Category: Vodafone

Executive Remuneration Analysis of Vodafone.
Executive Remuneration Analysis of Vodafone 1. Introduction Executive remuneration is the compensation which company rewards for the executive directors. Since the early 1980s, executive payment increase rapidly. The unjustified increasing of executive remuneration pushes the reform of remuneration policy. The Cadbury code mentioned this problem in the Code of Practice in 1995. Cadbury gives some suggestions to companies about the executive remuneration policy.
According to his suggestions, companies should dividend total payment into the basic salary and performance-based bonus, and the remuneration report should publish in the annual reporting every year [1]. In additional, UK government provides the vote right for shareholders to supervise the company’s executive remuneration, it also can force executive directors taking investors’ interest into account when they design the company strategy [2]. The analysis of big companies’ remuneration policy is more emphasize by investors and government, especially after the 2008 financial crisis.
Investors are paying more attention to whether the executives deserve the high reward. Therefore, the analysis of executive remuneration is more necessary and valuable. Companies in FTSE 100 have the highest market capitalization in UK, and it means the analysis of FTSE 100 companies is most valuable. Vodafone Group, as one of the biggest company in the FTSE 100 companies, has business in almost 70 countries. And the market capitalization is nearly ? 90bn [3]. Last year, Vittorio Calao, the CEO? of Vodafone received around ? 0m for remuneration in fiscal year 2012, which is one of the highest remuneration in the FTSE 100 [4]. Although the executive rewards are higher than others in the FTSE 100, there still are 96. 12% shareholders voting in favour with the Vodafone’s remuneration policy [5]. This raises the question that why there are a huge amount of shareholders convincingly supports their highest remuneration. This essay analyses the executive remuneration for Vodafone Group. Firstly, it will talk about the remuneration principle. Then the Remuneration Committee will be discussed.

