The Scope of the Impact of the Class Action against Vodafone - Research Proposal Example

Market research Table of Contents 4.0. Secondary research findings 1 4.1 Porters Five Force Analysis 2 5.0 Research Needs 4 5.1. Research problem 4 5.2 Research Needs Statement 6 6.0. Research objectives and hypotheses 6 6.1 Aim 6 6.2 objectives 7 7.0 Recommendations for questionnaire questions 8 8.0. Conclusions 8 9.0. Reference List 10 4.0. Secondary research findings Australia’s telecom market revenues have reflected a mild down turn since 2011, with various analysts expecting it to remain subdued over the next few years (Bingeman 2013). The Australian telecommunication market is highly competitive. The growth for mobile is expected to continue rising within the pre-paid and post-paid segments, since Vodafone along with its competitors all offer HDSPA and 3G internet services (Vodafone 2012). Australia is one of the world’s leading nations in terms of smartphone penetration, with smartphone-ownership expected to increase to over 60 percent by 2015. The Vodafone Company seems to be losing its customer base to major competitors such as Optus and Telstra. Indeed, Telstra has consolidated a lead in the Australian telecommunications market, receiving a market share of around 60 percent in 2011 (Bender 2013). Using the Porter’s Five Forces Analysis, the salient problems that Vodafone faces in the telecom industry can be identified and analyzed in an effort to solve the perceived problems resulting from the impacts of the class action. 4.1 Porters Five Force Analysis Based on Porter’s Five Forces Analysis, the key forces that influence Vodafone and the Australian Telecom industry are analyzed. The Five Forces model structures out the company’s internal and external environment in an effort to analyse the underlying problems facing the company. The five forces singled out by Porter (1985) influence an industry’s competitive industry. The forces include threat of new entrants, supplier’s bargaining power, suppliers substitute good, customers’ bargaining power and lastly, competitive rivalry (Aarons & Waalewijin 2002). Competitive rivalry: Vodafone faces high competition within the telecom industry as there are several renowned firms that offer similar products. The major competitors include Optus and Telstra. Further, new technology has stimulated a range of substitute products and services. For instance, since the mobile phone penetration is high in Australia (over 60 percent), the industry players are competing to attract users with quality range of products and lower pricing. Consequently, this has tended to reduce the overall profitability of the industry. Since Vodafone is a player in the highly competitive industry, the class action has significantly affected its competitive edge resulting to loss of customer base (Bingeman 2013). The company faces stiff competition from the industry’s two major competitors, including Optus and Telstra. Indeed, the company needs to redefine its marketing objectives and re-examine its position in the Australian market to pursue the market, improve its reputation and select the right promotional strategies (Bender 2013). Availability of substitutes: The products and services that the Australian telecom industry offers face significant substitution threats. For instance the cable TV and satellite operators are currently competing for buyers. Additionally, a number of other companies offer similar products like Vodafone. Further, the increased use of the internet has turned out as a viable means for cutting the rates of voice calls (Vodafone 2012). This means that Vodafone still stands to lose its market share (Bender 2013). Threat of new entrants: The capital-intensive telecoms market in Australia’s single-most prevalent barrier to entry is finance. To cover the huge fixed costs related to fixing the telecom infrastructure, companies will have to put in large amounts of finance (Vodafone 2012). In addition, it is critical to observe that management familiarity and expert operational management capabilities is considerably infrequent to compete with major industry players such as Optus and Telstra make entries to the industry even harder (Ainsworth 2009). Power of suppliers: although telecom equipment suppliers have substantial bargaining power over Vodafone, it is still perceivable that there are several large equipment suppliers across Australia. The large number of suppliers reduces their bargaining power. Typically, Vodafone would in normal situations have a greater bargaining power than its suppliers. In which case, since the company needs to maintain its infrastructure in an effort to improve the quality of its services to the customer, it maintains a higher bargaining power over its suppliers. For instance, the company plans to spend over $1 billion on upgrading its infrastructure in a move that will see the company restore its networks and repair its damaged brand (Bender 2013; Pollitt 2001). Based on the findings from Porter’s Five Forces analysis, the major problems facing Vodafone include reduced market share, poor customer service, reduced profitability, reduced competitiveness and loss of brand reputation. 5.0 Research Needs 5.1. Research problem In the last quarter of 2010, Vodafone’s network started to suffer from severe problems concerning the quality of calls, SMS reliability voicemail and data speeds. Dissatisfied customers terminated their subscription with the company. Later, a law firm proposed to fine a class of action suit against the company claiming that the company’s services were unfit for purpose (Bingeman 2013). However, research literature indicates that the estimated 23,000 customers who sought to file the suit have not been able to do so due to inadequate funding (Bender 2013). The company’s Australian operation faces a range of management problems resulting to poor performances. For instance, in 2012, it was ranked last among the Australian carriers for network coverage, managing a two-star rating. Review of Australia’s mobile network reveals that the company received 21 complaints for every of the company’s 100 customers due to engineering defaults. Consequently, an estimated 23,000 unsatisfied customers brought a class action against