BUSINESS STRATEGY:

VODAFONE
Contents
Introduction....................................................................................................................................1
Impact of Macro-environment on Vodafone and its business strategies.............................1
Political Factor...........................................................................................................................2
Economic factors.......................................................................................................................3
Social factor...............................................................................................................................3
Technological factor..................................................................................................................3
Legal factor................................................................................................................................4
Environmental factor.................................................................................................................4
Analyzing internal environment and capabilities of Vodafone...............................................4
Capital access...........................................................................................................................4
Network capability.....................................................................................................................5
Brand equity...............................................................................................................................5
Analysis of Vodafone using Porter’s Five force Framework..................................................5
Threat of Entry...........................................................................................................................6
Threat of substitutes.................................................................................................................6
Bargaining power of supplier...................................................................................................6
Bargaining power of buyer.......................................................................................................7
Rivalry.........................................................................................................................................7
Application of SWOT model to assist Vodafone about strategic directions.........................7
Strength of Vodafone................................................................................................................7
Weaknesses of Vodafone........................................................................................................8
Opportunities for Vodafone......................................................................................................9
Threats to Vodafone...............................................................................................................10
Recommendation and conclusion............................................................................................10
References...................................................................................................................................11

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Introduction
Vodafone group is said to be one of main multinational telecom company based in UK.
Their main headquarter is also located in UK. The idea was first established with the
collaboration of Racal Electronics Pls. And Millicom Inc. by offering the mobile services.
After then, Vodafone has remarked itself as a single company back in 1984. Presently,
Vodafone has established its network worldwide in Asia, Pacific, Africa and Middle East.
In this report the microenvironment, micro-environment and capabilities of Vodafone will
be examined by using tools and theories of competitive advantage. Hence the main
content of this report will focus on building the strategic plan to adhere the growth of
Vodafone in future (Campowsky, Carella, Magedanz and Schreiner, 2012). This plan will involve
the use of strategy development tools to examine internal external forces which have a
huge impact on the growth and progress of Vodafone. SWOT, Pestle, Porter and VRIO
will be used to analyze the internal and external factor in Vodafone and its capabilities
to grow and succeed.

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Impact of Macro-environment on Vodafone and its business
strategies
Macro-environment is the term defined by all the external factor which impact the
growth and progress of organization. Macro-environment is always said to be external
part which influence the working of company. It is evident that telecommunication
industry plays a significant role in increasing the economy of country as the products
and service promote modernization in country.

Figure 1 Macro-environment factors

Pestle framework will be utilized in order to analyze the factors which impacts the
working of company in the relative industry as shown in fig 1. PESTLE is an acronym for
Political, Economic, Social, Legal and Environmental factor which plays a significant
role in future of company as in Vodafone can gain help through understanding the
dynamic of external environment and can improve its current business activities.

Political Factor
During the last year, the company faced serious backlash from Spain and Italy and
some serious pressure from South Africa. Regardless of all the facts, Vodafone tries its
best to retain the revenues as a result of which the company is able to generates

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incomes by 0.3%, EBITDA up by 3.1 % and EBIT BY 9.4% (Kumar, 2011). moreover, in
the last year Vodafone was sold to Qatar foundation. There were many evident reasons
which impacts the company for example, the business faces decline due to less sale,
the evident changes in business activities and less revenues generated from mobiles
phones in UK. As in Spain and Italy, the reason of decline was due to other brands and
competition. Moreover, the government policies also restricted growth and income badly
(Pratap, 2019).

Economic factors
Economic factor remains very significant for a multinational company to run the
business smoothly. In the field of telecommunication industry, the performance of global
and local economies has direct effect on the income and revenues. The main strategy
of Vodafone was aimed to have good returns on capital employed in Europe. Hence its
vision and mission are also to accommodate the good Return on Investment in UK. The
emerging need and demand of mobile phones has raised the income of Vodafone
specifically in its main market like India, UK, Spain and Italy. These nations have
stabilized economy which has a positive impact on Vodafone. Although after Brexit the
economy of UK has impacted the sales of Vodafone which also effect the profitability of
organization in future. Moreover, India is said to be more stable country in terms of
economy which serves a great opportunity for Vodafone (Team, 2019).