This part aims to measure whether the Remuneration Committee according to the UK Corporate Governance Code. The third part will explain the remuneration package of Vodafone Group, both base salary and various bonuses are included. At last, the essay will discuss the rationality of Vodafone’s executive remuneration from the perspectives of remuneration policy itself and the comparison with other companies. 2. Remuneration principle The aim of Vodafone’s executive remuneration is driving executives to achieve the company’s long-term strategic goals by offering an attractive and competitive reward [6].
Vodafone wishes to make sure that their executive directors keeping in the highest level in work by providing an attractive payment. For example, a part of rewards are measured by the performance for this year. Therefore, executive directors were given an opportunity to achieve the truly exceptional performance. The remuneration package is determined by Remuneration Committee after Comprehensive consideration. The Remuneration Committee will choose some relevant group of comparators when setting total reward. It makes sure that the executive remuneration policies are considered on a total compensation basis.
The comparators are choosing from some basic considerations, which are as follows: 1) top European companies, 2) top UK companies, 3) particularly for scarce skills, and 4) the relevant market in question [6]. These comparators mean that Europe is the major region for business for Vodafone, and the company is original from UK. According to above three principles, the external comparators are consisting by similar size companies, and the European top 25 companies and a few other select companies relevant to the sector.
Additionally, the external comparator group do not including the financial companies, such as bank and insurance company. Another important Remuneration principle is that the rewards will related to the performance both long-term and short-term. According to the Annual Report of 2012, performance-based reward account for 70% in the whole remuneration package [6]. Vodafone build a link between executive directors and shareholders by this way, in order to force executive directors think about shareholders’ interest. 3. Remuneration Committee
According to the UK Corporate Governance Code, the Remuneration Committee must include at least three independent non-executive directors [7]. The Remuneration Committee of Vodafone is consisting by independent non-executive directors and running independently in the company. The chairman of Remuneration Committee is Luc Vandevelde, and there are another five members in the Remuneration Committee. All of them are the non-executive directors in company. There also are two external advisors: PricewaterhouseCoopers LLP (‘pwc’) and Towers Watson.
Pwc is responsible for performance analysis and giving suggestions about company strategy and measuring the performance. It also supports the international business of Vodafone, such as tax, finance, compliance and operations. Another external advisor Towers Watson provides the market data of executive payment to Remuneration Committee. They also manage the pensions and benefit for Vodafone [6]. There are a lot of factors need to be considered by Remuneration Committee when deciding the payment package. Firstly, Remuneration Committee consults the CEO and HR directors’ opinion of the appropriate reward package for executives.
Secondly, the external advisors give the Committee another perspective form the external information analysis. They can provide the benchmark of directors’ reward about other similar company on the market. Additionally, Committee also take the company’s strategy into account, both long-term and short-term are important. In fiscal year 2012, Remuneration Committee had five meetings to discuss the Short-Term Incentive bonus, Long-Term Incentive plan and basic salary in order to determine the total remuneration packages of the executive directors appropriately [6].
Remuneration Committee particularly report four chief executive directors in the Directors’ Remuneration Report, including Chief Executive Vittotio Colao, Chief Financial Officer Andy Halford, Chief Technology Officer Stephen Pusey and Regional CEO Europe Michel Combes, and the reporting also include the reward of non-executive directors. 4. Remuneration package The Vodafone remuneration package is divided into five parts: base salary, Global Short-Term Incentive Plan (‘GSTIP’), Global Long-Term Incentive Plan (‘GLTI’) base awards, Global Long-Term Incentive Plan (‘GLTI’) co-investment matching awards and benefit [6].
These parts reflect the remuneration policy of Vodafone which make the executives holing a lot of company shares to align the interest of executive directors and investors. It also obeys the UK Corporate Governance Code that keeping the reward in a level which is attractive and motivate to the directors, and designing the performance- related income based on long-term strategy. Base salary aims to attract and retain the best talents. It reflects the directors’ level of skill, experience and the responsibility in Vodafone. In fiscal year 2012, Committee decided the base salary stay at the same level with 2011[6].
Global (‘GSTIP’) measure the performance in this financial year with the short- term financial and non- financial target, and the GSTIP is paid in cash in June 2013. The related performance is service revenue (25%), EBITDA (25%), adjusted free cash flow (20%) and competitive performance assessment (30%). This bonus can flow from 0-200% of base salary, and it reward 93. 4% of target for financial year 2012[6]. Global Long-Term Incentive Plan (‘GLTI’) is consist of performance shares which award every year and vest three years later to force directors on the Vodafone’s long-term strategy.
The vesting of performance shares is determined by the adjusted free cash flow and relative TSR performance. Both operational performance and external performance are included in the two measures in GLTI. The target GLTI face value of CEO is 137. 5% for basic salary, and 110% for other directors. In this year, executive directors was rewarded the vesting the shares of 2008 fiscal year at 30. 6% of maximum [6]. Global Long-Term Incentive Plan (‘GLTI’) co-investment matching awards means that executive directors can purchase Vodafone normal shares and turning them to performance shares after holding three years.
Benefit is the pension scheme for the executive director and other benefit such as company car and private medical insurance. 5. Analysis of the director remuneration Figure 1 Total remuneration for 2012 (based on Vodafone 2012 Annual Report) The Figure 1 shows the detail of the total remuneration for fiscal year 2012 including a value for GLTI payment. Without the GLTI vesting during this year, Vodafone actually paid 30. 35m pounds to CEO Colao, 19. 27m pounds to CFO Halford, 21m pounds to Europe region CEO Combes, and 14. 08m pounds for CTO Pusey [6].
The Figure 1 illustrates that all the four chief executive directors’ incomes are increasing except the CTO Pusey. Although the total rewards were general increased, GSTIP for fiscal year 2012 was decreasing. In the meanwhile, salary and cash in lieu of pension were keeping in the similar level with last year. Therefore, the increasing of total remuneration was due to the significant increasing of the item cash in lieu of GLTI dividends. During the fiscal year 2012, the Global Short-Term Incentive was deduct from last year. The total actual short term incentive payment was 93. %, while the target payment is 100% and the maximum payment is 200% for the basic salary [6]. According to the remuneration policy of Vodafone, GSTIP is influenced by the performance for this year. There are four indicates to measure the GSTIP: service revenue, EBITDA, adjusted free cash flow and competitive performance assessment. According to the 2012 annual report, the service revenue slightly increased to 46. 4bn pounds, which was just arrival the target performance [6]. However, the EBITAD and adjust free cash flow were cut down, especially the adjust free cash flow.
Because of the loss of China Mobile Limited and the dividends of SFR, the actual pay-out percentage for adjust free cash flow is 8. 5, while the target performance is 20% in the whole GSTIP [6]. The policy of GSTIP is related to both the financial and non-financial performance in this year in order to measure the executive short-term performance in a rational way. The target performance is not only based on the Vodafone’s strategy and past operation, but also taking the long-term strategy into account. Figure 2 Adjust free cash flow target and range for awards Based on Vodafone 2012 Annual Report) Figure 3 GLTI award for 2008 & 2009 (based on Vodafone 2012 Annual Report) Opposite the reducing of DSTIP, cash for Global Long-Term Incentive Plan is significant increase. The GLTI is determined by adjust free cash flow and the TSR outperformance of a peer group median. These two indicators consist a matrix in order to measure the internal operational performance and external performance. The long-term operation cycle is three years which means the target performance of financial year 2012 was settled in 2010.
According to Figure 2, the target for 2012 is 18bn pounds, while the actual adjusted free cash flow for 2012 was 20. 9bn pounds [6]. Another important measure is the TSR performance. The figure 3 shows that Vodafone’s TSR was outperformance than the peer group which constitute by the similar size companies. The TSR performance increasing by 18. 5% in 2012, and exceed the target number. Therefore, the TSR performance for 2012 was paid by 100% of maximum to executive directors, while there is only 30% in 2011.
Figure 4 Five year historical TSR performance (based on Vodafone 2012 Annual Report) Table 1 Comparison of Vodafone & BT Group (Base on [6] [8] [9] [10]) 201220112010 CEO Reward ?000Total Revenue ?bnCEO Reward ?000Total Revenue ?bnCEO Reward ?000Total Revenue ?bn Vodafone303546. 46282645. 88266844. 47 BT Group250518. 90235920. 1210520. 1 To compare with other similar size companies in UK, figure 4 reflects the Vodafone TSR performance compare with the average level of FSTE 100. From this figure, it indicates that Vodafone’s TSR performance is higher than the average level of FSTE 100.
It means that the Vodafone Group is in a better operation situation among FSTE 100 companies. Therefore, it is reasonable that Vodafone’s executive remuneration is higher than the similar size companies. Additionally, the comparison in Table 1 is shown in similar result. BT Group is another strong competitor of Vodafone in UK telecommunication industry. The numbers in table 1 are published in the annual report for the two companies from 2010 to 2012. The total revenue of Vodafone is basically twice as much as BT Group, while the difference between the CEO remuneration is just around ? m in the three years. Through above analysis, Vodafone remuneration is in a rational level, and it is corresponding to its operation performance. 6. Conclusion All in all, Vodafone executive remuneration is acceptable and in a rational level. It not only reflects the operation performance but also obey the rules of UK Corporate Governance Code. The executive remuneration is setting by an independent remuneration committee which consist by five non-executive directors and two external advisors.
The remuneration report is published by Remuneration Committee in Vodafone’s Annual Report. The remuneration package divide into base salary, Global Short-Term Incentive Plan (‘GSTIP’), Global Long-Term Incentive Plan (‘GLTI’) base awards, Global Long-Term Incentive Plan (‘GLTI’) co-investment matching awards and benefit. Through these five parts, executive reward is related to performance and the investor interest, and can help executives focusing on company’s strategy. Therefore, Vodafone executive remuneration can be seen as a good example in executive remuneration policy.

