the growth of vodafone
“Role of Strategic Planning and Implementation in Ensuring the Success of Profit and not for Profit Making Organizations”
1. Strategic planning; Introduction
Planning is necessary for everything. Without the knowledge of where to go and how to go, it is very difficult to reach at the destination and you are likely to get lost on the way paralyzed by the uncertainties and surprises. The same case applies to the business that operates in competitive environment. Without the clear targets and the guidelines to reach them, any business cannot survive and has to withdraw from its businesses. The targets and the guidelines of a business constitute the business strategy. In this regard, Ansoff (1965) says “business strategy is the broad collection of decisions, rules and guidelines that define a business's scope and growth direction.”
In its strategy, an organization formulates its reasons for existence which is the mission, and set its purposes and objectives. Once the objectives have been set, it forms action plans which are the policies and programs to achieve the objectives. Only the mission and the action plans do not guarantee that a business organization is in the right route. Different methods are to be employed to ensure that the things are taking the right path and the business is developing towards its mission. A business has to keep all these things in consideration at the beginning of the business and adjust its plan and policies to address the changing environments. While strategically thinking is very important to managers, good managers must have the foresight and must be able to generate and evaluate a number of worthwhile strategies considering the nature of the business, the environments it operates in, the capabilities and the resources it has. That is why, strategically thinking is very important to the managers and strategic planning has got prominence in the business.
The term strategic planning has been used to refer to a process of defining an organization's future direction or its strategy. Robson (1997) defines Strategic Management as the study of symptoms and portents of the future and interpret them so as to choose an appropriate direction for the future development of the organization. The future time reference in the strategic planning may range from a year to 4-5 years. However, some organization might plan for long period up to 20 years. The time period variation is considered to be depending upon the nature of the business. The longer the time period, the harder it is to manage the strategic planning. In anyway, it highlights the methodologies to be adopted to reach to the destination. A successful strategic planning not only tells where an organization is going in the near future and how, but also the ways of measuring the achievements of the plan.
Strategic planning is all about the course an organization takes as a part of a strategy. Strategy has been defined as “the pattern of decisions made for allocation of resources throughout an organization. These encapsulate both desired goals and beliefs about what are acceptable and, most critically, what unacceptable means for achieving them.” (Robson, 1997) Strategic planning tells how these decisions are made and what sort of methodologies and techniques are adopted to achieve the desired goals and objectives. It successfully posits and relates the firm to its environment to assure the continued success. It looks beyond the day to day operations of an organization to a long-term prospects and development. A strategic plan begins with the articulation of specific goals and then specifies the action plans and the means to acquire the goals.
2. Profit and not for profit making organizations
As the name suggests,profit making companies have the primary purpose to make profit. Contrary to it, not for profit making organizations exist for the cause of philanthropy, for the welfare provisions. Social solidarity and the service for the humanity is the only and the final cause of the existence of the not for profit organization. Although the profit making organization
also serve the people and are accountable to the society but take money for the product and service they offer. The private companies and public companies are the examples of these. The not for profit sector constitutes the private, voluntary and other nonprofit organizations. Profit making and not for profit making organizations differ from each other in terms of their orientation and the way they finance their activities. According to Anheler (2005) Nonprofit organizations are internally focused on their members and discriminate in terms of willingness to welcome and serve members or clients who come from different in faith, beliefs, and social status. In terms of generating financial resources, the nonprofit making organizations depend on donation, gifts, grants, dues and public subsidies .On the other hand, the profit making organizations are oriented towards their customers and indiscriminately serve them as long as they are willing to pay for their product and services. Business forms leverage their finance by charging the prices for their product and services and the government agencies finance their activities through taxation. Whatever the difference between them, both the profit and not for profit making organizations must have the goals and objectives, plans and policies to achieve the objectives and methodologies to ensure that things are taking place well. Both of these kinds of organization must form the strategy for their success. Strategic planning is very important for them. The major difference in the way these two different types of organizations carry out the different steps and the associated activities in the planning process is supposed to depend on the size and scale of the organization than on the profit making and the not for profit making status. The planning activities the smaller organizations conduct tend to be similar despite being profit making and not for profit making status. On the other hand, large nonprofits and large for-profits tend to conduct somewhat similar planning activities that are different from those conducted in small organizations. The focus of the planning activities is often different between for-profits and nonprofits. Nonprofits tend to focus more on matters of board development; fundraising and volunteer For-profits tend to focus more on activities to maximize profit. Also, in addition to the size of the organization, differences in how organizations carry out the planning activities are more a matter of the nature of the participants in the organization -- than its for-profit/nonprofit status. (Source: managementhelp.org). Both kinds of organizations involve the following processes in strategic planning.
