Corporate Strategy of Vodafone Group Plc - Essay Example

?Corporate Strategy: The Company Project: Vodafone Group Plc Table of Contents Table of Contents 2 Task 3 Critical Analysis of the Current Success Strategy of Vodafone Group Plc 4 PESTLE Analysis 4 Porter’s Five Forces Analysis 7 Task 2 10 References 15 Task 1 Vodafone Group Plc is an international telecommunication corporation, which includes the world’s second highest number of subscribers. It is a multinational conglomerate which operates in more than 30 countries all over the globe. The name Vodafone was derived from voice datafone selected by the organisation in order to offer the customers the facility of voice as well as data services within the mobile phones. The head office of Vodafone Group Plc is situated in London in the United Kingdom. Vodafone Group Plc is the market leader in providing wide array of communication services including voice calls, internet access, video messaging and picture to its customers in order to assist them in fulfilment of their communication desires. Vodafone Group Plc mainly operates within Europe, Africa, Asia Pacific, the United States and Middle East with a total range of customers of 371 million (Vodafone Group, 2011). Vodafone Group Plc is a renowned organisation, which encompassed total revenue of ?45.9 billion along with profitability of ?7.870 billion in the year 2011 (Vodafone Group, 2011). Thus, it is one of the market leaders in this sector. The prime objective of Vodafone Group Plc is to offer various inventive products and/or services to its customers in order to cope up with their varied alternating demands and needs. This is extremely essential for Vodafone Group Plc to retain its market share and position in this global market. The paper mainly aims to critically analyse and evaluate the current strategy of Vodafone Group Plc in an efficient way with the help of PESTLE and Porter’s five forces model. Moreover, the vital role played by the resources and the capabilities are also observed in an explicit way, in order to determine the success of the strategy. Critical Analysis of the Current Success Strategy of Vodafone Group Plc Vodafone Group Plc is one of the reputed brands of the telecommunication sector as it offers variety of products such as handsets, Wi-Fi, GPS and Vodafone 360. This is because Vodafone Group Plc mainly aims to augment the life of the consumers with the help of exclusive power of mobile communique. For this reason, Vodafone Group Plc updated their business policies in the year 2010 and positioned itself by making alteration i.e. from ‘a stronger to a more valuable Vodafone’ (Vodafone Group, 2010). The strategies that have been altered include highlighting more on the key parts of development potentials, expanding into rising markets such as Ghana and Qatar, augmenting the value of Vodafone and thereby improving the revenue of the organisation (Vodafone Group, 2010). This specific strategy is undertaken by Vodafone Group Plc in order to enhance its growth and intensification along with overall profit. The strategy can be evaluated with the help of PESTLE analysis. PESTLE Analysis Political Factors Political environment is mainly associated with various rules and regulations, which offer high impact on the telecommunication services of a country. In recent era, the Foreign Direct Investment (FDI) rate enhanced to a significant extent in the economy of the United Kingdom that helped Vodafone Group Plc to enhance its brand equity and identity in the market. Moreover, it also helped Vodafone Group Plc in attracting more customers in the market of the United Kingdom, which facilitated the organisation to enhance its overall revenue from ?44.5 billion in the year 2010 to ?45.9 billion in the year 2011 (Vodafone Group, 2010). In addition, its operating profit also augmented from ?11.5 billion in the year 2010 to ?11.8 billion in the year 2011 (Vodafone Group, 2011). Other than this, augmentation in FDI investment also facilitated the company to enhance its total range of customers from ? 341.1 million in the year 2010 to ? 370.9 million in the year 2011 (Vodafone Group, 2011). In addition, the policy of 2G and 3G facility also enhanced the brand uniqueness of Vodafone Group Plc in data network sector as well. This depicts that implementation of the above mentioned policies proved quite beneficial for Vodafone Group Plc which resulted in the success of its current business strategy. Economic Factors Economic factors also influence the industry of telecommunication to a significant extent. Due to the recession in the year 2009-2010, the demand of the mobiles phones reduced considerably. This occurred mainly due to downfall of income rates of the citizens of the country. Thus, in order to cope up with this situation, Vodafone Group Plc reduced the prices of its handsets along with other services in order to make profit. This proved quite beneficial for Vodafone Group Plc thereby increasing its range of customers (Slideshare, n.d.). Social Factors Due to the intensification of the use of information technology, the craze of internet has increased to a high extent among the people. This enhanced the demand for broadband facility and Value Added Services (VAS) of Vodafone Group Plc especially among the youth. As a result, the profit margin and brand loyalty also augmented among other market competitors (Slideshare, n.d.). This made Vodafone much more precious to its customers, which is the prime objective of the current strategy of Vodafone Group Plc. Technological Factors The introduction of Code Division Multiple Access (CDMA), General Packet Service (GPS) and Wi-Fi also enhanced the distinctiveness the Vodafone Group Plc, which paved its path for success. Thus, it can be affirmed that utilisation of these above highlighted facilities helped in attracting more customers resulting in improvement of exposure in numerous emerging markets such as Ghana, Fuji and Qatar (Vodafone Group, 2011). Legal Factors Implementation of the revised European Union regulatory structure in the United Kingdom in the year 2011 also proved beneficial for Vodafone Group Plc which enhanced its productivity and total earnings resulting in enhancement of its total worth (Global Legal Group, 2012). Environmental Factors Vodafone Group Plc is also attempting to implement environmental designing in mobile phones along with promotion of recycling of mobile phones to reduce e-waste. Thus, it helped in enhancing customer reliability and consistency, which is essential for Vodafone Group Plc to sustain in the long run (Vodafone Group, 2011). Thus, from the above discussion, it can be revealed that Vodafone Group Plc has become successful in repositioning its uniqueness within the minds of the customers resulting in amplification of the portfolio of the brand. Porter’s Five Forces Analysis Industry Rivalry In the market of the UK, telecommunication sector is highly competitive as it includes large number of players such as Orange, T-mobile and Telefornica O2 (Economics Online, n.d.). For this rationale, the level of rivalry among the competitors is extensively high. This is depicted in the below figure: Market Share of Mobile Phone Operators in Market of the United Kingdom Source: (Economics Online, n.d.) Thus, from the above figure, it can be observed that Vodafone Group Plc is the largest service provider in the market of the United Kingdom as compared to others. This can be maintained by Vodafone Group Plc if it attempts to offer varied inventive products and/or services to the customers, which is essential to penetrate in a new emerging market. Bargaining Power of Buyers Due to large number of service providers offering similar services, the bargaining power of the customers is quite high. Thus, the switching cost is also quite high in the telecommunication sector (The Financial Times Ltd, 2011). Hence, the current strategy would prove valuable for Vodafone Group Plc to attract more customers as compared to other market players. Bargaining Power of Suppliers The bargaining power of the suppliers is quite low as majority of the services offered to the customers are similar in nature. Along with this, the network facility offered is also quite alike in nature, which reduces the bargaining power of the suppliers (Vodafone Group, 2010). Threats of New Entrants Threat of new entrants is quite low in this sector due to high reputation and brand inimitability of the existing market leaders. Furthermore, the infrastructure set up cost is also quite high which may not be feasible for new entrants. Thus, these issues might prove valuable for Vodafone Group Plc to amplify its efficacy with the help of the current business repositioning strategy (Scribd, n.d.). Threat of Substitutes Although the industry of telecommunication is very competitive, still the threat of substitute products such as wireless phones is quite high (MarketWatch, 2012). Similarly, social networking sites, internet and video conferencing might hinder the business of broadband services of mobile companies such as Vodafone Group Plc (Scribd, n.d.). Moreover, in order to tackle the scenario of increasing substitute offerings, Vodafone Group Plc is also introducing machine-to-machine strategy (M2M) in order to transfer information from one person to the other without any human participation in order to enhance the efficiency of the services offered to the customers and to diminish the total cost involvement (Vodafone Group, 2010). Thus, from the above discussion, it can be analysed that repositioning strategy of Vodafone Group Plc has been significantly successful as it helps in augmentation of customer satisfaction and brand equity by offering various new services. Task 2 Vodafone Group Plc is one of the reputed and renowned organisations dealing in telecommunication sector. The varied resources and capabilities of Vodafone Group Plc help in fulfilment of its business strategies. The resources can be divided into both tangible and intangibles resources. The tangible resources include skilled workforce of the organisation, varied products and/or services and adequate financial resources whereas the intangible resources are advanced image and reputation, strong distribution networks and technological skills (Vodafone Group, 2010). Resources Skilled Human Resources of Vodafone Group Plc One of the main strengths of Vodafone Group Plc is that it encompasses a very strong and talented team of