Executive Remuneration Analysis of Vodafone

Vodafone Group PLC.

Vodafone Group plc is British multinational telecommunication with its headquarters in London, it is one of the world’s leading telecommunication companies. Vodafone supplies a range of services such as data across mobile and fixed networks, voice and messaging, and connects all customers together. They have mobile licenses in all the countries, they operate and fixed licenses in several markets. With voice, Vodafone provides mobile voice communications, and this is the largest proportion of their revenue. Messaging allows customers to send and receive messages using mobile devices. They are located all over the world, in regions such as Asia Pacific, United States, Middle East, Europe, and Africa that ps to about 25 countries. Vodafone has been around since 1984, and it has grown over the years through mergers and acquisitions.
Principal Financial Risks
One of the financial risks Vodafone faces is the global economic disruption. Vodafone as an international business has the tendency to operate in several countries and currencies, thus changes to world economic conditions will have an impact on them. Any major economic disruption may end in reduced outlay power for their customers and impact their ability to access capital markets. A relative strengthening or weakening of the foremost currencies during which they interact may impact their gain or profit. With this, the potential impact it can have on the business is economic instability and after reductions in the company and consumers spending or impact on capital markets could confine or make limit their refinancing choices. As a result, the companies operating profit will be sensitive to either a relative strengthening or weakening of the major currencies in which they operate. Another financial risk is the allocation of the group’s capital. Vodafone is failing to maximize returns to shareholders because of the inefficient use of capital. The capital of the group is not been used effectively. That means there is a risk of Vodafone failing to deliver long-term value to its shareholders if they are unable to manage their capital efficiently and favorably merge strategic acquisitions and disposal.

