Question:
Discuss about the Strategic Management of Vodafone Group.
Vodafone Group is a mobile telecommunication company. The company is present in Europe, Africa and also in the United States. The company started the operations in 1984, and now it is known as one of the world’s leading mobile telecommunication company. Vodafone is the market leader by taking into considering the current operations. The company offers effective services so that the company can easily survive in the competitive environment. Vodafone is usually selling the product and services on prices and promotion. The market trends are followed by the company, so that the profitability can be enhanced easily. Vodafone is one of the major global providers of telecommunication services. The company has a strong presence in the Germany, Spain, and Italy. The global reach of the company is in more than 38 countries. The company offers various ranges of mobile services like voice, data and roaming services to the customers and business enterprises. Vodafone has a strong network infrastructure that consists of 2G and 3G networks. The activities are conducted over GSM and GPRS network standards. The networks enable the group to offer high-speed data services.
Vodafone Group is one of the British multinational telecommunications company headquartered in London. The Vodafone owns and operates in 21 countries and has partner networks in over 40 countries. The company consists of 92,812 employees worldwide. The mission of the company is that “The Company will be the leader of the communication and it is connecting world”.
Porter five forces analysis is a framework to evaluate the level of competition within an industry and business strategy development is also taken into consideration. The porter five forces analysis consist of:
Buyers often demand more and also they want the offers that can be easily available at the minimum cost. This gives direct pressure on the company profitability in the long term. If the customer base is smaller and more powerful, then Vodafone can easily attain higher bargaining power of the customers and also the discounts and offers are given more (Mittal, Han, Lee, Im and Sridhar, 2017). The buyer in the Telecommunication industry is strong. The powerful buyers can easily minimize the cost leader prices. This helps the Vodafone Company to attain profit at above-average returns as compared to its closest competitors. The buyer power gives direct impact on reducing the cost of prices in the industry by taking into consideration the competitors. If the company keeps reasonable profits, then it can be easy to attain profitability (Diaz, Perea and Gutierrez, Vodafone Group Plc, 2015).
So, Vodafone will keep reasonable profits as compared to the competitors. The bargaining of the consumers can be handled in many ways like: The Company can easily build a large base of the customers so that many opportunities can be given to the firm. By increasing the innovative product, the company can easily often seek discounts, so that the company can easily come up with varieties of the products and services. New products and services will minimize the defection of the existing customers of the Vodafone (Abd-El-Salam, Shawky and El-Nahas, 2013).
Suppliers of the telecommunication industry are strong. Vodafone is one of the cost leaders in the market that operates with the competitors within the margins. It helps to absorb the price enhancement from the suppliers and also from the competitors. By having the large share in the market the company can easily hold the cost of the suppliers. It is very easy for the company to attain the profitability and also to compete in the competitive environment in an effective manner. If the competitors are making profits, then also the company has the capability to attain average profits (Kang and Park, 2014).There are many companies in the telecommunication sector that take into consideration, various suppliers. Suppliers can give impact on reducing the margins of the company and can easily earn profits in the market. The suppliers who are powerful take into consideration negotiating power to extract the high prices from the firm in the telecommunication field (Bavasso and Long, 2015).
The impact of the high supplier bargaining power is that it reduces the overall profitability of the wireless communications. Due to the high market share of the company, it can be easy to absorb price increments from the suppliers. Vodafone can easily maintain low prices from its suppliers and also can make effective profits. The company should give focus on creating supply chain with multiple suppliers. The Focus should be given to product design and the materials so that the prices can be enhanced in a proper manner (Fox, Wong and Pudney, Vodafone Group Plc, 2016).
When a product and services meet the similar needs of the customer, then the profitability of the company suffers. Vodafone faces a high threat of product substitutes. As there are many companies in the telecommunication sector. The landlines users are reducing day by day. The trend of video conferencing is increasing day by day. The customers are given focus on yahoo messenger and also on Skype. There are many few companies offering 3g card and DSL services, the customers get attracted towards the services where the price is less. There are many companies that offer effective services at fewer prices. Due to the high purchasing power of buyer and effective economies of scale, the company does not pass down the cost attributes for substitution of the products. The company should give focus on being service oriented rather than just product oriented. It is important to make proper understanding about the need of the customer rather than what the customer is buying. Vodafone can easily increase the switching cost for the customers (Albers, 2017).