Social factor
Social factors involve the living of people and their likes in regard to certain things.
Many companies have understood the importance of sociocultural factors which impact
the business overall. The main reason of acknowledging social factor is habits and
preferences to buy things are keep on changing among people which has serious
impact on the growth of business. After the technology revolution, consumer has
become more demanding and wants to have smooth connection without any
interruptions. There has been evident growth in the use of internet for many purposes
which is beneficial for companies like Vodafone to grab the attention of user.

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Technological factor
Vodafone is telecommunication company in which technology plays key roles in
performing activities. Hence it is important to add technology into their system to be on
top among competitors. In order to provide user convenience, Vodafone is suing
modern technology to incorporate engagement of users. Through Vodafone App and
website, users can access wide range of things like packages or deal of internet.

Legal factor
The intervention in government policies, fluctuation of economy and taxation policies
are some legal factor which influence the working of any business. There are many
legal terms which must eb followed by organizations and they must be aware of
consistence in every zone. Resistance can bring about gigantic fines. These factors
must be determined by Vodafone to stay in industry with reputation. These legal factors
must be acknowledge by Vodafone to confront issues faced by company in industries.

Environmental factor
With the emerging technology and innovation, sustainability to save environment has
become a question. Many organizations are inventing their asset and money to remove
their carbon footprint from earth. Moreover, government has been playing a role in
making every organization responsible of its action and impact on earth. Vodafone is
also helping to erase its carbon footprint from environment. It is also evident that these
strategies also help to minimize the costs and increases the efficiency of work in future.

Analyzing internal environment and capabilities of Vodafone

Internal capabilities ought to have huge impact on the business and revenues. In order
to examine the internal capabilities of Vodafone, VRIO framework will be used. By using
VRIO framework, value, rarity, imitability will be questions in regard to its organization in
business.

Capital access
The Vodafone UK has been able to gain its revenues from its parent company
Vodafone Group. With free income of £5.6 billion, the gathering can furnish its auxiliary

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with money to improve its working abilities or strengthen its promoting. Capital access is
an important ability. Be that as it may, contenders additionally approach capital from
various sources and in this way this ability is normal, leaving Vodafone in a
circumstance of serious equality with its rivals.

Network capability
Due to large investment made by Vodafone to improve its connection service for both
indoors and outdoor location, has held the company to increase the revenues. The
brand claims to have best network connection with 4G indoor connections to provide
best experience of interne to its customers. This capability of company makes it
superior from tis rivals in industry.

Brand equity
For year 2011, Vodafone has gained its brands equity by generating $31billion income.
Moreover, the brand has opened its subsidiaries in 19 countries to serve 411million
customers globally. This has increased the brand loyalty and equity as people who
travels to UK tend to be familiar with the services of Vodafone and prefer to use it while
roaming in world. Due to tis brand equity and services Vodafone tend to best brand in
the industry of telecommunication see fig 2.

Figure 2 VRIO Framework (Al-Atiqi and Mumen, 2014)

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Analysis of Vodafone using Porter’s Five force Framework
In order to examine the position of Vodafone in market, Porter five Force framework will
be utilized (AR_Vodafone Group PLC | Mobile Phones | Smartphone | Avaliação gratuita de 30 dias |
Scribd, 2018). This will allow to examine the surrounding factors like threat of new entry,
threat of substitutes, bargaining power of buyer, bargaining power of suppliers and
rivalry.

Threat of Entry
In the field of telecommunication, there are high risk of entering into the industry. The
main reason behind this is due to upfront cost which makes it difficult to enter the
business. But it is somehow easier for the communication companies to enter other
communications sector due to convergence in the communication field. As in the start,
for any mobile telecommunication company it requires huge investment to set up the
network infrastructure (Amin Azab et al., 2016). But now even with no telecommunication
set-up many companies like MVNOs are entering the sector. This is because many
mobile shops like Carphone Warehouse provide the infrastructure attached with their
devices. Moreover, Mobile Number Portability (MNP) also encouraged many brands to
enter the business without spending much amount on building the set-up thus creating a
threat of new entry.

