FUTURE CHALLENGES FOR VODAFONE - Essay Example

Vodafone will have to deal with increased completion in the near future as more telecommunication companies come up. To understand how this will affect the company in the next ten to fifteen years, it is important o look at the issues that have emerged in the last ten years. As William (2009) says, since the globalization of mobile networks ten years ago, it has become explicit that that every year that passes by the telecommunication industry is changing. Those companies that entered in to the industry in early 1990s no longer have the monopoly that they used to have in the past.

In the earlier years, licensing for telecommunication companies was very expensive and prohibitive for new and small entrants. However, this has changed and it is now easier for such companies to come up with a way to enter the market with minimum cost. This has increased the risk for bigger and older firms such as Vodafone and they are at risk of being drowned by the new entrants. In this regard, the main issue that Vodafone will be facing in the near future (by the year 2020) is the problem of increased competition.

This will be more so in the developing countries such as China and many African countries (McKenna, 2011). Vodafone has a number of networks in threes developing countries and these networks are becoming a major aspect of the Vodafone business and network. As these networks continue to be attacked by smaller newer networks, the firms will have a crisis by the time it reaches 2020. A good example is in Kenya where Vodafone owns forty percent of the largest telecommunication network called Safaricom.

While this Safaricom has been the largest and the most profitable network in the east African region, it has become very clear that the network is losing its mighty and power to newer and upcoming network. The network was launched in Kenya in the year 2003 and by the year 2006, it had managed to scoop over 80% of the telecommunication market share. It also had a very fast growing network subscription over the last ten years. However, this has been seen to change over the last three years. Subscriber loyalty has decreased and now more subscribers are more willing to go to newer networks.

This was not so in the past as more subscribers were loyal to the Safaricom network. The same is happening everywhere in places like China where the local telecommunication companies have grown very fast and are taking over the industry (Westen, 2009). As this continues, it will become very difficult for Vodafone to maintain its strategic leadership and this will become a very major issue for the firm. The other thing that has affected the firm is the reduction of licensing fees for telecommunication companies.

Many governments have realized that licensing many firms is a benefit to the economy as it increases completion and reduces monopoly in the telecommunication industry. As a result, the hefty licensing amounts that were charged to telecommunication companies in the earlier days are no longer there. In this regard, it has been easier for new and smaller telecommunication companies to enter the market and thus bringing more competition for the older and bigger firms like Vodafone (McGreggor, 2010).

Vodafone seems to be the most affected because it seems to not have prepared for such an eventuality. As Vodafone grapples with these issues in the short term, there are other problems looming in the long term. With the expectation that there will be a technological singularity by the end 2035, it is expected that the way people communicate will change over time. Personal computers are changing the way people co