Vodafone group: An analysis

Chapter 1

Firm’s Profile

Vodafone Group is a mobile telecommunications company. The company has a significant presence in Europe, the Middle East, Africa, Asia Pacific and the United States. In the United States the group’s associated undertaking operates as Verizon Wireless.

From a UK start-up company in 1984, Vodafone is now the world’s leading mobile telecommunications company. So Vodafone it’s a market leader in its current production. Businesses know that consumers position products in relation to those of competitors. There can be a ‘pecking order’ or ‘product ladder’. Products might be market leaders. They are usually the main selling product and decisions on prices and promotion are often followed by other products, known as market followers. (Dave Hall et al, 2006)

Vodafone is amongst the major global providers of telecommunication services. The company has a strong presence in Germany, the UK, Italy, Spain and other European countries. Through its direct and partner networks, its global reach extends to more than 38 countries. Vodafone offers a wide range of mobile services such as voice, messaging, data, and roaming services to customers and business enterprises. Vodafone has a strong network infrastructure comprising 2G and 3G networks, which are operated over GSM and GPRS network standards. These networks enable the group provide high speed data services.

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Legal Type Of Firm

Vofadone was formerly known as Racal Strategic Radio Limited and changed its name to Racal Telecommunications Group Limited in 1985. Further, the company changed its name to Racal Telecom Limited in 1988; to Vodafone Group Public Limited Company in 1991; to Vodafone AirTouch Plc in 1999; and subsequently to Vodafone Group Public Limited Company in 2000. Vodafone Group is headquartered in Newbury, the United Kingdom.

Source: http://www.scripophily.net/ratepulicoen.html

Public limited companies tends to be larger and is the second type of o limited company. This company name ends in plc. There are around 1.2 million registered limited companies in the UK, but only around 1% of them are public limited companies.

Shares in public limited companies may be freely bought and sold by the general public on the stock market. Owners of plcs are therefore rarely closely involved with the business. The stock exchange is a market where second hand shares are bought and sold.

Operating as a public limited company is associated with both advantages and disadvantages.

Advantages:

• All members have limited liability.
• Huge amounts of money can be raised from the sale of shares to the public.
• Production costs may be lower as firms may gain and this leads to ability to expand and benefit from economies of scale which means as the production increases the cost of production per unit decreases. In this case Vodafone will be able to set lower prices than competitors and in this way increase sales revenue and maybe profits.
• The great size of Vodafone, can often dominate the market and lead to a market leader where the competitor firms will have to follow.

Disadvantages:

• There can be potential management problems in the organization.
• There may be danger of takeover
• There may be danger of shares loosing value through fashion and rumour and this to lead to a reduction of the stock market shares.

Some public limited companies such as Vodafone are very large indeed. They have millions of shareholders and a wide variety of business interests situated all over the world. So, Vodafone is a multinational company which means that it has production plants in a number of different countries.

Type Of Competition

Vodafone Group Plc is the world’s leading mobile telecomunications , with a significantpresence in Europe, the Middle East, Africa, Asia pacific and the united states through the company’s subsiadiary undertakings, joint ventures, associated undertakings and investments.

source: http://www.linkedin.com/companies/vodafone

Vodeafone is operating as an oligoply because it a market leader and has its dominant place in the market. Oligopoly is one of the four market structures. At one extreme perfect competition, where there are very many firms competing. Each firm is so small relative to the whole industry that it has no power to influence price. It is a price taker. At the otherxtreme is monopoly where there is just one firm in the industry, and hence no competition , which involves a quite a lot of firms competing and where there is freedom for new firms to enter the industry, and oligopoly which involves only a few firms and where entry of new firms is restricted. So, oligopoly is a market structure where there are few enough firs to enable barriers to be erected against the entry of new firms.

Product Design And UCD Failures

Vodafone the worlds largest mobile operator, is seeking an experienced freelancer to supportin the design and developmentof its exclusive products and specific Vodafone owned devices for all customer target groups.

Vodafone’s aim is to grow revenue and improve its profit margin by adding value to its products and services, i.e. Earning more from each product sold. The ‘Vodafone Live’ service enables customers to use picture messaging to download polyphonic ringtones, colourgames, images and information, through an icon driver menu. Vodafone offers a product with many different features provides customers with opportunities to chat, play games, send and receive pictures, change ringtones, receive information and soon view video clips and send video messages.

Vodafone and other mobile phone industries use different ways in orderto prolongthe maturity stage of their product life cycle and gain more profits. The cell phone life cycle includes design, manufacture, distribution, use and disposal(or alternatively, refurbishment of recycling components).

Chapter 2

Swot Analysis

The purpose of Swot Analysis is to conduct a general and quick examination of a business current position so that it can identify preffered and likely directions for the future. Swot analysis involves looking at the internal strengths and weaknesses of a business and the external opportunities and threats. (Dave Hall et al, 2006)

Strengths:

• Diversified geographical portfolio with strong mobile telecommunications operations in Europe, the Middle East, Africa, Asia Pacific and to some extent the US
• Leading presence in emerging markets such as India
• Big presence in Japan market
• Strategig alliances with Apple iPhone

Weaknesses:

• US business not nearly as strong as European/rest of the world operations
• 80% of its business is generated in Europe

Opportunities:

• Focus on costs reductions improving returns
• Majority stake in Huthcison Essar in India
• Research and development of new mobile technologies
• Focus on developing markets ( Africa, Latin America

Threats:

• Highly competitive market
• Still lags behind major competitors in the US
• Extremely high penetration rates in key European markets
• European Union regulation on cross-border cell phone usage by customers
• Develpment of VOIP communication

Source: http://www.wikiswot.com/SWOT/15_Communication_Services/Vodafone.html

Pest-G Analysis

Pest -G analysis examines the external environment and the global factors that may affect a business. It can provide a quick and visual representation of the external pressuresfacing a business, and their possible constraints on strategy. It is usually divided into five external influences on a business-political, economic, social, technological and green environment. (Dave Hall et al, 2006)

Political This is concerned with how political developments, regionally, rationally and internationally might affect Vodafone’s strategy. It might include a consideration of legislation, such as consumer laws, regulation, political pressures and the goverment’s view of certain activities.