Also, there is a risk of major tax disputes for Vodafone. They might not sufficiently resolve the major tax disputes they have. They operate in many areas of authority around the world and occasionally they have disputes on their amount of tax due. When this happens, it ends up exposing them to important additional tax liabilities which then affects the profit of the business.  Lastly, the increase in competition is reducing their market share and profitability. Vodafone is facing severe competition especially with their competitors who are both mature in the market and new entrants in the market, all this competitor is trying to secure also a share of the customer base. Competition can reduce the rate at which Vodafone adds new customers or decreases in the size of their market share and therefore a decline in their average revenue per customer. The position Vodafone is that they are difficulties acquiring new customers and retaining existing customers.
Vodafone Group data and relevant reports
From the data, it can be seen that from the year 2008 the revenue of the company kept on increasing but fell in the year 2012 with a revenue of £38.82 billion and in the next year, which is 2013 slightly decreased to a £38.04, and in the year 2014 it rose a little. This movement kept on happening until 2016 where they had their highest sales revenue. This happened because in that year they invested in faster networks which boosted their demand in Europe since then the revenue has been slightly stable. From the data, Germany contributes a lot to Vodafone’s revenue. And the United Kingdom’s revenue has decreased from 2016 as well as other European countries. Spain is stable there hasn’t been any improvement or a decline. Italy is making progress. Vodacom which is based in South Africa has improved over the years since 2016. Other AMAP country’s revenue fell in 2018 but they were doing well in 2016 and 2017. From the data, Vodafone’s shares have fallen to their lowest level since 2014. There has been a constant drop in the share price. From 2017 the share price has dropped by around 18%. Therefore, the company has become unpopular with investors. A lot do not want to invest with the company since their return will not be high. And it is expected to fall by 7% this year, aside from that Vodafone plans to change the current CEO and this is weighing on investors’ minds.
Regression Analysis- interpretation
A negative relationship can be observed between sales revenue and profit or loss for the year. The data of the two variables are collected from the 2010-2018 annual report and the regression line is drawn using the Minitab.
The regression line is y= 45513-0.1261x. The R-sq is 37.09%,
therefore 37.09% variation in the sales revenue(y) can be explained by the variation in the profit or loss(x) whiles the remaining 62.91% is due to other factors. Since the coefficient of the determinant is close to zero there is poor prediction. Even though the regression showed a poor prediction, it can be seen from the table that over the years profit has drastically reduced. In 2010 profit was £8618m while in 2018 profit was £2788m and in 2014 it had a profit of £59420m. From the principle financial risk identified there has been an increase in competition thereby reducing their market share and profitability, meaning this risk has started affecting the company.
Limitation of my analysis
In my report, there were several limitations to my analysis. Firstly, there was a lack of data and reliable data for me to use which then limited the scope of my analysis. Relevant data and reports were hard to come by for Vodafone Group, and the ones seen were unreliable or not related to what I needed. Also, I do not think my explanation of the financial risk and analysis was of sound understating. It was also limited in length.
Reference

Vodafone Group (2019). Visit the Vodafone corporate website. Online Vodafone.com. Available at: https://www.vodafone.com/content/index.html Accessed 9 Mar. 2019.
Vodafone Group (2018). Annual Financial Report – RNS – London Stock Exchange. Online Londonstockexchange.com. Available at: https://www.londonstockexchange.com/exchange/news/market-news/market-news-detail/VOD/13664186.html Accessed 18 Mar. 2019.
Vodafone Group (2018). The 2018 annual report of Vodafone. Online Vodafone.com. Available at: https://www.vodafone.com/content/annualreport/annual_report18/downloads/Vodafone-full-annual-report-2018.pdf Accessed 19 Mar. 2019.
Statista (2019). Vodafone Group revenue 2008-2018 | Statistic. Online Statista. Available at: https://www.statista.com/statistics/241610/revenue-of-vodafone-since-2008/ Accessed 19 Mar. 2019.
Vodafone Group Plc (2012). Principal risk factors and uncertainties. Online Vodafone.com. Available at: https://www.vodafone.com/content/annualreport/annual_report12/downloads/performance_vodafone_ar2012_sections/principal_risk_factors_and_uncertainties_vodafone_ar2012.pdf Accessed 20 Mar. 2019.
IG. (2019). Vodafone: where next for the European telecoms giant? Online Available at https://www.ig.com/uk/news-and-trade-ideas/shares-news/vodafone–where-next-for-the-european-telecoms-giant–180608 Accessed 28 Mar. 2019.
Stephens, R. (2018). Why has the Vodafone Group plc share price fallen by 18% in the last year? – Investopedia. online Investomania. Available at: https://investomania.co.uk/2018/08/why-has-the-vodafone-group-plc-share-price-fallen-by-18-in-the-last-year/ Accessed 28 Mar. 2019.

