Contemporary Strategy Management Essay

Question:

Analyse the strategic issues of the Vodafone Company that is the leading company in mobile communications.

Answer:

1. Introduction

Vodafone Group PLC is the world’s leading mobile telecommunication company that is operating network in more than 26 countries as well as has partner network with more than 50 countries around the world with significant presence in Europe, the Middle East, Africa, Asia pacific and the United State (Vodafone, 2016). The company was formed as subsidiary of Radal electronic PLC in 1908 and was established to explore the opportunity of the new cellular technology for wireless communication. Furthermore, the company’s strategy is focusing on international market and expand its brand precent around the world. The organisation has been managed successfully over 4 CEO with Vittorio Colao who is the fourth CEO and current CEO to manage the company.

The main aim of the report is to analyse the strategic issues of the Vodafone Company that is the leading company in mobile communications. The main problem that the company is facing is with maintaining the profit of the company. The main aim of the company recently is to move the strategies to improve the profitability of the firm instead of growth. The objective is to manage international strategies in order increase the global network. The report critically evaluates the case study on “Vodafone 2012: Rethinking international strategy”. Analysing the case study the author answers the questions such as benefits of international scope in wireless telecomm. The report gives advice to Vodafone on its international strategy as to the business on which Vodafone should divest and invest (Eden and Ackermann 2013).

This report is conducted in the purpose of identifying strategic issues or problems that Vodafone is faced which likely to affect the organisation international performance as well as analysis and evaluate each problem in detail and give recommendation for Vodafone to have a better improvement in its strategy and performance in international market.

Colao the new CEO of Vodafone company aims at improving the profit condition of the company and expanding the business in the international market. It aims at increasing the benefit that the company can get from its international scope. The organization has been managed successfully over four CEO with Vittorio Colao being the fourth and the current CEO to manage the company. Furthermore, the company’s strategy is focusing on international market and expands its brand percent around the world.

2. Identification strategic issues and problems

The main benefits of expanding business in international market are that it helps in creating differentiated product giving advantage to the company. The other benefits of international scope and providing its service to other countries are to offer seamless roaming service. It also allows flexibility of the promotional ideas. It also allows innovation of new products. The main benefit of international scope in wireless telecom is competitive advantage, product differentiation, economies of scale, risk management and technological change. Hence in order to grab these opportunities and expand its business in international market the company needs to identify the international strategic issues and problems. It should then aim at solving these issues for the benefit of the company in the international market (Gamble and Thompson 2014).

The number of competitors for the wirelesses communication is rising in the international market that is making it essential for the company to adopt strategies that will lead in international integration. To reach to top position in the international market it is essential for the company to review its international strategies for the benefit of the company. The main competitors of Vodafone Company are AT&T, China mobile and Nippon Telegraph and telephone. To maximize profit, gaining competitive advantage is essential so that the company is able to create a unique brand name to build customer loyalty (Ghezzi 2013).

The strategic issues and problem which listed below are exist in Vodafone’s current situation and implementation. In order to improve the company international performance, these issues need to take into account to have better strategy and development.

3.1 Differences in customer preferences technology development, and technology in operating region

The main strategic issues occurred in Vodafone international strategy (One Vodafone), which leads One Vodafone strategy fail to run and operate globally, are the differences in culture, technology, and technology development. As One Vodafone strategy are trying to use the single technology platform in the market that the company enters and operates. Particularly, the difference in technology development, technology, and customer preferences in two markets, including Japan, The US have made Vodafone fail to run and manage its strategy successfully.

The main strategic issue that affects the company’s growth in the global market is the differences in the culture of the people. The main aim of Colao should be to deal with the differences in consumer preferences in order to levy its strategy successfully. The main issue is differences in the technological culture between the countries that the company was not being able to handle. , The US have made Vodafone fail to run and manage its strategy successfully (Galliers and Leidner 2014).

3.2 Vodafone has not manage its portfolio effectively (lack of control over its subsidiaries)

Strategic issues that exist in Vodafone international strategy (One Vodafone), which leads Vodafone to not manage its international portfolio effectively, are Vodafone lack of control over its subsidiaries in the US, Japan and France market. Although Vodafone has holding minority of stake of Verizon wireless (45 %) in the US market and SFR (44%) in the France market, those two company are not adapted Vodafone while operating in the market. It has shown that Vodafone has not leverage its resources to expand its global presence.

The main strategic issue that affects the company’s growth in the global market is the differences in the culture of the people. The main aim of Colao should be to deal with the differences in consumer preferences in order to levy its strategy successfully. The main issue is differences in the technological culture between the countries that the company was not being able to handle. , The US have made Vodafone fail to run and manage its strategy successfully (Frynas and Mellahi 2015).

