Vodafone Group Plc Competitive Analysis - Case Study Example

VODAFONE GROUP PLC REPORT Name: Institution affiliated: Date of submission: Tutor: Introduction The business World has always been the most dynamic in terms of the events and activities that take place each day, each hour, each minute, each second and every single millisecond. It is such changes that some investors take advantage while some others are taken advantage by the changes. The electronics and software industries have experienced a wide range of changes that have seen some companies grow in reaps and bounds, overtaking former global giants while others have lagged behind and have been overtaken by the chain of events, literally. Vodafone is a public multinational company that deals with communication and information technology. Vodafone was founded in 1982 by Eduard Racal Millicom and was by then known as the Racal Strategic Radio Ltd. Having been founded at this time, Vodafone was incorporated in 1985 as Racal-Vodafone Holdings Ltd. It was however, not until October of 1988 that Vodafone as listed in the London’s Stock Exchange where the managers floated 20% of the shares to the public. Vodafone has its headquarters in London in the United Kingdom and has its products being sold worldwide. The company usually provides telecommunication services like mobile telephony, fixed lines, digital television and internet services. Currently, the company employs a total of 92,812 employees around the world as of the report produced by the company at the year ended 2014. In terms of its revenues for the year ended 2013 and the number of subscribers to the company’s services, Vodafone ranks second as companies in the World with highest revenues behind China mobile [Vod141]. Reports, however, indicate that the company has been underperforming, judging by its previous revenues and in comparison to its competitors in the mobile telephony market. Such performances are triggered by weaknesses in the company, threats and opportunities that the company fails to deliver. This could also be as a result of the company failing to capitalize on its strengths that have previously worked out well for it. The financial reports in the recent years show varying returns. The returns are, however, on an almost constant margin. Taking for example, the net sales for the years between 2010 and 2013, the minimum returns were 38,041,000 and the maximum figure was 38,821,000 (all figures in Euros). The difference in net sales is around 500,000. Having such figures for the company makes it pleasant for the shareholders making it possible for them to allow the directors to expand the business given that is an increase in demand for the growing market. However, the company underperformed in almost all sectors in the year 2014. Revenues collection from sales and other activities dropped down from to € 43.60 billion, net income also dropped to €-3.91 billion. A revaluation of the company’s total assets also showed a drop to €121.84 billion. The total shareholders’ equity amounted to €70.80 billion, a drop from the previous financial period. Given such trends in the markets it is advisable for the management team of the company to understand the weaknesses in the company that resulted in such poor performance and found ways to improve. The managers should also exploit and capitalize on the strengths of the company by understanding the activities that provided for the best revenue returns and provided for more funds and research programs to help improve the activities and the returns from such activities. It is however important to note that there was an increase in profits for the company between 2013 and 2014 as the profit stood at €59.42 billion [Vod14]. Competitive analysis The emergence of new companies in the communication and information technology sector has increased the competition that Vodafone has especially in its operations within Australia. Such companies include Telstra and Optus. The products and services from Vodafone are more appealing to the consumers since they develop products that go beyond customer satisfaction by enhancing value creation for the customer. The customers of these companies have thus developed confidence in the products, the brand names and the companies that develop these products. It has enhanced customer loyalty by locking in these customers to the products that become difficult to convince them that any other brand can satisfy their needs [Ste071]. Vodafone has made mergers to build up strong and bigger cartels, which help them to reach more consumers in their quest to supply their products and services. Mergers take place when two companies come together to become a single entity. Acquisitions are whereby a company takes over the other company, its services and processes and completely changes them to become the owner of the business [Nel01]. Some of the competitor companies of Vodafone have also been making mergers; thus, they have been able to increase their base making them as competitive as Vodafone. With such a competitive advantage, Vodafone is on the losing end since some of its customers are likely to move to the other companies [Fin10]. Given that there is a wider reach of the market for companies which have merged, companies like Vodafone should consider increasing their mergers and acquisitions to increase their market base as well reduce the competition that they face. Among the notable mergers by Vodafone include AirTouch Communications in 1999 and Bell Atlantic Corporation in the same year while acquisition made include that of Talkland in 1996 for £30.6 million Operations and marketing strategies Porter developed the generic strategies to involve three strategic options that businesses should apply in order to increase their competitive advantage over the other companies. The strategies are cost leadership, focus, and differentiation [Por03]. Cost leadership involves the need that a company has to reduce its prices and make them cheaper while at the same time ensuring that they are not recording losses in the company. The company thus has to provide for services that are cheaper than those of their competitors to help maintain the competitive advantage that the company has over its competitors. Differentiation is done to the products and services to provide a distinction between them and those of the competitors. The strategy is done by the corporation to provide the need to differentiate its products and services to ensure that they are uniquely desirable by the consumers. As a result, the products and services achieve a target market of their own or reduce the demand of the products and services from the competitors. Finally, focus involves the need for businesses to offer products and services that distinctly serve a given market position that would face reduce competition from the competitors. The focus strategy can however be split into two strategies to cover either the cost focus strategy of the differentiation focus strategy each of which could be taken up distinctively by the business depending on the management [Mic082]. Porter’s strategies are vital to Vodafone as they provide a strategic design for companies in the strategic management exercise. It