Vodafone Business Strategy: A Comprehensive Analysis

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BUSINESS STRATEGY
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Table of Contents
Introduction......................................................................................................................................3
Task 1...............................................................................................................................................3
PESTLE model for environmental analysis................................................................................3
Ansoff’s vector growth matrix.....................................................................................................5
Task 2...............................................................................................................................................6
VRIO analysis..............................................................................................................................6
Strengths of Vodafone.................................................................................................................7
Weakness of Vodafone................................................................................................................8
Task 3...............................................................................................................................................9
Porter’s five forces model............................................................................................................9
Balanced scorecard....................................................................................................................10
Task 4.............................................................................................................................................12
Bowman’s Strategy Clock.........................................................................................................12
Porter Generic Strategy..............................................................................................................14
References......................................................................................................................................16
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Introduction
The business has become the biggest competition in the world and to grow the competitive
advantage companies are planning new ways to grow business growth. Here in this segment, the
discussion is going to be how the company is growing its business through increasing demand.
Here in this segment is going to be discussed on Vodafone, a telecommunication company, UK.
Task 1
PESTLE model for environmental analysis
It is an analysis that reflects the external force which affects the business of a typical
organisation.
Political environment-
The political factor affects the business to a great extent. It includes the political stability of a
country, the government policies, entry-exit policies, rules and regulation, tax structure and the
distribution model approved the political parties. Nowadays the communications and the internet
is a vital driving factor to any countries growth. So Vodafone is going to get the advantage of t as
it promised the service mentioned (Abbott, 2015). Vodafone is currently one of the biggest
telecom service providers in the world. This status is going to help the company to liaise with the
government. It could make a positive political impact that could go in favour of the government.
As far as the tax structure is concerned here Vodafone ca face the problem and it could be an
extra burden over the company. The policy to enter countries telecom sector is a bit strict. So
entering and claiming market share can be a challenge to Vodafone.
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Economic environment: In this type of environment the financial factor influences the business.
This includes currency fluctuation, inflations etc. Every government is in the move to reduce the
unemployment rate to increase the affordability to use the internet so that it can benefit their
employment status (Bohari, Hin and Fuad, 2017). Due to the ongoing instability in the eurozone
economic crisis Vodafone is bound to face challenges in terms of growth and revenue
generation. At the present scenario… people have higher earning which generates disposable
cash. They can use his cash to avail the service from the Vodafone.
Social environment:
Social and cultural factor influences an organization's growth to some great extent. It inspires
the decision-making process also. It includes the language, culture, customs, religion etc. People
always want to be stay connected with their near and dear ones for the telecommunicating
services giver=s them the opportunity to communicate with their near and dear ones easily. This
is the reason Vodafone has a great acceptability factor in terms of social acceptance. Another
advantage is communication and internet surfing is an addiction. The more they are addicted the
more Vodafone gets the opportunity to raise their sales revenue. The population is not stagnant.
So the more the population increases the more the requirement of communication is generated.
This is where Vodafone is going to get the opportunity.
Technological environment:
Technology is the most vital driving factor in day’s business. The more the company is
technologically advanced the more they have the advantage over their competitors. Vodafone is
technologically very advancing origination which gives this organization an edge over its
competitors (Bull et al. 2016). They deliver improved services and allows the customers to a lot
of options that their competitors can't provide. Internet speed is the most driving factor nowadays
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to do get an advantage over the competitors. Vodafone delivers high-speed net connection which
helps the current generation to some great extension which is the reason they are attracted t this
organization.
Environmental Factors
Different markets have different conditions regarding environmental standards. This impacts the
business of a typical organization. Vodafone needs mobile towers to cater the telecommunication
services. These towers are always in the news for generating radiation beyond the permissible
limits and polluting the environments which affect the business (Coussement, Lessmann and
Verstraeten, 2017).
Legal Factors
The legal framework in different countries has different conditions and regulations to be
maintained with. Vodafone has to maintain at per with legal system in the country they are doing
the business.
Ansoff’s vector growth matrix
This model is essential for strategic positioning where it can use the opportunities through
developing new business, products, and services or to enter a new market. It is named product-
marketing mix for sometimes. It is the most used model for marketing. ``
1. Market penetration- it is a process to increase business in existing customer base. Means how
a company can grow its own business in an already existing customer base. For this, the
company decreases the time for processing the services, the opening hours of the store, and to
showcase the entire offer portfolio to the customers. In addition, companies introduce new things
which are attractive for the customers to avail. This is called market penetration (Dawes, 2018).
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2. Market development- Here the development means to increase the market area and enter into
the new market place. Vodafone has entered into much new market area, as everybody knows.
