Vodafone: Analysis of Resources, Environment, and Competitive Forces

This report provides a comprehensive analysis of Vodafone's business strategy, examining both internal and external factors that influence its operations. The introduction highlights the importance of understanding the business environment, particularly in the telecommunications sector. The report then delves into Vodafone's internal resources and capabilities, utilizing the VRIO framework to assess their value, rarity, imitability, and organizational aspects. This analysis reveals Vodafone's strengths, such as its financial resources, employees, distribution network, and patents. The external environment is evaluated through a PESTLE analysis, considering political, economic, social, technological, legal, and environmental factors impacting Vodafone's performance. Furthermore, the report applies Porter's Five Forces model to assess the competitive landscape, including the threat of new entrants, substitutes, bargaining power of suppliers and buyers, and rivalry among existing competitors. The conclusion summarizes the key findings, emphasizing the significance of these analyses for Vodafone's strategic decision-making and competitive advantage.

STRATEGIES,
ENTERPRISE AND
INNOVATIONS

Table of Contents
a) Introduction of the report.............................................................................................................3
b) Analysis of the firm’s internal resources and capabilities...........................................................3
c) External environment (PESTLE ANALYSIS)............................................................................5
d) Porter's Five Forces Model..........................................................................................................6
e) Conclusion...................................................................................................................................8
REFERENCES................................................................................................................................9

a) Introduction of the report
Business Environment consist of both internal and external factors, which influence an
organisation's working process (Orlando, 2016). Telecommunication is the transmission of
information or exchange of information from various types of technologies over wire radio,
phones or other electromagnetic system. In present report, organisation that has been taken into
consideration is Vodafone. Basically, this company is a multinational telecommunication
company and it is registered and headquartered at Newbury, Berkshire, England. Vodafone
started in 1982 with the establishment of Racal Strategic Radio Ltd subsidiary of Racal
Electronics, the UK largest market of radio technology which is formed a partnership which is
present Vodafone share. Including this, report will be focusing on capabilities and internal
resources that give the organisation a competitive advantage. Also, key drivers to change will be
analysed considering PESTLE Analysis. Lastly, Porter’s Five Forces framework will lead
Vodafone to gain competitive advantages and capture the larger market at international level.
b) Analysis of the firm’s internal resources and capabilities
A company should use its resources effectively and efficiently to be successful in its
operations. The resources should be managed properly herein to check the utilisation of
resources by Vodafone, VRIO Framework is applied (Kerl, 2018). VRIO Framework is an
internal analysis tool which helps organisations to protect and uncover their resources that give
competitive advantage. It has four questions that include value, inimitable, rarity and
organisation. The VRIO Framework of Vodafone for analysing its internal resources and
capacities are discussed below:
RESOURCES VALUE RARE IMITABLE ORGANISATIO
N
Financial Resources YES YES YES YES
Employees YES YES YES -
Distribution Network YES YES -
Patent YES YES YES -

Value
If the resource adds value to the customer, then it is valuable resource.
 Financial Resources: These are highly valuable as this help to grab the opportunities as it
arises. In case of Vodafone, are highly valuable as they invest in the external projects and
combat the threats.
 Employees: Employees are the asset for every organisation. In Vodafone, the employees
are highly trained and work effectively which leads to competitive advantage in the
industry. There employee retention ration is also high which is a positive sign for
company.
 Distribution Network: This shows how the company reaches it customers. Vodafone has
valuable distribution network and reaches every customer which boost its sales. Patent: Patent helps company to sell through its name and gain competitive advantage. In
case of VRIO, patent is a valuable resource (Crutchfield and Peterson, 2016).
Rare
Resources than are few and can be acquired by less companies are rare resources and they
provide competitive advantage. The resource that is valuable as well as rare provides competitive
advantage in short run.
 Financial Resources: Vodafone possess strong financial resources which are seen only in
few companies. Not every company can have such strong financial resources, it takes
time to build them.
 Employees: In Vodafone employees are highly trained and get good compensation also
there is good working environment because to which the absenteeism rate is low there
and this shows employees of Vodafone are rare.
 Distribution Network: The competitors would take time to come up with some better
distribution network. According to VRIO Framework, Vodafone's distribution network is
rare (Ang, 2016). Patent: These patents are not easily available to competitors. This shows patents used by
them are rare resource because of which they are getting competitive advantage. Also
there is need for a lot of investment to create better distribution channels.
Imitable

Imitable means are the resources easily copied, or it is difficult to copy. If the resources are not
copied easily or a lot of money is required to copy the resources than it gives competitive
advantage. The resources that are valuable, rare and also difficult to imitate provide competitive
advantage.
 Financial Resources: Financial resources are acquired after so many years in practice.
Vodafone has acquired such profits and losses after so much of hard work which are not
possible to imitate and everyone has their own financial resources. The financial
resources are costly to be imitated (Bregu and Shosha, 2019). Employees: The employees of Vodafone are highly motivated and work effectively for
the organisation but it is not costly to imitate them as every organisation provide training
and keep the employees motivated. So, it is not costly to imitate the employees of
Vodafone.
Organisation
Organised management is required by every company because without organisation of internal
management the company can't achieve its goals.
 Financial Resources: The financial resources of Vodafone are organised as they plan
before using their money they use strategies to invest money and grab the opportunities
while combatting threat. They have competitive advantage over others.
c) External environment (PESTLE ANALYSIS)
In order to analyse the external environment of Vodafone. Pestle analysis is a driver that
help to analyse the external environment of the business. It is a tool that help to analyse the
performance of the company and how the external environment (macro) affect the business
company.
Political Factor: Political factor is a factor in which government interfere the economy.
Political factor includes tax policy, environmental law, political stability, trade restriction.
Throughout the years Vodafone face competition in Spain and Italy. The political factor affects
the company revenue and probability of the business because of levy taxes. The company made
proper policies and procedure for political environment and made provision for taxes that it was
not made a burden of company and company profit (Kresak, Corvington and Williamson, 2016).
Economic Factor: Economic Factor that influence the performance of individual status.
They include education, income status, and income. Vodafone company prepare and make vision