Threat of substitutes
During the start of telecommunication, the primary aim was to provide smooth voice
connection between network. But after the emergence of technology, people are more
into using internet applications like VoIP instead of making calls through GSM. This also
decreased the profit income that come by using GSM instead of VoIP. Moreover,
services like WhatsApp and Messenger also decreases the revenues that comes from
traditional way of sending electronic message. Moreover, the competitors of Vodafone
have been struggling hard to make their connection smart enough and they are
improving their services to cater audience with better services. this will pose threat to
substitutes as Vodafone can be replaced by its customer who find it old and lacking in
technology advancement.

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Bargaining power of supplier
In this highly converged industry, many suppliers are present to accommodate
companies. Like MVNOs which provides infrastructure to many companies in order to
run the network smoothly. This results in increasing bargaining power of these
suppliers. Moreover, big mobile companies like Apple and Samsung are also the
suppliers of telecom operators as telecom companies are collaborating with hem in
terms of offering call and internet packages to create brand image and equity among
public. So, they have influenced the bargaining power of supplier.

Bargaining power of buyer

After the introduction of MNP, buyer has the power to switch from brands to brands.
This also influence the industry to act more competitive. Since then customer can easily
switch their choice after comparing the prices and packages. This leads to have high
rate of bargaining power of buyers.

Rivalry
After the technological advancement, the competition among companies have raised
and become high in industry. Many brands are competing hard to be on top and
compete with Vodafone. The cut in prices can only encourage the price competition,
rather than companies must think of utilizing their asset to advance the technology like
4G LTE. The new entrants also hold rivalry which poses threat to Vodafone (Amrollahi
and Akhgar, 2013). The new entries and existing contenders are improving their services
along with that they are offering attractive internet packages to drive public attention to
them.

Application of SWOT model to assist Vodafone about strategic

directions
Since the start, the report is built upon gathering the facts and figures to illustrate issues
which might influence the growth of Vodafone in telecommunication industry. Hence in
this section SWOT analysis will help to examine internal and external forces which has
helped the brand to retain its position in the industry and be on top among its rivals.

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Strength of Vodafone
 One of the biggest strength of Vodafone is that brand is being consistent from the
last 28 years in terms of tis services. This has built the strong brand awareness
among customers who shows loyalty with brand through sticking it from the start.
This has also created strong brand recognition from the past years.
 Another power of Vodafone is that brand keep on playing with offering different
services to entertain its customers. For example, Vodafone introduced M-Pesa to
transfer money from mobile which was first started in Kenya and then spread to
other countries as well.
 Vodafone has shown its presence in many countries which increases its brand
equity among people. While measuring the revenues, Europe contributes to 67%,
Africa and Central Europe & Asia Pacific and Middle East adds 15% and 18%.
 It has large number of subscribers which makes the brand known to all parts of the
world.
 Moreover, strong marketing and advertising makes the brand super attractive to
buy (Khan and Suhaib, 2019).

Weaknesses of Vodafone
 Limited reach to rural areas is one the weakness which may impact the growth of
company in future.
 Due to high competition in market and slow growth, Vodafone brand valuation is
dropping to dangerous level.
 The company is suffering from huge debt which may be 25% more from its
revenues generated. This should be solved by acquisition with other brands.
 Moreover, the performance in European market is relatively low which may be a
weakness to perform better than other brands.
 The brand has been losing its subscriber from the past years which might become
a threat in future. As shown in fig 3, the company is losing the subscribers.

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Figure 3 Losing subscribers (Bhasin, 2018)

Opportunities for Vodafone

 The company can gain revenues by introducing the network to rural areas.
 The company needs to target international market to expand the business.
 The company needs to invest in technological advancement like 4GLTE.
 Can offer merger and acquisition with other leading brands to pay debt amount.
 To propose advance network like 5G to increase growth in market share.
 The company can expand the business in Africa due to huge chance of growth
and potential.
 The company can invest in cellular process to hold up its customers. The
company can avail the chance to provide best services at affordable rates which
can have appositive impact on the growth and income of company.
 Invest in rising industries to generate income.