For example, German market, Japan, Australia etc. Vodafone was a joint business of UK and us
and it went higher and higher through the time.
3. Product development- this part is concerned about how to modify or develop the existing
offers or services for the customers. To produce this kind of offers the company reduces the
manufacturing charges. The company worked on the modification of the quality of the product.
They ask for feedbacks to maintain a good customer-company relationship, to know about the
demands of the consumers, and working towards customer satisfaction. Vodafone has a great
customer relationship (Firoz Suleman, Rashidirad and Firoz Suleman, 2019). In addition, it is
more into quality products and not into quantity services.
4. Diversification-
This segment talks about entering into a new market with new products or services and applies
this to existing customers as well. To establish in a new market there are things which are
important more than the product and services. And for that the company needs expertise. The
tech support is very important in this section as the new market will come up with many new
things and sort those out team must go strong technologically. Vodafone is technologically
advanced and has a huge experience of connecting a new market.
Task 2
VRIO analysis
Valuable –
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It is about the resources and if t is valuable to the Vodafone. The resources include financial
resources, marketing resources, human resources. These resources are valuable to the
organization. These value ad to the smooth running of the business and ensures the desired
outcome along with the profitability.
Rare –
Some valuable resources are rare and costly to incur. The organization has to identify those and
take the necessary steps to mitigate the problem. Today's telecom market facing more and more
completions in term of data services as more and more companies are catering data at a lower
rate. Vodafone needs to control the resource acquiring process to control the cost as it can prove
dearly to the end consumer (Ghezzi, Cortimiglia and Frank, 2015).
Costly to Imitate –
Disruption is the main threat the telecom industry is facing at present. Competitors are coming
up with new and innovative products so imitating some existing product by the Vodafone can
prove the dearly. They need to introduce overhead and innovative fresh product to retain the
customer base by entertaining them with more an more cost-effective buying option'
Organizational Competence and utilizing most of the resources–
The company needs to measure how much they can harness the valuable resources and still stay
in the completion with cost-effective prices. The Vodafone needs to be more exploited in terms
of the airing of valuable resources. They need to control the vendors more aggressively to stay in
the competition by delivering cost-effective priced services to their customer (Knott, 2015).
Also, the organization needs to utilize most of its resources to the full. This is to be done
effectively to have an edge over the competitors for pricing of the products.
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Strengths of Vodafone
Vodafone is one of the leading telecom company all over the world. They have several strengths
in their favour to d the business very smoothly (Mathooko and Ogutu, 2015). These strengths
help the Vodafone to protect their market shares and also it helps to penetrate into the new
market and claim market share there too. The company also has the largest pool of highly
satisfied customer all over the world. It has collaborated with a number of technology companies
to deliver the finest technical expertise to their consumer. Their highly skilled workforce adds to
their value in the market and made them a successful organization. They also have successful
track records of introducing new innovative products to the customers. They gain expertise in
entering a new market and claim market share there in just a few time span. Their funding is
strong enough to support any given new venture.
Weakness of Vodafone
Weakness is the areas where Vodafone can improve upon. The strategy is about making choices
and weakness are the areas where an organization can improve using SWOT analysis and build
on its competitive advantage and strategic positioning.
Every organization has some weakness in doing business in some specific areas. Overcoming the
weakness using the swot analysis is the main aim. And the weakness is successfully overcome
then it is very likely that the organizational growth would take a nice pace. Vodafone also has
lots of weakness such as Vodafone lacks the expertise in moving to their segment of business
except their own product. They are also unsuccessful in integrating small firms which they
acquire as they lack the management in coordinating between different cultures (Mungai and
Ogot, 2017). Also even when a product by the Vodafone is positioned rightly still they lack in
selling the USP. Also, the company lately is not able to tackle the challenges which have been
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put forward by the new entrants in the market. Also, the company has a high attrition rate which
is costing the company dearly.
Task 3
Porter’s five forces model
The Michael E Porter develops this model in 1979. The model is concerned with competitive
position analysis of any business. Competitive intensity and attractiveness in the market are
making the base concept of this model. It shows the power of a business.
The five forces are –
1. Supplier power- the supplier has great power. If a buyer has strong bargaining power then the
supplier gets the opportunity to supply high priced product and the other possibility is to low
quality raw materials to their buyers. This situation affects the buying farm in their profits and
there are several reasons for that. A supplier has bargaining power only when few suppliers but
more buyers, the cost of switching the raw material is far more costly, a few substitute raw
materials exist (Phadermrod, Crowder and Wills, 2019). However, Vodafone is a strong cost
leader which operates in higher margins than its competitors so it can manage with the price
high. S Vodafone is high ranged company this is not a threat for Vodafone.