Although there is no homogeneity in the ways the planning strategy takes place in different organizations, they exhibit similar type of model with some of the variants.
3. Strategic planning of Vodafone
3.1. Vodafone: Introduction
Vodafone is a mobile company. It runs its business in Europe, the middle East, Africa, Asia Pacific and the United states. It operates through its subsidiaries, joint ventures, and associated undertakings and investments. The group had 323 million customers as per the registered record as at 30 September 2009. It has the total marketed capital of about 71.2 billion dollar as at 12 November 2009. www.vodafone.com
3.2. Company Mission
Mission statement of any organization articulates its reason for existence attempting to answer the question: What business are we in? “a central purpose of the organization” (Robson,1997). The mission statement represents what the senior managers want to achieve in the future: their view about the future of the organization. It clearly defines what they are not doing thereby are giving the guidelines for the course of action they will adopt. Vodafone has the mission statement:
We will be the communications Leader in an increasingly connected world. (www.vodafone.com/start/investor_relations/strategy0.html- (Assessed on 15th Jan.2010)
3.3. Company Vision
Vodafone clearly states that it will become the global mobile telecommunications leader through profit, customers and value. (www.vodafone.com). Although, the vision and mission are often converged, some organizations state their mission and vision separately. According to Anheier (2005), “a vision conveys the ideal picture future of the organization, its aspirations, and hopes of what it will become, achieve, or contribute.” It inspires and works as a framework for the formulation of mission. Vodafone's vision is to make mobile network systems “nervous System” of the closely interconnected developed markets of a Europe, US and Japan.
Source : www.thetimes100.co.uk
3.4. Goals of the company
Goals define the future positions of the organizations. Goals and objectives are often used interchangeably. If they are separated, goals refer to broad and timeless statements of the end results and objectives are quantitative and qualitative measures of the goals. (Robson, 2005) Vodafone has the following objectives to achieve its mission.
o To become the one of the world's top five brands.
o To retain the Market Leadership.
o To extend its services in the emerging market of Asia and Africa.
o To introduce the innovation in the use of mobiles bringing sophistication in the use. ( source: www.vodafone.com)
3.5. SWOT Analysis of the company
Any company operating in the competitive market has to assess its current position, and SWOT analysis provides the basis for the company's resources capability scansion which is internal to the organization and the environmental scansion which are external environmental context in which the Company operates. Strengths and weaknesses; opportunities and threats are the major Factors a company has to consider in the formulation of the business strategies. Vodafone's SWOT analysis has the following result.
Vodafone has brought the diversifications in mobile telecommunication with stronghold in its operations in the markets of Europe, the Middle East, Africa, and Asia Pacific and the US. It has the big presence in Japan and the leading position in the India. Its strategic alliance with Apple iphone is also the strength of Vodafone. Besides these, the strengths help the company identify the core values and formulate the strategy.
SWOT analysis helps the company identify the weaknesses whereby the company would make the strategies to reduce its weaknesses by the reconfigurations of its operations. Vodafone has the following weaknesses that help shape the strategies. The Vodafone's large percentage of operations, 80%, is in Europe and its US business is not as strong as Europe.
Vodafone can exploit its strengths to seize the opportunities that lay open in the market. It has the opportunities in the developing markets of Asia and Africa, the cost reductions in India, and the research and development of the new technologies in the mobile phones. Strategy will focus to exploit these opportunities.