the company (Bingeman 2013). The company’s recent poor performances show the company has had operational management issues. Analysis of the Vodafone’s fundamental problems shows that the company faces a number of management problems. Indeed, Vodafone offers an interesting field of study since its management trajectories has enabled the company to be a market leader in telecommunications services. The class action has had a significant effect on the company’s class action, specifically its brand repute. The customer also experienced sharp customer decline, with over 108,000 subscribers opting for competitor services within the first three months of 2013, 443,000 in the 2012 financial year and 554 in the 2012 financial year (Bingeman 2013; Bender 2013). The company also continues to experience sharp decline in revenue due to the declined reputation over poor services. Vodafone Hutchison Australia (VHA), a company that is in joint-venture with Vodafone to run the Australian operation, lost an estimated $1.2 billion in the 2011 and 2012 financial years. VHA is currently implementing a turnaround plan through the support of its shareholders. Additionally, it seeks to stabilize its customer base and financial performance (Bender 2013). 5.2 Research Needs Statement The problems faced by Vodafone have aggravated since an estimated 23,000 unsatisfied customers threatened to bring a class of action against the company (Bingeman 2013). Indeed, the company’s recent poor performances had serious operational management issues. Vodafone’s economic viability is greatly threatened by high competitive telecom market, the declined brand reputation and the customer’s changing demands to dynamism of technologic. The primary purpose of this study is to examine whether the class action that was initiated by a group of unsatisfied customers contributed to the myriad of problems facing its operational management. However, little is understood about how class action affects customer perception about the company’s products. The secondary purpose is to contribute new knowledge that informs the telecommunications industry and academia on the impact of class actions on organizational performance. Although there is no specific model to explain the impacts of class action on organizational management, research literature suggest several variables that can be examined towards this end. 6.0. Research objectives and hypotheses 6.1 Aim The aim of the report is to investigate the scope of the impact of the Class Action against Vodafone. 6.2 objectives 1. Examine Vodafone’s management and corporate finance 2. Compare the poor financial and operational performance with a theoretical model 3. Investigate how the company’s operational management can improve value to customers 4. Evaluate the possible impacts of the threat to bring a class action against the company 5. To find out whether the company customer-centred services that are seen to reflect customer requirements 6. Examine whether the company's operations are in line with the corporate strategies 7. To explore the range of opportunities for the company’s growth by cutting on the cost of its products 8. Examine the external threats, such as a spectre of factors including global financial crisis that inhibit the company from meeting its objectives 9. Explore the ways in which the company can restore is reputation and improve profitability 10. The impact of class action to the perception of the quality of the services The above research questions will be answered using quantitative testing of two hypotheses: H1: The construct of change attitudes towards Vodafone products and services is correlated to the poor financial performance. H2: The construct of ineffective operational management and services is correlated to the poor customer satisfaction. 7.0 Recommendations for questionnaire questions The proposed research questions for the study include: 1. To what extent does Vodafone’s management structure enable the company to operate efficiently 2. Is the company’s operational management effective enough to improve value to customers 3. To what extent has the company’s growth rate improved or fallen after the threat of the class action 4. Does the company’s customer-centred services reflect customer requirements 5. Are the company's operations in line with the corporate strategies 6. Can the company improve its growth by cutting on the cost of its products and services 8.0. Conclusions Vodafone continues to experience sharp decline in revenue due to the declined reputation resulting from the company’s poor performances as it has failed to satisfy the needs of customer. The situation worsened when over 23,000 unsatisfied customers threatened to file a class of action suit against the company. Based on the findings from Porter’s Five Forces analysis, the major problems facing Vodafone include reduced market share, poor customer service, reduced profitability, reduced competitiveness and loss of brand reputation. 9.0. Reference List Ainsworth, H 2009, “Can project management create organization value? Necessary, but not sufficient,” Program and Business Value Management, viewed 25 August 2013, http://www.programvalue.com.au/web%20site%20download%20material/PBVM%20Project%20Mgt%20and%20Org%20Value%20article%20v3.pdf Aarons, S & Waalewijin, P 2002, A Knowledge Base Representing Porter's Five Forces Model, viewed 25 August 2013, http://repub.eur.nl/res/pub/753/eur-few-cs-99-02.pdf Bender, A 2013, Vodafone lags behind Telstra and Optus on network performance: report, ComputerWorld, viewed 25 August 2013, http://www.computerworld.com.au/article/459431/vodafone_lags_behind_telstra_optus_network_performance_report/ Bingeman, M 2013, Vodafone facing renewed threat of class action by unhappy customers, The Australian, viewed 25 August 2013, http://www.theaustralian.com.au/australian-it/vodafone-facing-class-action-law-suit-by-unhappy-customers/story-e6frgakx-1226585758264 Pollitt, C 2001, 'Integrating Financial Management and Performance Management,' OECD Journal on Budgeting, pp7-36 Vodafone 2012, Sustainability 2012 Summary Report, viewed 25 August 2013, http://www.vodafone.com/content/dam/vodafone/about/sustainability/reports/2011_12/vodafone_sustainability_report.pdf Read More