2.. Buyer power- when a buyer has strong bargaining power, it is their right to ask for a low
priced product or high-quality product as per their choices. It does not mean the buyer will
accept the low-quality product but the revenue should be lower for the producer of the product.
This goes strong hen there are a few buyers, they have many substitutes, and buyers are price
sensitive. But the market buyer scan says that the Vodafone can maintain the above average
profits.
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3. Competitive rivalry- there are many competitors in the market. There is increasing
competition. This increases when the number of competitors increases, the growth will go slow,
low customer loyalty etc. In this section, no other company can compete with Vodafone
(Schawel and Billing, 2018).
4. The threat of substitution- This is a big threat for every company. For example, if a person
can find a better quality product at a lower price and it hardly takes anything to switch is a big
threat. This substitution is a threat to all companies. Vodafone has a low threat on it. The cost
leadership strategy makes the Vodafone string enough that it's difficult to be substituted by a new
company.
5. The threat of new entry- this determines how easy or hard it is to get into an industry. It is
very important to make a few barriers for the company because otherwise if there are
competitive companies the share profit will definitely decrease. This problem is high when the
government has no regulation on it, products are mostly the same, low amount of capital is
needed to enter that industry etc (Vargas-Hernández and Garcia, 2019). This is a threat always.
Moreover, for that, the company must look up to the costs and should reduce it.
Balanced scorecard
According to the writer Peter Drucker, what gets properly measure gets properly managed, and
when a project is properly managed it is considered done. one can manage which he can't
measure is the simple logic according to him. The balanced scorecard is such a measuring tool of
a typical organization's performance against the set goals and objectives. This tool is the final
measurement of what is done and what needs to be done. It blends the financial measure with the
operational measure and tells what action has been already taken. It also identifies the factor
which is going to influence future financial factors.
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The major objective of any multinational company is to save money wherever is possible. Most
the Vodafone business includes the merging of several organizations in different countries. One
of the biggest merges can be referred to the acquiring the Hutchison Essar of India (Widya
Yudha, Tjahjono and Kolios, 2018).
FINANCIAL PERSPECTIVE
the way a stakeholder views an organization is the first perspective of the balanced scorecard of a
company. In the year 2010, the ROCE for the Vodafone Plc was 4.33% in comparison to 4.7% in
2009. Vodafone's leading rival, the Deutsche Telekom Ag which is a German Telecom company.
Their ROCE of the year 2009 was 4.19% in comparison to 4.96% in 2008. The shareholders of
the Vodafone plc are going to be concerned as Vodafone's ROCE percentage is falling behind
their competitors. Both the Vodafone and the Deutsche Telekom is going to be disappointed as
the return will e declining, that means reduced growth along with decreased efficiency.
CUSTOMER PERSPECTIVE
The customer perspective is like how a typical organization identifies its probable customer.
Researchers Kaplan and Norton (1996) said that "customer perspectives a thing that enables
companies to attract their customer outcome measurement – loyalty, satisfaction, retention,
profitability and acquisition – to target the customers and the market segment. This also lets them
measure and identifies the value propositions which they are going to deliver to the target
customer and the market segments (Bull et al. 2016). Value propositions are representing the
essential drivers, for the measurement of the core customer outcome.
INTERNAL BUSINESS PROCESS PERSPECTIVE
The third of the four perspectives is the Internal Business Process Perspective, which is, at what
processes should the organization excel?
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This perspective educates an organization about which of the process it should be excelled the
most. The measures and the objectives for internal business perspective came from the strategies
for meeting shareholder expectations. The perspective asks "what does one need to rectify within
their business to make it sure that they deliver value propositions to the market needs.
Task 4
Bowman’s Strategy Clock
There are many models that help to understand the companies their position in a market. Cliff
Bowman and David Faulkner develop it.
1. Low price and low value-added- this is a strategic position where a company can hold its
price lower than the rest of the companies to compete with contemporaries in the market. The
low price of the product and the services and the missing form of the product and services
decreases the value. It is not the most competitive framework.
2. The low price-the company who follows the bowman theory always end up having good
profits. When a company process product more and the services get developed the sale increases
in a way. However, the lower price somewhere leads to the term loss but due to huge outputs, the
loss is replaced by profits (Coussement, Lessmann and Verstraeten, 2017).
3. Hybrid- This is a good positioning strategy. It involves some services at a low price but there
goes some differentiation related to the product. This strategy is basically to make people
understand that, the value of services will be good if they accept the product differentiation
4. Differentiation – this differentiation strategy is a very strong strategic way. This offers good
benefit services where branding, promotion, marketing plays a huge role as well as the quality of
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