Threats are the external factors that pose hindrances for the expansion and development of the company. The highly competitive market of the mobile phones, European Union regulations on cross border cell phone are the threats that the company has to tackle by formulating the strategies. www.researchandmarkets.com/.../vodafone_group_plc_company_analysis.pdf [ 15th Jan 2010]
Besides these, a company has to do the environmental scanning before making the decisions. The tools for doing this are PESTEL analysis and the PORTER'S FIVE FORCES analysis. It is equally important for Vodafone to analysis these forces for the formation and the implementation of the strategies.
3.6. Strategies of the company
3.6.1. Corporate Social Responsibility Strategy
Vodafone closely knows that to materialize its vision, it has to keep the customers trust and loyalty intact and make sure the customers admire its product. The way it does business ensures the customers' loyalty. Vodafone enhances its reputation and builds customer locality by interlinking business strategy and its corporate responsibility strategy. (www.thetimes100.co.uk). When a business succeeds in meeting the needs of the society, it gets ample opportunities to expand and increase its business. Along with its business strategy of expansion, Vodafone sets clear priorities
* Capture the potential of mobile to bring socio-economic value in both emerging economies and developed markets, through broadening access to communications to all sections of society.
* Deliver progress against stakeholder expectations on the key areas of climate change, a safe and responsible internet experience, and sustainable products and services.
* Ensure our operating standards are of a consistent and appropriate level across the Group.( www.thetimes100.co.uk/ Business Case Studies/Vodafone/ Vodafone's corporate Responsibility: Assessed: 15th Jan,2010)
3.6.2. Business Strategy:
In the globally competitive marketplace with a large number of existing and emerging mobile companies, Vodafone is required to hold be very innovative and customer oriented approaches to hold the existing market and cruise the new market. Vodafone has adopted two approaches in its business strategy:
18.104.22.168. Product Extension:
Vodafone knows that sophistication in the existing product and services is the key to its survival in the already established market. New features, dimensions and efficient and effective customer service are the key to it. In the developed market of U.K., USA and Europe the users are very sophisticated and they expect new functions in their mobiles. Vodafone has developed new ways of delivering the product and services with noble functions help Vodafone to retain the existing customers and attract the new ones. 3G technologies have improved the ability and quality of transferring voice and data. Very fast internet speeds allow extended services such as video calling, music downloads, mobile television and email messaging.
22.214.171.124. Expansion in the emerging Market:
Vodafone is continuously striving to expand its business to the remotest part of the globe where the people do not have an access to the mobile phone. These areas include the places which are not developed in their infrastructures rendering the landline communication very difficult. Vodafone seems to be committed to providing these markets with the technology to develop communication that will help both economically and socially. There are supposed to be more than four billion mobile phones across the world and 64% of all users in a developing country (www.thetimes100.co.uk/ Business Case Studies/Vodafone/ Vodafone's Business Strategy: Assessed: 15th Jan,2010)
3.6.3. Corporate strategy:-
As a part of corporate strategy, Vodafone aims to become the world's top five brands. To achieve this, it has adopted the duel branding policy with the 30 companies to expand its global presence. It includes the locally recognized brand and the Vodafone name. The policy is once the Vodafone name becomes widely accepted; Vodafone is believed to become the sole brand. The best example of it is its sponsorship deal with Manchester United. The commercial alliance between Manchester United and Vodafone was announced in February 2000 and Vodafone became the main sponsor of telecommunications and equipment service partner of the club. The purpose behind it is to establish its brand in those places where Manchester United is a good brand and Vodafone has not yet been established.
www.thetimes100.co.uk/ Business Case Studies/Vodafone/ Measuring the Success of the Strategy: Assessed: 15th Jan, 2010
3.6.4. Measurement of the Success of the strategies.
Once the strategies are formulated, a business organization has to establish the measuring yardsticks to see the effectiveness of the programmes implemented. Vodafone recourses to the following ways to measure the success of the implementation.
* Consumer research is done to measure the general awareness.
* The impact and accessories is measured by charting ongoing improvements in sales.
* The effectiveness of the value added activities is measured through the number of people registered in the services.