employees. This enhanced skill of the employees is attributable to constant training and development programmes which help in improvement of employee skills and abilities. This would help in development of the knowledge as well as skills of the employees, which might prove extremely beneficial for the organisation as well as the employees. It would also help in creation of various new products and/or services in order to satisfy changing needs and demands of the customers. As a result, it can be affirmed that the enhancement of the efficiency of the employees is the most essential factor, which might help the organisation to sustain in the long-term. It would also enhance organisational productivity as well as brand fidelity. Thus, it plays a vital role in enhancing the market portfolio of Vodafone Group Plc in diverse regions. Advanced Image and Reputation of Vodafone Group Plc The other important resource which assists in fulfilment of the brand exclusivity in the emerging markets is the status of Vodafone Group Plc (Vodafone Limited, 2011). It also helps in reduction of varied business threats such as risk of new players in the market and the substitute products among others. Thus, strong corporate image also proves quite advantageous in alluring new range of customers as well as to preserve the existing ones. Adequate Financial Resources Strong financial capabilities of the organisation are also a noteworthy factor which helps Vodafone Group Plc to penetrate into new markets. The total revenue of Vodafone Group Plc accounted to ?45.9 billion in the year 2011, which assisted the organisation in restructuring its manufacturing units in an efficient way (Vodafone Group, 2010). Hence, it has helped in augmentations of brand awareness along with customer confidence, which are extremely essential for an organisation at the time of repositioning. Other than this, in order to reposition itself, Vodafone is also utilising the idea of outsourcing in order to offer a strong network and consistent customer feedback regarding any problem to its customers to enhance the trust of its consumers (Slideshare, n.d.). Varied Products and Services Vodafone Group Plc possesses a strong association in the market as compared to other market players, which is due to its diverse products and services range. These include voice services, messaging, fixed broadband, fixed line voice, vodafone 360, vodafone live, games and television, blackberry, 2G and 3G among others at a reasonable cost, which help Vodafone Group Plc to attract new customers, which is necessary to reposition its brand name in an emerging market (Vodafone Limited, 2012). This is because with the increase of customer range, the revenue as well as the sales of the organisation would increase leading to augmentation of its total market share. Strong Distribution Networks Vodafone Group Plc is positioned in the 9th place among the world’s top well-known brands in the global record of 100 mobile brands, which is mainly due to its strong network connectivity all round the world (Vodafone Group, 2011). In order to maintain their strong network of distribution the company has expanded their business to increase their total number of mobile clients in the markets such as South Africa. The revenue generation from South Africa was quite substantial in the fourth quarter of 2010, which also enhanced the rate of penetration along with revenue (Vodafone Group, 2010). This fact is shown in the below diagram: Mobile Service Revenue and Market Share Source: (Vodafone Group, 2011) Technological Skills Innovation is the sole priority of Vodafone’s contribution for growth and development. The prime motive of Vodafone Group Plc is to develop numerous sustainable products and services which offer high value to the society. The development of Vodafone M-Pesa is an inventive technology, which helps in transmitting money from the bank with the help of mobiles, which is highly appreciated by large number of customer in the world. Other than this, the introduction of 3G and 4G technologies also attracted large array of consumers, which proved quite valuable for Vodafone Group Plc to enter new rising markets of Ghana and Qatar (Vodafone Group, 2012). In addition to the resources, the capability of preservation of unique culture within the organisation of Vodafone Group Plc also played a vital role in enhancing and streamlining its corporate strategy. Unique Culture Although Vodafone Group Plc operates in diverse countries, it includes a uniform organisational culture (Vodafone, 2008). The main reason behind this is proper coordination and communication among the employees of the organisational hierarchy, which is essential to retain the experienced and skilled employees for future growth and development of the organisation (Bustillo & et. al., 2008). In addition, uniform culture would also help in offering advanced products and/or services to the customers to gratify alternating desires (Vodafone Hutchison Australia Pty Ltd, 2012). Hence, it can be revealed that the above discussed resources and capabilities help Vodafone Group Plc to a high extent in order to accomplish the current business strategy. 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