological factors contributing positively as Vodafone had undergone various innovation and
exploration. It catered the gap in the business model with the augmentation of appropriate
technologies now and then. The whole business framework of Vodafone is technology driven
and it has to keep augmenting the latest and cutting edge technologies to hold the current market
share (Glukhov et al., 2015).
Legal factors: for an organization like Vodafone which is present globally the compliance of
legal norms and trade laws becomes extremely important. It needs to keep a close look at the
changing market dynamics. Vodafone on multiple occasions has been accused of tax evasion and
such practices have to be avoided by adopting the business policies of higher integrity and
accountability (Haseeb, 2017).
Environmental factors have to be dealt with efficiently with the adoption of green and
environment-friendly technologies. They also endorse the less environmental damage and the
threat to vulnerable species due to their business units (Mudambi and Puck, 2016).
The structure of a Society’s and the level of education and expertise in the desired area impact
the business operations. But the availability of skilled and cheapest workforce is higher in the
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Asian and African regions. This impacts the balance-sheet of an organization Kraus and
Strömsten, 2016).
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LO2
P2
VRIO framework has been developed by Jay B Barney to examine the comparative strength of
an organization's resources. VRIO (value of the resource, rareness of the resource, imitation
threat and organizational proficiency) framework has been used to assess the internal capabilities
of Vodafone (Ang, 2016).
Resource value rare Imitation
Yes Yes Yes Yes
If all constituents in the table show an optimistic result then the organization has sustainable
resources. And if any of the above constituents shows an undesirable result then the organization
needs further improvement (Chatzoglou et al., 2018).
Figure 1-VRIO Framework
[Source: Mudambi and Puck, 2016]
Resources Valuable rareness Imitation
threat
Organized to
use
Influence on
economic
gain
Network yes yes no No Short-term
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capability Competitive
advantage
Financial
assets
yes yes no Yes Long-term
competitive
advantage
Intellectual
property
yes yes no yes Long-term
competitive
advantage
Skilled
employees
yes no yes yes Short-term
Competitive
advantage
Vodafone has put in lots of investment in improving its resources capacities and gain a
sustainable competitive advantage in the market (Mudambi and Puck, 2016).
Valuable: the resources of Vodafone include access to the market capital and availability of
liquidity to run its business operations smoothly. And the strong wireless network and the unique
financial strength of help the organization to grow further. Product parity ranked the Vodafone at
the 5th position for brand name and product parity (Chatzoglou et al., 2018).
Rare: the intellectual property rights, strong capital formation, and investments in the latest
technologies, for instance, 5G technologies and experienced leadership are the resources of
Vodafone which cannot be replicated easily. Skilled employees and pricing mechanisms can
replicate with little effort (Hitesh Bhasin, 2018).
Imitation threat: the cost-construction and establishing the prices of the products and services
can be replicated easily by its competitors. So, Vodafone should devise an effective strategy to
reduce the threat of imitation. A huge investment in research and development endowed
Vodafone with intellectual property rights followed by the revenue generation (Kraus and
Strömsten, 2016).
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Organized to use: The Vodafone devised many effective business plans to make profitable use
of its current resources as well as develop a plan to turn potential resources into valuable
resources (Chatzoglou et al., 2018).
Organizational support: the Vodafone group has organized the management procedures and
system. The organizational culture and business operations are very flexible. The operative
implementation of policies and approaches support it to improve an enormous market share and
gave a competitive lead (Bull et al., 2016).
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VALUE CHAIN ANALYSIS
The value chain analysis is helpful in identifying the internal capabilities and competitive
advantage of Vodafone and it has been conducted as follows:
Figure 2-Value Chain Analysis
Source: [Gurcaylilar-Yenidogan, 2018]
Primary activities: major activities of Vodafone are online facilities and provision, great
integrated switching servers and consolidated facts and figures warehousing. This is the activities
in which Vodafone focuses to from the input creation to the output generation. They add the
value directly (Business Jargons, 2019).
Support activities: the support activities of the Vodafone group are secure dominant advertising,
mitigating environmental impact and improving Vodafone's goodwill and customer satisfaction
by enhancement in products and services. These activities do not add any value directly but them
as important as primary activities (Business Jargons, 2019).
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