3.3 Vodafone is slow in responding to industry evolution (changing industry evaluation)

Vodafone is slowing to respond the market trend due to its mobile focus only strategy. According to (Grant 2013, p. 690) a key market trend was the integration of fixed and mobile communication through bundled offering to customer. While most of domestic focus operator offered quadruple play bundles including comprising fixed and mobile telephony, broadband internet access, and television services, Vodafone is slow to response in this trend and has no strategy for convergence. Furthermore, Vodafone total communication strategy is considered slow reaction to the market trend as they was not able to effectively provide full value to customer in term of bundle offering of mobile and fixed line communication.

Due to the industry evolution, handsets market with their software such as Apple (IPhone, IPad), RIM (Blackberry) has shift to be the key player in the industry. However, Vodafone was unable to distributes iPhone or offer their service to iPhone user until 2008. Furthermore, the growing dominant of Apple in mobile internet access meaning that they dominant supply wireless application will limit the value Vodafone can offer to their customer in term of wireless application (Reddy et al. 2014).

To improve its international business performance to maximize its profit is that Vodafone can expand its scope and can divest its business into entertainment market. The company should also concentrate on investing in joint venture with the local service provider. Colaos strategy was to expand the business in the market where Vodafone lacked a controlling stakes such as Japan, India and other countries. It is essential for Vodafone to increase its pace of work. It is slow in responding to industry evolution. It also has lack of control of businesses in its international portfolios such as United States and France (Ghezzi et al. 2014).

4. Analysis and evaluation

The analysis of the case study shows that the strategy put forth by Colao ahs helped Vodafone company increase its growth. It has reinforced its growth as the world’s most international telecommunication provider. The main problem with Vodafone is to maintain and achieve competitive advantage. The main strategy of Vittorio Colao was to increase and improve the customer value by providing them satisfactory products and reducing the cost of production. The second aim was to strengthen the capital discipline (Grant 2015).

4.1. Difference in customer preferences, technology, and technology development

Competitive advantages within international content analysis framework (appendix) are going to use in order to analyse Vodafone current issues and thus to help Vodafone to re identify its competitive advantage in the international market that they are enter and operate, especially Japan and the US market. According to Grant (2013, p 319), competitive advantage in the international content analysis framework helps the organisation to understand how competitive advantage is achieved in the international market when the organisation match its internal strength in resources and capabilities. Moreover, the framework also points out that gaining the competitive advantage in the international market depends on not only firm resources but also the national environment that the firm enters to. Firstly, in relation to Vodafone resources and capabilities in the US and Japan market, technology is the main concern that Vodafone need to take into consideration. One Vodafone strategy is to standardize the technology and to try to use that same technology platform in every market they are entering, however, difference in technology platform in Japan and The US market have made One Vodafone fail to run effectively and thus Vodafone doesn’t achieve the competitive advantage in those market. According to Grant (2013, p. 684), Japan and the US used cellular wireless technologies that differed from the GSM European standard that are used by Vodafone across its other market. For example: Verizon Wireless (the US) used CDMA, which was incompatible with GSM that is used in European. Furthermore, the industry environment is another factors that to evaluate whether the organisation can achieve competitive advantage in the international market or not. In case of Vodafone, entering to the market which have a higher or lower national capacity in technology such as the US, and Japan have made Vodafone fail to achieve the competitive advantage in those market. According to (Grant 2013, p.684) Japan regarded as the world’s advanced market, adopting the wireless technology communication at least two year earlier than Euro. Thus, entering in to the market which have a higher technology capacity like Japan and tried to standardise Vodafone technology and run globally strategy are fail to run or operate. For example : with development of technology in Japan, introducing Vodafone global handset in these market made the users are not satisfy with the technology due to the phone were consider technology backward. On the hands, the US market is considered as slow development in technology which are laggard in adoption 3G wireless technology as well as multiple, incompatible, wireless standard have again pointed out that Vodafone are not able use the same technology platform to operated globally. Besides, trying to standardlise the technology and entering in the market which have higher or lower technology development like US and Japan also made Vodafone fail achieve competitive advantage in those market.

4.2 Vodafone has not manage its portfolio effectively (lack of control over its subsidiaries)

Initially, the main issues occurred in Vodafone strategy, which lead Vodafone not manage its portfolio effectively, are Vodafone lacked of control over its business in the US, Poland, India, France. According to Vodafone annual report (2011, p 26), Vodafone possess 45% ownership of Verizon Wireless (US), 24,4 % of Polkomtel ( Poland), 4.4 % of Bharti Airtel ( India), and 44% of SFR ( France ). However, that company have not adopted Vodafone brand whilst they are operating. However, that company have not adopted Vodafone brand whilst they are operating. It is essential for the company to develop products and services that are differentiated in nature in order to manage its portfolio effectively. Since the culture of different countries varies it is essential for the company to develop the product keeping in mind the customer preferences of the market. It is essential for the company to invest in Research and Development and analyse the condition of the market. Analysing the market of France and India is essential before entering and expanding its business in the market. It should also disinvest its products into entertainment sector. Making a deal with Google nexus also will help the company compete in the global market.