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Threats to Vodafone

 Airtel, Reliance Jio, AT&T, China Mobile are the top competitors of Vodafone
which are struggling hard to compete.
 The company should never take grant these coopetitors in terms of growth and
success.
 The impact of Brexit and currency fluctuation to pounds can also be threat to
company in UK.

Recommendation and conclusion

Vodafone is one the main leading brand in the field of telecommunication industry. The
company has been striving hard to remain on top but there are lot of competitors which
sound as threat for company. Vodafone should only focus to provide services in terms
of mobile data and connection. The company can also collaborate with broadband
services provider to provides best services. They may invest in making their own
broadband connection to be sustainable in future.

Be that as it may, as more organizations were combining and offering types of

assistance inside all regions of correspondence, Vodafone may end up falling behind in
rivalry. Eventually, Vodafone must pick between an association and making their own
broadband system either by securing or DIY.

It is concluded with the fact that; this strategic plan combines different strategy
development tools to exhibit the elements which may impact the growth of company.
The company has potential to grow in market by investing in accurate technologies and
improving customer services. the report has examined the internal elements of
Vodafone which may help to define future strategies and aligning workforce to strive
better.

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References
Al-Atiqi, A. and Mumen, F., 2014. The Strategic Alternatives of Vodafone UK
in 2009. [online] Available at:
<https://www.researchgate.net/publication/283579555_The_Strategic_Alte
rnatives_of_Vodafone_UK_in_2009> [Accessed 6 June 2020].

Amin Azab, N., El Sheikh, Y., Moharram, A., Ibrahim, B. and Yehia, N., 2016.
A strategic use of technology: case of Vodafone Egypt. Emerald Emerging
Markets Case Studies, 6(3), pp.1-16.

Amrollahi, A. and Akhgar, B., 2013. Analyzing Open Source Business with
Porter’s Five Forces. International Journal of Computer Theory and
Engineering, pp.162-165.

Bhasin, H., 2018. SWOT Analysis Of Vodafone - Vodafone SWOT Analysis.

[online] Marketing91. Available at: <https://www.marketing91.com/swot-
analysis-vodafone/> [Accessed 6 June 2020].

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Campowsky, K., Carella, G., Magedanz, T. and Schreiner, F., 2012.
Optimization of Elastic Cloud Brokerage Mechanisms for Future
Telecommunication Service Environments. PIK - Praxis der
Informationsverarbeitung und Kommunikation, 35(3).

Khan, S. and Suhaib, M., 2019. Evaluating an International Human Resource

Management Strategy for New Telecommunication Group in Developing
Countries, Concentrating on Pakistan (A Case Study of Vodafone). SSRN
Electronic Journal,.

Kumar, N., 2011. Vodafone Is The Top UK Brand, Says Global Report.

[online] The Independent. Available at:
<https://www.independent.co.uk/news/business/news/vodafone-is-the-top-
uk-brand-says-global-report-2247994.html> [Accessed 6 June 2020].

Pratap, A., 2019. Pestel Analysis Of Vodafone Group - Notesmatic. [online]

notesmatic. Available at: <https://notesmatic.com/2019/05/pestel-analysis-
of-vodafone-group/> [Accessed 6 June 2020].

Scribd. 2018. AR_Vodafone Group PLC | Mobile Phones | Smartphone |

Avaliação Gratuita De 30 Dias | Scribd. [online] Available at:
<https://pt.scribd.com/document/37778856/AR-Vodafone-Group-PLC>
[Accessed 6 June 2020].

Team, M., 2019. Vodafone PESTLE Analysis | PESTEL Analysis Of Vodafone

| MBA Skool-Study.Learn.Share.. [online] MBA Skool-Study.Learn.Share.
Available at: <https://www.mbaskool.com/pestle-
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