Economic This might involve the analysis of a variety of economic factors and their effects on business. They might include consumers ativity, their willingness to spend. Economic variables sch as inflation, unemployement, trade growth. Th effects ofchanges in product and labour markets.

Social One social issue that affects the operations of Vodafone in a positive way is the increased population in India. So Vodafone operating in a market with high population leads to an increase demand for its products.

Technological Businesses operate in a world of rapd tehnological change. Organisation sneed to regularly review the impact of new technologies upon their activities. Production may become out of date and increase costs for the business, communication may become inefficient as ICT develops. That’s why Vodafone is investing in R&D which is vital in industries where technological change is rapid.

Green Enviromental factors can influence the decisions of Vodafone. Taking into account environmental considerations mayraise costs, but might also generate greater sales. Environmental and social issues are very important for Vodafone. They use the monitoring aspect of the entropy system for international data gathering across their operating companies. This information is fed into their corporate Social Responsibility (CSR) and has resulted in significant data qulality improvements.

Chapter 3

Global MIS/Risks

Vodafone is a multinational company operating in a globalised economy where there is free international trade between different countries.

International trade is based on the principle of competitive advantage. This means that businesses that benefit from the international trade are those which can produce their products at the lowest opportunity cost than other countries.

According to Peter Jay the ability to produce anywhere in the world, sell your products anywhere in the world and sent your profits anywhere in the world is called globalisation.

Vodafone is a very successfull cell phone company, as it is a market leader in the countries that is operating and this it has been achieved by its international competitivness. With international marketing firms have to consider their USP( unic selling point) and their international competitivness in order to increase their global market share. In this effort multinational have to provide greater variety of products better qulity an d at lower price. To improve therefore their USP and improve their international competitivness multinationals should improgve productivity per worker, invest in research and development and experience further economies of scale. (Dave Hall et al, 2006)

Vodafone In Ghanaian Mobile Deal

Mobile phone firm Vodafone is to expand its presence in Africa which is a less economically developed country by buying a controlling stake in Ghana Telecom for 452 pounds. Rapid uptake in mobile use on the continent has attracted foreign firms. Vodafone is attracted by Ghana’s strong economy and political stablity. Ghana is the most attractive markets in Africa. There are currently 2.7 million mobile subscribers executive in Ghana, although overall mobile penetration per head of the population in the west African country reamauins low at 35%. So, as a result of this Vodafone has recently sought to focus on emerging markets with high potential and less established competition, existing more mature mrkets such as Japan.

Source: http://news.bbc.co.uk/1/hi/business/7487821.stm

The Impact Of Vodafone In The Ldc’s

As we said previously Vodafone is a multinational company that operates mostly in less economically developed countries that are becoming emerging economies because it can be benefit in a number of ways. However, the operation of Vodafone in those countries is acossiated both with advantages and disadvantages.

It can increase the employment and in this way it can increase the income per capita. An increase in domestic competition leads to an improvement in the efficiency of local firms and also decrease inflation. It can improve the balance of payment account of the country if product’s are sold abroad and also the curency of the country in which a multinational operates in, and also it can introduce new technogy, production processes and management stylkes and techniques.

Ethical Issues

There are some ethical issues that result from the nature of the operation of different multiationals in the ldc’s. One ethical issue is the exploitation of workers. There are long working hours, they impose over time and also child and labour prisoners.

They might operate in ldc’s with lower environmental standards.

Usually they have high orked related accidents and the reason is because it is cheaper for them to have lower safety standards.

They usually bring their managers ( mddle andhigh level) for ther headworkers and therefore don’t give many opportunties to local managers.

Because of the size and financial size of such enterprises, there are concerns about the ability of goverments to control them and in this way they may be able to avoid paying operation tax.

Conclusion

The above project is an analysis of a global multinational company which is operating in different countries and it is a market leader in the products that it provides.

The results that came out of this project are connected to the marketing strategies that Vodafone uses in order to promote effectively its products around the world through the an appropriate marketing Mix.

I Also saw how different cocial environmental and technological issues benefit the company and which are the threats that may increase costs of vodafone and maybe decrease profits.

Finally I analysed the operations of Vodafonesin the less econimically developed countries andin which way it can affect the economy of these countries and the ethical issues that may arrise through such operation.

References

Dave Hall, Rob Jones, Carlo Raffo (2006), 3rd edition, Business Studies

John Sloman , (2006) sixth edition, Economics, Prentice Hall

http://www.scripophily.net/ratepulicoen.html

http://www.linkedin.com/companies/vodafone

http://www.wikiswot.com/SWOT/15_Communication_Services/Vodafone.html

http://news.bbc.co.uk/1/hi/business/7487821.stm

The rate of increasing prices per year. When inflation is increasing prices increase faster, when inflation decreases prices keep increasing but in a slower rate. Inflation is bad for firms and for the market. Since the products are becoming more expensive, people’s purchasing power is reduced so they buy less.