VODAFONE CORPORATE STRATEGY
Table of Contents
Introduction to Corporate Strategy. 3
Vodafone Strategic Environment Analysis. 3
Strategic Environment Industry Analysis. 9
Experienced managers and employees. 11
Machines and other related infrastructure. 11
Introduction to Corporate Strategy
Corporate strategy refers to an entity’s business actions that aim to realize the set goals and objectives by warranting competitive advantage, which is the desire of most if not all companies in the business world (Skærbæk, &Tryggestad 2010). It is important to note that effective corporate strategy relies on an organization’s long-term vision that targets corporate value creation as well as employee motivation to help it achieve to-notch customer satisfaction. Customer satisfaction is the measure of the level of happiness of each or most clients with a particular company’s products (Amini, & Bienstock 2014).
High customer satisfaction means that the clients will keep acquiring commodities from the company; thus, the latter will realize maximum profits to enable it to stay afloat. Just like several concepts in the business world, corporate strategy is a continuous process that demands not only employee input, but also the investor’s efforts. The reason for investors’ inclusion is for them to gain maximum trust in the organization, thus provide sufficient resources for optimum customer value delivery (Dicle, & Köse 2014). Optimum customer value delivery lies in the company’s ability to revise its corporate strategy from time to time. The paper sets forth to provide a report on Vodafone’s corporate strategy.
Vodafone Strategic Environment Analysis
Vodafone Company is a British telecommunication firm headquartered in London but with a registered office in Berkshire. However, the company extends its operation to other continents, thus a multinational entity (Amini, & Bienstock 2014).
Business Environment
Like any other entity, Vodafone has a business environment that mostly affects its operations, whether directly or indirectly. Though a common term in the business world, only a few scholars have given a succinct description of a business environment. Dicle, & Köse (2014) define the business environment as a collection of all the internal and external factors that surround an entity’s operation. Thus, it can easily make it grow or even inhibit its growth, depending on how it is handled. Vodafone Company’s business environment is made of the macro environment, micro environment, and the firm environment.
PESTLE is the best tool in analyzing Vodafone’s macro-environment because it puts forth the factors that the company has no control over, and the best way it can cope with them is through adjusting accordingly (Ledin, & Machin 2016). The role of any PESTLE analysis is to enable individuals to have the macro-environment picture of the business that they are getting into as a company so that the organization can pick the factors that are most likely to affect it the most (Skærbæk, & Tryggestad 2010). PESTLE in full stands for six factors that are always common within the external environment of any business: Political, Economic, Social, Technological, and Environmental factors, respectively (Papazov, & Mihaylova 2015). Even though PESTLE analysis is termed useful for a new company getting into a business for the first time, it is also appropriate for old companies to get into a new industry to expand its income generation base, as is the case for Vodafone.
PESTLE Analysis
Political factors
Political factors are the eventualities that result from the government decisions that may affect the business environment for a new entrant in a business-like in the case of Vodafone in the telecommunication industry in other countries within Europe. The political factors emerge in regards to legislation or economic policy formulation (Ledin, & Machin 2016).
The first issue is high taxation on multinational organizations, which is purely a political factor. Most host governments tend to come up with different taxation laws for multinational companies. It implies that the multinational organization faces double taxation with that in the host country, usually being high (Papazov, & Mihaylova 2015). The high and double taxation is a threat to Vodafone Company, which is expanding into new borders to garner maximum profits that can make it achieve the desired growth and help it in contributing effecting to the home country’s Gross Domestic Product (Lanis, & Richardson 2012). The implication is that any attempt by Vodacom Company to enter into the telecommunication business within other countries whether in Europe ore beyond would mean more taxation that might not match the intended profits thus might cause a decline in its initial profit margin (Kumar, Rahman, Kazmi, & Goyal 2012)
Economic Factors
Economic factors are the related economic issues in the country or continent that a company targets to make inroads (Özdemirci 2011). Therefore, one can easily conclude that economic factors emerge from the state of the country’s economy that a company wants to venture into but in regards to a particular product. Vodafone targets entry into other countries in Europe other than the United Kingdom (Kumar, et al., p. 486)
The main economic issue in Europe is that people are compensated well at their workplace, and various governments cater for most if not all the basic needs of their citizens, ranging from education to housing to some extent (Özdemirci, 2011). The implication is that there is a sizeable amount of disposable income that the citizens can use to purchase various products, primarily in the telecommunication sector. The better place would the citizens go than Vodafone (Shinkle, & Spencer, 2012). Therefore, the presence of disposable income provides an opportunity for expansion to Vodafone as it can achieve maximum sales and make sufficient profits that only remain imaginable to other companies in the telecommunication industry (Lanis, & Richardson, 2012).