New entrants in the wireless communication bring innovation and also many changes to conduct the activities. Innovation strategy gives pressure on the company by introducing low pricing strategy and also by giving new value proposition to the consumers. The company has to manage all these challenges and create barriers so that proper safety can be taken from the competition. To enter into this industry huge license fees is incurred, so it is not possible for everyone to invest in this sector. High initial capital is required to start the business (Zablah, Carlson, Donavan, Maxham and Brown, 2016). Vodafone has to face many complex regulatory issues and also due to the change of technology, it is not possible for the different companies to enter in this sector. The infrastructure cost is one of the essential factors. The cost of infrastructure is high as compared to other sectors. So Vodafone faces low threats of substitutes. It is not possible for the companies to enter into this sector, as the risk is also high. Every business cannot survive in the competitive environment (Agnihotri, Dingus, Hu and Krush, 2016).
If the rivalry among the existing players in an industry is intense then it can give downfall in the prices and also on the overall profitability of the industry. Vodafone operates in the competitive wireless communication industry. The competition level gives impact on the long-term profitability of the organization. The company has an open market for competition and also it has little discrimination other than cost. Vodafone can easily handle the industry rivalry among the competitors by building a sustainable differentiation and also to compete in a better way. The company can easily collaborate with the competitors to enhance the market size rather than just competing in the small market. The competitors offer innovative products and services to the customers that mean that Vodafone has to offer same to its customers (Labib, El-Salam and Shaheen, 2016).
It is evaluated that the Vodafone has survived in the competitive environment. The ability to diversify the products and services together has given success to the company. The financial position of the company also contributes to growth due to the innovative strategies that are taken into consideration and also the ability to explore new markets in the different geographical regions. Vodafone has capitalized its opportunities and also eliminated the threats so that the improvements can be made on the weaknesses. The company should adopt effective competitive strategies, so that the company can easily survive in the market.
Vodafone must enhance its GPRS subscriber base due to the high demand in the market. The value-added services and also the location-based services should be introduced. The company should diversify its broadband network by introducing voice over internet and should also tap the rural markets. In the telecommunication industry, it is essential that the consumers should get effective services, so that they can easily get attracted towards the company. To compete in the competitive environment it is important to provide good services at low cost, so that the consumers can survive for a long time. Vodafone should remain innovative in the market. It is seen that the more innovative the company is, the more profitability can be attained.
References
Abd-El-Salam, E.M., Shawky, A.Y. and El-Nahas, T., 2013. The impact of corporate image and reputation on service quality, customer satisfaction and customer loyalty: testing the mediating role. Case analysis in an international service company. Journal of Business and Retail Management Research, 8(1).
Agnihotri, R., Dingus, R., Hu, M.Y. and Krush, M.T., 2016. Social media: Influencing customer satisfaction in B2B sales. Industrial Marketing Management, 53, pp.172-180.
Albers, S., 2017. Competition dynamics of alliance networks. Managing Alliance Portfolios and Networks, p.91.
Bavasso, A. and Long, D., 2015. The Application of Competition Law in the Communications and Media Sectors. Journal of European Competition Law & Practice, 6(5), pp.365-380.
Diaz, A.G., Perea, R.M. and Gutierrez, J.L.T., Vodafone Group Plc, 2015. Method and system for the improvement of routing in communications networks providing multimedia services over IMS networks. U.S. Patent 9,036,547.
Fox, D.A., Wong, G. and Pudney, C.D., Vodafone Group Plc, 2016. Location based services in communications networks. U.S. Patent 9,319,972.
Kang, D. and Park, Y., 2014. based measurement of customer satisfaction in mobile service: Sentiment analysis and VIKOR approach. Expert Systems with Applications, 41(4), pp.1041-1050.
Labib, A., El-Salam, E.M.A. and Shaheen, A.Y.M., 2016. Measuring the impact of service quality and service personalization on customer satisfaction, trust and loyalty in telecommunication sector: an application on Vodafone Egypt. The Business & Management Review, 7(2), p.145.
Mittal, V., Han, K., Lee, J.Y., Im, B. and Sridhar, S., 2017. Attribute-Level Satisfaction, Overall Customer Satisfaction, and Performance Outcomes in Business-to-Business Firms.
Olou, L.P. and Yeboah-Ofori, A., 2014. The Implications of Switching Barriers on Subscriber Retention in Developing Economies.
Seo, D., 2017. Digital Business Convergence and Emerging Contested Fields: A Conceptual Framework. Journal of the Association for Information Systems, 18(10).
Zablah, A.R., Carlson, B.D., Donavan, D.T., Maxham III, J.G. and Brown, T.J., 2016. A cross-lagged test of the association between customer satisfaction and employee job satisfaction in a relational context. Journal of Applied Psychology, 101(5), p.743.
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