Posted: September 4th, 2013
Strategic Research Project
Strategic Research Project
Vodafone Group is a British transnational company that engages in telecommunications. It has its mother company in Newbury, United Kingdom. Vodafone is the world’s largest telecommunication company in terms of revenue and second in terms of the number of users. It operates in over thirty countries having a vast base of associate companies. The company has a slogan “Everybody’s welcome” displaying how they have made efforts to accommodate all kinds of clients with different backgrounds having the same of interest of using Vodafone products. True to their mission, Vodafone have extended their branches to cover at least all the continents in the world.
The company has strengths, weaknesses, opportunities and threats that apply to its operations, in addition to its structures. The major strengths of Vodafone Group are that Vodafone has a wide, geographical portfolio covering much of Africa, the Middle East, plus to a small level, the US. Therefore, they enjoy a strong customer base that provides it with increasing revenue each financial year. This large customer base also becomes the consumers for Vodafone products. Vodafone has also invested substantially in their network infrastructure with signal masts to serve consumers within their vicinity. Vodafone also managed to entrench their presence in most developing states like India and Kenya. Lastly, Vodafone provides reliable data and voice services especially in cities making it a preference for corporate groups. (Vodafone Group Plc, 1900)
Some of the weaknesses plaguing Vodafone include non exploitation of other markets. Owing to their heavy investment in Europe, Vodafone misses out on benefiting from the rest of the untapped markets in The Americas and East Asia which still have a large demand for mobile phones along with other Vodafone products. Vodafone has also invested very little in extending their signal range to cover most of rural areas thereby missing out on the huge rural consumers. Vodafone has also not focused their business operations in the US. Therefore, they do not maximize on the thriving demand created by mainstream American firms and entrepreneurs.
In terms of opportunities, Vodafone have developed innovations in mobile commerce that seek to fuse banking with mobility that will see an increase in their revenues. Vodafone launched the mobile money transfer service, M-PESA along with Safaricom Kenya, which brought new dimensions to mobile banking. Vodafone has also launched the mHealth Solutions which is the application of mobile communications to healthcare. Apart from these products, Vodafone also launched the cheapest phone aimed for the developing world.
The most dominant threat in this market is the constant change in technological approaches. The telecommunications market is characterized by a dynamic competition that constantly seeks to innovate and experiment with new ideas. Consequently, this competitive environment always threatens Vodafone with being edged out of the market. The European Union also poses a threat to the mobile usage across borders in Europe threatening Vodafone as mobile phones are their major product. Lastly, Vodafone still has a lot of ground to catch up with other American telecommunication companies that have cut a niche for themselves as solid competitors. (PLC SWOT analysis, 2011)
In terms of market penetration, the Vodafone company has made huge investments in most of Africa as well as the Middle East in a bid to penetrate new markets. It operates in Egypt, in South Africa, in Ghana and in Libya under the partnership with al Madar (Working Nation, 2004). Of interest is the approach of using partnerships as the main method of going into business within Africa. This can be an attempt at mitigating political as well as economic risks that plague most of African states. Within Asia and Latin America, Vodafone has been taking a laid back approach similar to that in Africa by again opting to partner with Verizon Wireless instead of establishing their own offices independently. Within Europe, Vodafone have been more aggressive. It has engaged in past takeovers of telecommunication companies, for example, Elisa, Omnitela plus Cyta alongside other companies. Clearly, Vodafone has invested a larger bulk of their capital in Europe as compared to the rest of the continents.
Vodafone has three main competitors in the global market namely T-Mobile, Orange as well as O2. Vodafone has taken a strategy of buying out other networks in order to reduce competition within a particular market segment. However, small network operators operating as mobile virtual network operators have lowered this barrier significantly with differentiated products alongside services identifying them as new entrants. Key suppliers of Vodafone have had less muscle to bargain owing to lack of technical advantages as well as the looming Chinese entrants who pursue cost leadership. Vodafone has responded to this by integrating all her key business activities hence leveraging their economies of scale. Vodafone has also countered the threat form substitutes by continuously diversifying its products to meet the consumer’s needs. (Myers, 2010)
Vodafone has been actively engaged in domestic politics of their host countries where they possess subsidiaries dragging the firm into many blame games. In order to avoid such complications in the future, Vodafone should revise their policies concerning cooperating with the state in matters of state interest. A good example was the Egypt insurgency where Vodafone, who administers most of the telecommunication infrastructure, shut off all voice and data services to Egypt citizens after orders by the state (William, 2011). Vodafone should also engage in a vigorous campaign to establish themselves in the US where there is a large customer base. Over five years, this should translate into profit margins received by Verizon as well as AT&T Mobility.
Global Perspective. (2010). Service Provider VoIP Equipment and Subscribers: Quarterly Worldwide and Regional Market Share, Size, and Forecast. Hoboken, NJ: John Wiley and Sons. Myers, D.
Vodafone (Firm). (2004). Working nation: Views from people at work. St. Albans: Vodafone.
Vodafone Group Plc (Newbury). (2010). Annual report. Newbury: Vodafone Group Plc.
Vodafone Group, PLC SWOT Analysis. (2011) (n.d.). (Business Source Complete) Cleveland: Data monitor Plc.
Williams, Christopher (28 January 2011). “How Egypt shut down the internet“. The Daily Telegraph (London)
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