Social Factors
Social factors imply an area’s demography, culture, and lifestyle that plays an important role when it comes to the purchase and use of a product in a certain are. Europe is one of the most densely populated continents in the world, and its citizens’ literacy or education standards is so high (Murphy, & Schlegelmilch, 2013). Therefore, Europe has high levels of education, which is an excellent opportunity for Vodafone Company when making inroads because it will not need to spend vast resources on educating people on what it is and what it deals with (Brooks, Chen, & Zeng, 2018). The money can be directed to other activities that are core for its growth and expansion or charity work, which is also a perfect marketing strategy.
The second social issue is that Vodafone is already a household name in Europe, and many people have either used it or even heard of it, thus an established brand. Having established brands means that a significant step is already made to make the current and potential customers familiar to the brand (Herrera 2015). Therefore, Vodafone has a ready market, which is one of the most significant opportunities it can utilize in ensuring immediate profits are inevitable. The final issue under social factors is in regards to health. Most of the Europeans are health due to a sound health system; thus, they can work hard and acquire funds to purchase things that other people term as a luxury. Good health leads to the presence of sufficient disposable income as people do not have to frequently walk into hospitals to spend money on treatment (Farndale, Scullion, & Sparrow, 2010). Therefore, good health or health citizens provides an opportunity for growth for Vodafone within Europe as people will purchase its products.
Technological Factors
Technological factors are defined as the digitally-oriented aspects that can make a business grow or diminish. For the past five decades, the world has been evolving technologically as attempts to make it a global village has been on the flares (Meskendahl 2010). When talking of technological advancement, the European continent comes in second just after North America and specifically the United States of America. Vodafone is Telecommunication Company that deals with technologically advance devices, hence the witnessed technological advancement in Europe will provide it with a perfect opportunity in selling its technical products as well as other things with ease and realizing substantial profit margins (Gherardi, Guthrie, & Farneti 2014). The reason is that there will be no efforts required to train current and potential customers on not only the importance of new technology but also its usage.
Legal Factors
Legal factors are the regulations issues put in place in various countries with the target of protecting citizens and other individuals who intend to buy goods and services from different companies (Skouloudis, Evangelinos, & Kourmousis 2010). Without the laws, every entity can simply walk into any country and do business at the locals’ expense, even if it means selling poisoned products and walking away. Even though Europe is one continent, there is sufficient variation when it comes to the employment issues that need a good lawyer if Vodafone Company targets understanding it. The primary legal factor is concerning the employment of individuals at any company within its soil (Higgins, & Walker 2012). There is a portion meant for locals and another part intended for the foreigners or the expatriates. The issue is, therefore, is that Vodafone likes to transport its employee with the sufficient experience as well as the know-how on the way the entity operates, thus the existing laws will be more of a threat to smooth operation and expansion of Vodafone Company (Reddy, Xie, & Agrawal 2015).
The other issue is the existent of several regulatory bodies that have varying requirements for any technological or telecommunication firm to operate in the European continent. Satisfying all the elements as well as fully adhering to the rules that are many and complex is not easy (Christopher, Payne, & Ballantyne 2013). However, it is essential to note that any single time a company disobeys intentionally or unintentionally one or more of regulation, the company can easily be confiscated and the top officials jailed even for more years before finally being evicted.
Environmental Factors
Environmental factors are the issues that are in line with the physical environment that forms parts of people’s everyday life. Depending on the industry, environmental factors are essential in ensuring that the growth aspect is attained within the tourism industry and the agricultural quarters (Scalera 2012). The primary ecological issue that hits most industries, global warming, and Vodafone’s business environment is not an exception. Global warming has been increasing for the past three decades and does not show signs of ceasing anytime soon. Increased global warming makes potential customers afraid of moving from one place to another in search of various products like those of Vodafone (Kothari, Kotabe, & Murphy 2013). Additionally, the potential clients become afraid of using any telecommunication gadget because they feel the devices can result in an explosion plus others. Therefore the increased global warming experienced in the last thirty years is a threat to the peaceful telecommunication business environment existence (Diskaya, Emir, & Orhan 2011).
Strategic Environment Industry Analysis
Like other sectors, the telecommunication industry is one of the most attractive areas that every potential and existing business wants to put its money because of its promising returns (Clarkson, Li, Richardson, & Vasvari 2011). In analyzing the industry, the five competitive forces are the appropriate framework worth consideration.
Five Forces of Competition
The rivalry between existing competitors
Various organizations within Europe offer telecommunication services that are similar to Vodafone, and they include but are not limited to Orange and EE (UK) Digital IQ: 123 (Fraj, Matute, & Melero 2015). The presence of competitors shows that there is a scramble for the existing customer base. The intense rivalry among the telecommunication companies in the UK makes the industry low attractive (Merschmann, & Thonemann 2011).
The threat of entry
For any new company to get into the UK and breakthrough to the telecommunication industry, they must fulfill several things that include acquiring several licenses that require not only resources but high qualification to attain (Diabat, & Govindan 2011). The other thing is that the company must have access to a distributor and supplier, which is not usually accessible; hence, the telecommunication industry in Europe is highly attractive.
