Vodafone Business Strategy: A Comprehensive Analysis

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Business strategy 1
Business strategy

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Table of Contents
Introduction....................................................................................................................................................3
Background of Vodafone...............................................................................................................................4
Task 1: External environment........................................................................................................................4
Impact and influence the macro environment on Vodafone......................................................................4
PESTLE.....................................................................................................................................................5
Ansoff matrix.............................................................................................................................................9
Task 2: The internal environment and organization capabilities.................................................................11
Strategic capability means.......................................................................................................................11
VRIO analysis for Vodafone...................................................................................................................11
Strengths and weaknesses of Vodafone...................................................................................................14
Task 3: Analysis of telecommunication industry.........................................................................................15
Competitiveness of UK telecommunication sector..................................................................................15
Porter five forces analysis........................................................................................................................16
Task 4: Strategic direction and option.........................................................................................................18
Strategic management plan......................................................................................................................18
Conclusion...................................................................................................................................................23
References....................................................................................................................................................24

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Introduction
The primary purpose of this report is to elaborate and explain the external environment of
Vodafone that affects the revenue, growth rate and profitability of the company. For this
purpose, PESTLE analysis and Ansoff matrix will be discussed in the task briefly. Additionally,
the paper will discuss and highlight the role and significance of strategic capabilities and
resources. Vodafone Company will be taken in the task to explain and depict the business
strategy in the international market. VRIO model, strengths and weaknesses of Vodafone and
porter five forces analysis will be presented in the task briefly. At the end, strategic management
plan will be elaborated in the paper briefly to produce a valid strategic direction and option.

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Background of Vodafone
Vodafone Group Plc. is a biggest and growing British multinational telecommunications
corporation that was incorporated in 1991. It is one of the biggest telecommunications
corporations rendering ample of services to both customers and enterprise consumers as well.
The firm provides mobile, TV and fixed services to the customers across the world. The main
aim of the company is to differentiate itself from the rivalries through constant investments in
superior and effective network infrastructure, global brand and rendering an effective customer
experience and leveraging the advantages of global scale. The firm operates and manages in a
rapid changing technological industry where innovation and scale are effective and unique form.
The sustainable business approach aligns and integrates with commercial and common goals and
objectives with a clear and effective social motive to generate a long term worth, value and fulfill
the customer requirements and needs. The marketing environment for Vodafone to conduct
business activities and operations is becoming more optimistic and positive (Vodafone, 2019).
Task 1: External environment
Impact and influence the macro environment on Vodafone
A macro environment is the situation that occursin the economy, rather than in a particular sector
or region. The external factors are irrepressible that affect Vodafone’s decision making and

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influence its approaches, strategies and performance. These components entail political,
economic, socio-cultural, technological, environment and legal(Davies and Oreszczyn, 2012).
The macro environment that affects the business activities and operations of Vodafone positively
and negatively that is discussed below.
PESTLE
Political factors: It is stated that UK is a constitutional monarchy that survives and runs under
the influence of a parliamentary system. Thus, UK is deemed to be a fair, effective and stable
country with ample of opportunities for those managing and operating within and the nation as a
whole (Laursen and Salter, 2014). The current corporation tax rate for the firm profits is 19%.
However, the government declared a decline to the corporation tax at budget 2016. The positive
and negative affect for Vodafone include:
Positive
 Active government and politically stable.
 Relatively fair and effective country with the public having a wide effect on the inner
workings. These positive conditions help Vodafone to conduct business functions and
operations successfully and effectively.
Negative
 There is high and immense corruption in the country that will affect the growth rate of
Vodafone.

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 Brexit is another challenge for Vodafone that hampers the profitability and image of the
company adversely.
Economic factors: The economic condition of UK is strong and effective. For instance, the UK
is the 5th biggest economy in the globe measured by nominal GDP. The GDP of UK was 2.62
lakh crores USD (2017). Therefore, it has a unique GDP and diverse economy that help in
increasing revenue and profitability of Vodafone internationally (Williams and Figueiredo,
2014).
Positive
 The country has 5th greater GDP across the world and it has diversified economy.
 Maximizing foreign direct investment leads higher revenue and returns for Vodafone.
Negative
 Economic recessions and high inflation, inflation rate rose to 3.1% in November 2017 as
it hampers the brand image and operations of Vodafone negatively.
Socio-cultural factors: The socio-cultural elements also affect the business initiatives of
Vodafone positively as well as negatively. For example, UK is one of the top 10 countries
apparent to have the most qualified population across the globe (David, 2019). Hence, high
social standards, dynamic culture and vales lead to better and effective all round situations for
the company. The positive and negative elements include:
Positive

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 High and effective standard of living.
 Several free public services, thus, the company can increase number of customers in the
UK by analyzing and identifying the buying behavior and needs of the customers (Kolios,
and Read, 2013).
Negative
 High education costs
 Growing and high dependency ratio
Technological factors: It has been studied that UK is one of the biggest technologically
advanced and innovative countries across the globe. The country is developing and enhancing
new technologies to render the excellent solutions for their clients (Bush, 2016). There are
several positive and negative factors influencing the operations of Vodafone:
Positive
 Quality innovation talent, skills and knowledge
 Ample of internal competition to motivate and stimulate success and progress
Negative
 Slow and poor technological development in comparison to the United States.
Environmental factors: The several environmental factors affect the financial image and
reputation of Vodafone positively and negatively as well. Some of positive and negative affect
include the following:

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Positive
 The government and local councils have taken ample of initiatives and actions to create
environmental awareness and minimize the adverse impact of economic growth and
progress on the environment (Bush, 2016). Thus, the environment is favorable for
Vodafone to conduct business successfully and dynamically.
Negative
 The UK encounters challenging and serious weather conditions. Climate change is
another issue that will be dealt by Vodafone while implementing the business widely.
Legal factors: It is a final element that needs to be examined and analyzed by Vodafone before
implementing the business initiatives in the UK (Uddin and Boateng, 2011). Some of the
examples of legal elements are presented below.
Positive
 The Government of UK has made several laws like employment act 1996, minimum
wage act and the equality act 2010. These laws protect the rights of the workers and
safeguard people from any biases and discrimination at Vodafone.
Negative
 Sometimes, the Vodafone is failed to abide these laws and rules due to high pressure.

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Ansoff matrix
The main purpose of the Ansoff matrix is to provide help and assistance to executives, marketers
and senior managers devise approaches and strategies for future development and growth
(Hussain, et al, 2013). The Ansoff matrix of Vodafone includes the following strategies:
Market penetration: Vodafone uses this strategy to penetrate the global market for selling the
social product. Under this strategy, existing product like social product is marketed in a manner
to boost the market share of the company. Moreover, the company has to do is to maximize its
marketing endeavors and enhance on its market share. Currently, the company is not positioned
under this strategy.
Market development: Under this approach, the corporation tries to expand and explore into new
and innovative markets with their existing products like TV, internet and mobile. This approach
is appropriate for the companies that have the capabilities and resources to enter new markets.
For example, Vodafone entering African markets where these innovative markets are yet to be
selected for social products and where the company can leverage their existing professionals and
expertise to enter these markets (FrengSvendsen, et al, 2011).
Product development: Under this strategy, Vodafone seeks to launch new products in existing
markets. This tactic can be effective and useful when the company has already set themselves in
the existing markets and all that they need to do is to introduce new product, which leverage the
brand reputation and value in the competitive market. For instance, Vodafone launches new

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mobile and social products in existing markets; they have the benefit of an effective and strong
brand value which will help the company to gather and maximize market share (Davcik, and
Sharma, 2016).
Diversification: Diversification strategy is a method of growth approach which helps the
company to grow and survive. It opens up new and innovative possibilities for the firm. By
implementing this strategy, the company not only diversifies its products rendering in the target
markets but also explores its business horizons. It is studied from the above analysis that
Vodafone is currently strategically positioned under this strategy to increase and enhance the sale
of social products because Vodafone in UK is perceived as offering excellent value and this
supported them to augment market share when they diversified into new market. The company is
entering into the new markets like Africa and Asia pacific by optimizing diversification approach
(Chen, et al, 2014). This approach is suitable and used by the firm because Vodafone operates
and manages business in Asia Pacific, Africa, and Europe that contributes 32% of the total
revenue and returns. The organization has partnership agreements with local mobile operators in
more than 58 markets and is managing through a joint venture in mobile networks market in
approx 26 countries. Vodafone reaches to its wide range of clients through ample of channels
like Vodafone stores, third party retailers, retail outlets, third party retailers and online medium
(Bhasin, 2018).

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Task 2: The internal environment and organization capabilities
Strategic capability means
Strategic capability may be explained as a business ability to harness all its talents, skills,
abilities and resources in order to attain competitive benefit and therefore thrive and maximize its
value over time. The capabilities of Vodafone include the following:
 The company’s wire line services are backed by a state of the art network infrastructure
entailing of over 140,000km of strong fibre backbone, around 400PoPs spread around
business clusters across the nation and a network operations center for 24*7 performance
management. It is one of the significant capabilities of Vodafone.
 The wire line network is developed and enhanced hierarchical ring architecture
comprising of super cores and regional cores that enable maximum or greater network
redundancy. It is another capability that possessed by Vodafone (Tiwari, 2011).
 Due to its strong and technological innovation capability, the company has further able to
set itself at a good universal route, consistent customer relationship management and
achieving high operations margin (Vodafone, 2019).
VRIO analysis for Vodafone
In an attempt to analyze and measure Vodafone’s internal capabilities and effectiveness, top
management uses the VRIO analysis which questions the value, rarity, limitability of each and

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every capability and whether it is formulated to exploit. VRIO analysis for Vodafone has been
discussed below:
Resources and
capabilities
Valuable Rare Costly to
imitate
Formulated
to exploit
Impact on
competitive
benefit
Access to capital Yes No No No Understood
competitive
parity
Network
competence/
capability
Yes Yes No No Comprehended
temporary
competitive
benefit
Brand equity Yes Yes Yes Yes Sustained
competitive
benefit
Financial
resources
Yes No The financial
instruments
are available
to all of the
Sustainable
financial
position
Momentary
competitive