Competitive Edge of Vodafone’s Strategy

Competitive edge of Vodafone’s strategy

Introduction:

This report will explore the strategic analysis of Vodafone Plc, a world’s biggest mobile network. Firstly, history of Vodafone will be explained. Secondly, external environment will be examined with the help of PESTLE analysis. Thirdly, internal environment will be analyzed for the various key strategies. Fourthly, Vodafone’s competitive situation explained with the help of SWOT analysis and finally conclusion about Vodafone strategy with regards to competitors will be drawn for current situation.

Company History:

Vodafone was established as a subsidiary company of Racal Electronic Plc in 1984 in Newbury, London. The company has less than 50 employees at that time. Vodafone is the first cellular network launch in the UK. It was floated in the stock exchange in October 1988. The first digital (GSM) mobile phone service was launched in the UK by Vodafone in 1991. With loads of value added services Vodafone progressed and expand rapidly as specified on the website www.vodafone.com. In 1999 Vodafone became second largest company in the FTSE 100.

Vodafone strategies for acquisitions, collaborations and merger helped to become largest mobile telecommunication company in the world in 2000. Annual report of 31st March 2006 shows that the group had 186.8 million proportionate customer and 553 million venture customer (pre-paid) in its subsidiaries, joint ventures, associates and investments with the turnover of $ 64,470 m. Today Vodafone has ownership interest in 27 countries across 5 continents and partner networks in further 33 countries.

External Environments:

PESTLE Analyses

Hollensen (2003) states that the frame work of PESTLE has been used to evaluate the Vodafone’s competitiveness in global mobile network and anticipates changes. PESTLE analysis measures a business market and potential according to external factors. It involves Political, Economical, Social, Technical, Legal and Environmental factors in which firm operate. Website www.businessball.com suggests that PESTLE analysis becomes more useful and relevant to the larger and more complex business like Vodafone.

Political Factors:

• In February 2000 Manchester United and Vodafone, UK announced a commercial alliance. In addition, Vodafone is able to develop new value added services specifically for Manchester United fans. This dual branding exposes the Vodafone name in countries where it may not have been previously known and helps Vodafone for global ambitions.(www.manutd.com)

• According to the guardian (2006) Vodafone’s chief executive, Arun Sarin on 25th July, suffered the most significant share older rebellion in the mobile phone operator’s 18-year history as a public company, when more than 15% share holders who voted at the AGM refuted to back him.

Economical Factors:

• Gavin Stamp reported that due to historic loss of Ј 21.8 b in year 2005, Vodafone proposed a sale of its Japanese business to soft bank for Ј 8. b (BBC news,2006)

• Telecom analyst Robin Hearn says “ I would like to see Vodafone get stuck in to some emerging markets and move more strongly in to countries like India- a rapidly growing developing country” (BBC news, 2006)

• Banking firm Lehman Brothers reported in the Sunday Telegraph that “we believe Vodafone has room to announce 10 % head count cuts and 15 % cost saving in IT and network operations through outsourcing.” (BBC news, 2006)

• The group’s partner network strategy enables the group to implement its global services in new territories, extend its brand reach into new markets and create additional revenue with out the need for equity investment.(Vodafone web)

• According to the Guardian (2006), the mobile phone firms prepare to do battle (price war) in German. As investor worried about a possible price war, Vodafone share price fall nearly 4 % to 112 p on 11th August.

• In the guardian, Richard Wray (2006) mentioned that there is acknowledgement that assets Vodafone bought as company paid for them Ј 100 b acquisition of Germany’s Mannesmann at the height of the dotcom boom. Today Vodafone wrote down the value of than business by staggering Ј 19.4 b only.

Social Factors:

• Vodafone’s research on the potential of mobile to improve healthcare suggest text message reminders for hospital and doctors appointments could save between Ј 240 and Ј 370 m per year in UK alone. (Vodafone