It is also essential to make acquisitions in other countries where the business is expected to grow such as South Africa, India and Ghana. It also plans to introduce new products in the emerging market such as mobile telephones. The main aim is to expand Vodafone’s business and make its stand in the corporate world. Introducing new mobile technologies and developing new software’s will help the company expand and manage its business in the portfolio scenario (Hill et al. 2014).

4.3 Vodafone is slow in responding to industry evolution (changing industry evaluation)

The main reason for the adoption of responding to industry evolution is the instability in finances and availability of low resources. It is essential to manage its cost structures. The company should concentrate in expanding its products services in order to quickly adapt to technological changes. The employees that work in the company should be efficient, knowledgeable, and skilful to adapt the technologies that are new to the market. The company should also have enough resources and money to adapt the change and react quickly to the scenario and present market condition (Johnson et al. 2015). The product and the value provided to the customers should be high and flexible in nature. The strategies that the company forms should be flexible so that the company can change the strategies as the situation demands. It should also concentrate in developing its communication strategy by developing plans such as effective digital marketing strategies. It is also essential to develop the software according to the new technologies such as Apple and Blackberry. The software that it develops should be in compliance with the technologies that come in the market. The managers should be effective and knowledgeable and also should hire employees that have high skill to manage all the complexities. It is also essential to develop resource that is essential to develop and adapt the change in the technology (Albers 2013).

Recommendation

The analysis shows that Vodafone should derive increased value from international portfolio of business by making a deal with Google nexus to compete with its rival in the global market. It should also concentrate on providing laptops with data cards of minimum charges in the developing countries. Vodafone Company should concentrate on developing strategies that is globally accepted. The main recommendation is to develop and expand its product service and software from just mobile services to other sectors as well. The employees hired should be such that it is able to adapt the changes in the environment and technology. Software development is necessary and so is the product differentiation in order to gain competitive advantage (McFarlin and Sweeney 2014).

Conclusion

Hence it is essential for Vodafone to expand its business in the global market. To achieve competitive advantage Vodafone needs to review its international strategies. International scope has many benefits such as technological change, and gaining customer advantage by expanding the market. It is advisable for the company to expand its business in international portfolios and divest its business to other sectors to maximize profit and growth. Portfolio management is essential and concentrating on customer preferences is also essential. The differences in culture cause large variations in technological adaption. Hence it is essential to develop strategies that are efficient in managing the cultural differences of the countries.

References

Albers, S., 2013. Cooperation and competition dynamics of business networks: A strategic management perspective (No. 111). Working Paper, Department of Business Policy and Logistics, University of Cologne.

Eden, C. and Ackermann, F., 2013. Making strategy: The journey of strategic management. Sage.

Frynas, J.G. and Mellahi, K., 2015. Global strategic management. Oxford University Press, USA.

Galliers, R.D. and Leidner, D.E., 2014. Strategic information management: challenges and strategies in managing information systems. Routledge.

Gamble, J.E. and Thompson Jr, A.A., 2014. Essentials of strategic management. Irwin Mcgraw-Hill.

Ghezzi, A., 2013. Revisiting business strategy under discontinuity.Management Decision, 51(7), pp.1326-1358.

Ghezzi, A., Balocco, R. and Rangone, A., 2014, January. The relationship between Open Innovation and Strategy: data-driven analysis of the Mobile Value Services Industry. In System Sciences (HICSS), 2014 47th Hawaii International Conference on (pp. 1073-1082). IEEE.

Grant, R.M., 2015. Contemporary Strategy Analysis 9e Text Only. John Wiley & Sons.

Hill, C., Jones, G. and Schilling, M., 2014. Strategic management: theory: an integrated approach. Cengage Learning.

Johnson, G., Whittington, R., Scholes, K., Angwin, D. and Regn?r, P., 2015.Fundamentals of strategy. Pearson.

McFarlin, D. and Sweeney, P.D., 2014. International Management: Strategic Opportunities & Cultural Challenges. Routledge.

Reddy, K.S., Nangia, V.K. and Agrawal, R., 2014. Farmers Fox Theory: does a country's weak regulatory system benefit both the acquirer and the target firm? Evidence from Vodafone-Hutchison deal. International Strategic Management Review, 2(1), pp.56-67.

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