and strategies for effective plan for customer. The main focus of the company is to modify the
cost of digital technologies and give competition to his competitors and take advantage to
capture the larger market share.
Social Factors: Social factor is a factor that affect the consumer behaviour specially
these affect the Culture of the individual and group, social class and reference of the
organisation. They change lifestyle as well as preference of the customer. Vodafone provide
fastest speed internet to attract more and full fill the need and desire of the customer. Growth and
demand of higher speed of internet important for all sectors of people such educational sector, e-
commerce companies, IT company’s backgrounds. So, Vodafone capture the large market share.
Technological Factors: Technological factors is used for evaluating available
alternatives. Vodafone is telecom brand it plays a key role as a service provider. The company
has made different internet plan according to the different types of consumer need and wants
according to the consumer paying capacity. Vodafone provide website and application to the
customer and in this website and application provide various facilities like selecting internet
recharge plan, online payment facilities to the customer. Overall there is a promotional technique
to attract the customer (Boateng, 2016).
Legal Factor: Legal factor is the factor that affect the external environment of business.
Legal environment has some code of conduct that affected the business organisation. Vodafone
company has charge heavy tax amount on customer internet plan.
Environmental Factor: Vodafone is connecting over 650 million and various
organisational and different market has different norms and structure but the mobile networking
tower radiations affect the human as well as environment also. If the company does not take any
action for harmful radiation company is closed is very soon. So, Company need to take
precautionary steps.
d) Porter's Five Forces Model
By acknowledge of Porter's five models, Vodafone group PLC will be able to identifies
its competition over opportunities by analysing its strength and weakness and shape a solution
to overcome with these factors which hinders the performance of company’s growth. Porter's
five forces model can be acknowledging from below factors in relation to Vodafone:
 Threat of new entrants: This force causes impact on the market share of existing firms,
how entrance of new firm can affect profitability of existing firms by providing

product/service according to demand of customers and establish new market economies.
Threat of new entrance is quite low in telecommunication industry as it is not easy to
overcome the competition of global firm like Vodafone in this sector which require huge
investment and capital power however, chances are low of new entrants but not nil, in
this context Vodafone must build pillars for its prevention, also by being more service
oriented rather than product oriented (Yadav and Gupta, 2020).
 Threat of new substitute: Availability of substitutes in a global market can causes
threat for the firms whose motive is to retain their customers for long term, substitutes
creates a pool of options for customers which makes them ready to shift their demand in
very short period. Threat of new substitutes in telecommunication department is
moderate due to other competitive firms providing same services with extra offers and
schemes. In respect with Vodafone, its competitors provide some valuable services for
example, DOT is providing initialising of operators without any licence and other
broadband connectivity, Vodafone need to overcome this threat by improvising their
services with low cost margin also understanding the core need of its customers.
 Bargaining power of suppliers: Every industry buys their raw materials from their
relevant suppliers which may make their bargaining power high in terms of increment in
cost which automatically leads to rise in cost of output. Bargaining powers in respect
with Vodafone, due to its wide expansion in market and a reputed image reflects low as it
has number of suppliers because of the fact that telecommunication industries choose
their suppliers carefully, in this industry fight amongst the suppliers are always an
advantage for buyers so that they could not high their cost otherwise company will shift
to other suppliers and loss will be borne by them however, uncertainty may arise in every
business concern, for that to tackle the situation Vodafone must maintain its chain of
supplies and be flexible in acceptance of changes (Matos, 2016).
 Bargaining power of buyers: Consumer always want money worth satisfaction and
demand for more in less price. Which make them ready to shift their demand for low
price product, here is an exception of this fact that some customers are more focused on
quality rather than price. Bargaining power of buyers in telecom industry is high as many
other telecom departments provides same services in low price. In respect with Vodafone,
buyers often seek for changes and innovation this will make their power high, to maintain

this power in favour of the company it should offer discounts and extra benefit services to
attract more customers.
 Rivalry among existing competitors: In this growing market, every business facing
competition in different aspects which create heavy impact on profitability of the
company. Telecommunication sector facing a large competition due to small number of
market shares. In respect with Vodafone, many competitors challenge them in terms of
revenue and services offered such as EE, British Telecom as per analysing their data in
past years, they are on their way to high growth (Alva and Bhat, 2018). Vodafone needs
to upgrade its strategies by focusing on huge market rather than small ones and
innovations in output is also must for customer satisfaction.
e) Conclusion
It can be concluded that external factors have a significant impact on every company as
to survive and perform good, it is important to check these factors and work with keeping these
factors in mind. Vodafone is successful as it always keeps track on its external factor's by doing
PESTLE Analysis, Porter's Five Forces Model and VRIO frame work.
After analysing through VRIO Framework it can be concluded that financial resources
and distribution network provide Vodafone a sustainable competitive advantage. Patent are also
helping in gaining competitive advantage and the employees are providing a temporary
competitive lead as they can be copied by others. Vodafone is a multinational company that deals
in telecommunication but there have some technological, political, legal, social and economic
factors that affect the business of Vodafone internally and externally and government has also a
major influential role in Vodafone business environment. With the study of porter's five forces
model, it is concluded that these 5 forces have a huge impact on organisations growth in terms of
customer satisfaction, competition, size and contribution of market. Vodafone must ensure these
factors while making any further move in order to attain productivity and profitability

REFERENCES
Books and Journals
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Operations Management, 15(4), p.46.
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