Threat of substitutes
It is only computers that can be used as substitutes for the telecommunication industry but only for sending emails and other forms of written communication as opposed to Vodacom and other companies that provide an avenue of audio and video communication (Sarooghi, Libaers, & Burkemper 2015). The presence of limited telecommunication industry substitutes shows that it is a highly attractive industry because people can make huge profits from it as it is not highly exhausted.
The bargaining power of buyers
Buyers are the customers of the telecommunication industry products, and they have low bargaining power because it is only one industry that deals with the telecommunication issues (Beske, Land, & Seuring 2014). Therefore, the telecommunication industry is highly attractive.
The bargaining power of supplier
Suppliers refer to the providers of the telecommunication service, and in Europe, they are many; thus, they have a low bargaining power (Pires, Martinho, & Chang 2011). From this perspective, the industry attractiveness is medium.
Capability Analysis
Vodafone is one of the largest in the telecommunication industry, especially in Europe, and has some unique resources.
Resources
Brand name
Vodafone is a household name in the telecommunication industry from London, where it is headquartered in other parts of the world (Dağdeviren, & Yüksel 2010). The reliable brand name gives it a milestone compared to other companies, thus does not need extreme marketing. Therefore the firm brand is one of Vodafone’s strengths in the telecommunication industry.
Experienced managers and employees
Having been in operation for over 15 years, Vodafone has some of the best employees, whether in terms of managers or any other rank (Tavitiyaman, Qu, & Zhangn 2011). Therefore, it has people who can produce the desired result within the required time limit as they have already been in the industry long enough. Experienced employees are a strength that helps the company realize the required profits within the shortest time possible (Chen 2011).
Machines and other related infrastructure
Vodafone just acquired Liberty Global and its assets at $19 billion, which implies that it has got machines and other related infrastructure that it requires to run its operation (Hurmelinna-Laukkanen, & Nätti 2018). The machines and buildings are physical resources that help the organization have a physical office and operate smoothly for maximum profit realization, thus a strength.
Capital base
Vodafone has a large capital base because it is a big company that has been in existence for more than a decade and knows how to maneuver (Gonçalves, & Ballon 2011). The significant capital is considered a strength because it can enable Vodafone to acquire other companies in the field to eradicate competition.
Suppliers
Vodafone has constant suppliers that ensure the company makes continuous service provision. However, this a weakness because the quality of commodities and services supplied are substandard, and it gives Vodafone’s competitors an edge in the game (Kim 2013).
Partners
Vodafone usually works in collaboration with several partners to ensure its clients get the desired service and product in time (Ojo, Janowski, & Awotwi 2013). The sand thing is that over-relying on partners sometimes comes out as a weakness because it makes Vodafone fail to deliver the required product or service with the mentality of the partner will do it.
| Resources | Competencies | |
| Threshold Capabilities | Machines Good capital base | Having a physical office Purchase competitors |
| Distinctive Capabilities | Brand Name Experienced workforce | Strong brand Top-notch skills
|
Capabilities = Resources + Competences
Having appropriate machines and a significant capital base help Vodafone to have a physical office and purchase competitors, respectively (Bian, & Yang 2010). Having a physical office is a competitive advantage because it enables the company to gain a customer’s trust.
On the other, a brand name ensures that Vodafone has a strong brand that quickly sells among potential clients. The experienced workforce gives the company a competitive advantage of top-notch skills that can easily tap the potential market (Koutinas, Chatzifragkou, Kopsahelis, Papanikolaou, & Kookos 2014).
Strategy Evaluation
The strategy I will use is the resource-based strategy
TWOS Construction
Threats
High and double taxation
Strict employment laws
Global warming
Weaknesses
High supplier bargaining power
High competitor rivalry
Opportunity
Disposable income
Establish brand
High level of education
Technological advancement
Strengths
Low buyer bargaining power
Low threat of entry
Low threat of substitute
TWOS Matrix
Internal factors
| Strengths | Weaknesses | |
| Opportunities (Disposable income) | Low threat of substitute | High competitor rivalry |
| Threats (Double taxation) | Low buyer bargaining power | High supplier bargaining power |
The two stakeholders that will be affected by the resource-based strategy are the buyers and the suppliers (Hitt, Xu, & Carnes 2016). The plan is acceptable because the resources will affect both the buyers and suppliers. The funds will influence the number of commodities the suppliers bring in. At the same time, the same support will determine the buyers’ ability to find another industry that can offer the same services so that their ability to go for substitute comes forth (Cheng, Venugopal, Teizer, & Vela 2011). Proper cash flow preparation techniques that can help in the acquisition of more funds to run the operations are required; thus, a large capital base is necessary (Quinn, & Davis 2015). The other thing needed is sufficient experience in the telecommunication sector because it helps the particular employee know how to maneuver to satisfy the client’s needs (Koziolek 2010).
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Appendix