* Exposure of the company is also measured by monitoring the media coverage.
www.thetimes100.co.uk/ Business Case Studies/Vodafone/ Measuring the Success of the Strategy: Assessed: 15th Jan, 2010)
4. Strategic planning in not for profit organization
4.1. Ford Foundation, U.K.
Established in 1936, The Ford Foundation focuses ‘on solving humankind's most pressing problems.' Ford Foundation adopts the traditional and accepted approaches to solve these human related problems. The Ford Foundation makes grants to many organizations that are working for the welfare of the people for the scientific, educational and charitable purposes. It is international philanthropic organization working for the advancement of the human welfare.
4.2. Mission of the Ford Foundation
The mission of Ford Foundation is to build a perfect global society. It has the following goals as a part of its mission: Strengthen the democratic values, Reduce poverty and injustice, Promote international co-operation, Advance human achievement.
In its way to it, the Foundation gives extensive support to the leaders and organizations that are working in the forefront of the society to bring changes in the society.
“The Ford Foundation is a resource for innovative people and institutions worldwide.”(Anheier, 2005)
4.3. The Organizational Values of Ford Foundation
The Ford foundation aims to promote human welfare through the creation of political, economic and social systems which in turn enhances the peace and sustains the environment. It seeks to achieve its mission through focusing on the factors on which the humanity depends. The Foundation has planned to combat with the challenges by staying close to the place where the problems are acute. For this, it collaborates with other nonprofit organizations and business sectors and ensuring the involvement of men and women from all sections. The organization believes the people centered activities boost the mutual understanding, improve the lives and the conditions of the society.
“We work mainly by making grants or loans that build knowledge and strengthen organizations and networks. Since our financial resources are modest compared with societal needs, we focus on key problem areas and program strategies.”
Susan V. Berresford (President, Ford Foundation) (Source: www.fordfound.org)
4.4. Strategic Focus of Ford Foundation
The strategic activities of nonprofit organizations depend upon the values it holds for the sake of humanity. For the successful achievement of the goals and mission an organization has to select the key areas to work. The ford Foundation has the following strategic areas to work.
o World peace and the establishment of a world order of law and justice.
o Basic principles of freedom and democracy in the solution of the insistent problems of an ever-changing society.
o To advance the economic well-being of people everywhere and to improve economic institutions for the better realization of democratic goals.
o Strengthen, expand and improve educational facilities and methods to enable individuals more fully to realize their intellectual, civic, and spiritual potential; to promote greater equality of educational opportunity; and to conserve and increase knowledge and enrich our culture.
o Increase knowledge of factors which influence or determine human conduct.
(Source: - www.fordfound.org/newsroom/speeches/149): Assessed on 14th Jan 2010
4.5. Core Issues of the Ford Foundation,
“Our programs will address eight significant social justice issues. These issues are grounded in our mission and history and will be familiar to our partners.”
(President Message, September 8, 2009)
o Access to Education.
o Democratic and accountable government
o Economic fairness and opportunity
o Social Justice Philanthropy
o Freedom of expression
o Sexuality, reproductive health and right
o Natural resources and sustainable rights
o Social justice philanthropy
(www.artsjournal.com/.../ford-foundation-announces-new.html : Assessed on 14th Jan 2010)
Based on these values and the goals, the ford foundations supports and launches the individual programmes worldwide in collaboration with other partner organizations.
Strategic planning has great role for the success of any organization whether the organization is profit making or not for profit making organization. Without the clear idea of the purpose, the way to take to pursue the purpose and the clear and well defined activities, an organization gets lost on the way and merely witness the loss of time, resources and efforts. Clearly defined goals and objectives consistent with the mission help the organization in many ways. Communicating the goals and objectives to the constituent part of an organization, developing a sense of ownership, ensuring the most effective resources focusing on the key priorities are the central issues in an organization. Meanwhile, an organization has to establish the mechanism to measures the process. These are the issues that can be addressed by strategic planning of an organization. To sum up, we can tell that the strategic planning provides the organization clear view providing greater effort ant efficiency.
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