is, however, reasonable for the business in question to only take and focus on one strategy in detail in the generic strategy. When considering the cost strategy, the business should focus fully on cost reduction technique. That is achieving maximum possible profits and revenues from the products and services [Mic13]. When a business sets to focus only on the differentiation strategy for their products and services, they should set to gain a competitive advantage over their competitors. However, in a consumer driven market, unlike the monopolistic type of market, it is impossible for the consumers to focus only on differentiation strategies as it may cost they a lot of finances which would force them to increase the cost of the products and services to recover the funds used for the purposes of differentiation. In such a case, the differentiation strategy is not sufficient thus they should also consider cost leadership as they focus on the differentiation strategy to ensure that the new products and services are affordable to all players in the niche market. The issue of diversification should be developed after a thorough research for the company to bring out a strong financial performance. The decisions on diversification should be mad where the risks posed by the strategies are low and the chances of failure are more or less non-existence [Ric093]. Customer value preposition and governance Improved consumer service among other strengths that Vodafone enjoys will aid them to enhance their financial performance through growth. The company has been keen to respond to the different unique preferences that the consumers loyal to the organization pose to them. The consumers will in most cases be concerned of about the quality of products and services that the company offers. The organization with the best combination of such consumer wants and preferences is most likely going to win their loyalty. In order to keep the consumers loyal to the organization, the company should encourage innovation to establish new services to encourage repeat customers [REr09]. There is an increase in new markets as the world continues to take a bold step to make it a global village. Many of the companies are trying to win over the loyalty of the consumers in the new markets. New products are increasingly being produced that are more efficient in terms of the performance and the type of services that they produce. Some areas in the World are never reached by some of the services that are offered by the large companies, yet such areas stand as potential markets for the products of such [Jok05]. These include the remote and emerging markets brought up by recovery from wars and natural calamities and other brought about by politics due to succession. The different distribution channels offer different options depending on the distance from the stores. Some of the channels are cheaper than others. The managers of the competing companies have created an online platform where consumers can transact online. It helps increase Vodafone’s profitability since more customers are easily reached by the online services. Vodafone has managed to set up any online platform for transaction purposes, thus making it increase its competitive grip in the market [Pet12]. Research and development is another of the important customer values that the organization considers in its daily activities. It is so since Vodafone has invested fully in the most advanced technology which allows them to improve the quality of their goods while at the same time reducing the costs of services. Research and development has also allowed the company to provide better quality services than those made by the competitor companies. The pricing of services is vital in any market. Vodafone should understand that consumer always go for the cheapest but most quality products and services, thus they should ensure that they reduce the prices set for their services while at the same time maintain quality [Dav11]. Marketing research provides businesses with a broad picture of the performance of the products that they provide to the public. Marketing research should also be promoted as it provides the researcher with the specific information that is required to assist in addressing the issues and methods that determine the processes used to provide for the good and services available. Marketing research is a set of processes set by a given company to help link the consumers of the company’s product to the marketer. The marketing research process provides the marketer with information that is used to identify opportunities that may arise in the market, the problems available and how to generate, refine, monitor and evaluate the performance of the goods and services for decision making purposes [Placeholder1]. The success of Vodafone is dependent on the management’s ability to innovate their products and services through a cost effective delivery line that is large and receptive to the market. Each department in the above chart has tasks and responsibilities which they perform in order to achieve Vodafone’s objectives and goals. The simple structure that Vodafone has adopted in Australia and other countries is very suitable for the services that they offer to their consumers. The structure can ensure that our employees understand the goal and that they are clear, smooth communication is enhanced and stability is assured. The realization of revenues is expected to increase both in the short run and in the long run as the consumers of the products and services realize the improvements that are continuously being made on them [Jos10]. Conclusion In conclusion, Vodafone should strategically apply their strengths on the opportunities and threats that they face to ensure that they face. The management of the company should ensure that they turns their stars into cash cows with time as a reduction in the investments made would mean that there would be more returns and as a result an increase in profits. The extra funds realized from the turning of the star into cash cows would be used to improve on the products that are considered to be either on dogs or question marks. A company may have higher sales revenues in the short run but if it fails to remain competitive, it is bound to be overtaken by its competitors. As companies are embroiled in cutthroat competition, new methods emerge in the business practice. New production processes also emerge as the companies try to reduce their costs of production while innovation changes each time a market player introduces new technology. As companies try to outdo each other, the biggest winner amidst these is a consumer as he benefits from higher quality products with improved functionality and better technology than ever before. REFERENCES Vod141: , (Vodafone PLC, 2014), Vod14: , (Vodafone group PLC, 2014), Ste071: , (Steinbock, 2007), Nel01: , (Nelson, 2001), Fin10: , (Sydney, 2010), Por03: , (Porter & Ketels, 2003), Mic082: , (Michael, 2008), Mic13: , (Michael, 2013), Ric093: , (Richard, William, & Peter, 2009, p. 55), REr09: , (Eric, 2009), Jok05: , (Joke, et al., 2005, pp. 6-7), Pet12: , (Peter & Susan, 2012), Dav11: , (Dave, 2011), Placeholder1: , (Suja, 2009), Jos10: , (Joseph, 2010), Read More