Vodafone Group PLC

Vodafone AirTouch’s bid for Mannesmann.
First of all, one has to mention that it is always difficult to evaluate a company. There is no single measure/calculation who can give you the valuation of a company. The value of a company can be different for every single human being. For instance, Vodafone Air Touch will try to calculate a very low valuation of the company because it wants to pay as less as possible, and Mannesmann a very high valuation, because it wants to get as much money as possible. As a result, it often depends on the interest of the different persons who evaluate a company. In October 1999, Mannesmann offered shares around 157. €. This was before the acquisition of Orange PLC, a competitor of Vodafone Air Touch in the UK market. After the acquisition, Vodafone offered 266€ per share, 68% more than the 157. 8€ per share Mannesmann offered few weeks before. Despite, this very high premium, Mannesmann’s CEO evaluated his company 350€ per share.
Here in this case, I think that the main reason for this high price differences is that with time, Mannesmann’s bargaining position changed. In the beginning, their position was not as strong as in the end when they achieved to acquire Orange Plc, a telecommunication company in the U. K. which was growing faster than Vodafone. As a result, Mannesmann became a stronger competitor for Vodafone and Mannesmann’s CEO knew that. As a consequence, he increased the valuation of his company. The reason why for instance an analyst from Julius Baar valuated Mannesmann between 250€ and 350€ per share and many other analysts between 174€ and 250€ per share may have some reasons. The main reason is that, as anticipated before, it is very difficult to evaluate a company. Furthermore, it is even more difficult to evaluate how many synergies Vodafone Air Touch would benefit from this takeover.
So it is very difficult to evaluate how much this Mannesmann takeover could be worth for Vodafone Air Touch. Moreover, one has to check which analysts own stocks of Mannesmann or Vodafone because this may also influence the different evaluations. (2) In your opinion, in general, when a company is the target of a hostile takeover bid, who should decide whether the terms and conditions of this bid are acceptable? The Chief Executive Officer (or the equivalent) of the target company? Or its Chairperson (if another person than the CEO)? Its board of directors? Its shareholders ?

If the shareholders, how practically should they make their decision? In my opinion, only the shareholders should take this type of decision. They are the one who own the company, and they should decide if they accept the takeover bid or not. If 50 % + X agree with the bid price, then the takeover should take place. Of course, before taking the decision, they should listen to the opinion of the CEO, the Chairperson, some analysts, as well as the Board of Directors. However, in my opinion, none of these key persons should take part of the decision making process.
In my opinion, the shareholders are the one who own the company, and they should decide what should happen with their investment. For instance, let us assume the employees would take part of decision making process. Then, in most of the cases, the employees would vote against a take over, because they fear about their jobs. They would never take a neutral decision, but a decision which is the best for them, not caring about the fact that the shareholders loose a high premium. They, as well as the trade unions, would vote against an takeover because they fear for the jobs.
However, they never think about the fact, that if the company is not taken over, the company who made a mid remains a competitor. And this competitor could increase its market share in spite of the smaller company that did not accept the takeover. And in this case, the employees of the smaller company would even risk to loose more jobs. The CEO and the the Chairperson should never take this type of decisions. Because, they are only in charge of the operations of the company, but they do not own the company. As a result, they should not decide about the matter. 3) In the case of the Vodafone AirTouch bid for Mannesmann, who should have made the decision ? (Please take into account the fact that Mannesmann had two boards, the supervisory board, and the management board) What do you think of the sentence in the fourth paragraph of page 5 of the case: “Esser rejected the offer on the grounds that it was inadequate” ? As stated before the shareholders should have taken this decision. They own the company and if 50 % + X is in favour of Vodadone AirTouch’s bid, then the company should accept the bid.
Let’s assume that you invested 50 000 € in Mannesmann’s shares and now somebody is offering you 80 000 € for the shares. Then you should decide if you accept this money, or if you think that your shares are much worthier in some months/years. In that case you vote against the hostile takeover. I think that this system makes the decision making also very rapid and efficient. In fact, if one would also ask the employees, some analysts and so on, then the decision making process would be much longer.
As a result, I think that the shareholders should take the decision, after having listened to the different opinions of the CEO, employees, analysts,.. However, I think it inacceptable that Esser as the CEO of the company, who does not own many shares, rejects the offer in the name of all the investors. This cannot be tolerated. In fact, he is like an employee of Meeresmann, he does not own the company, and he should take the best decisions for his shareholders who in some way gave him this job as CEO.
As a result, I think that he cannot take the decision to refuse a bid without having spoken with any shareholder of the company. This is not a personal decision, but a decision which influences all the stakeholders of the company. It is unacceptable that he takes the decision on behalf of all the share- and stakeholders. (4) If you had been a shareholder of Mannesmann on December 17, 1999, what would you have liked to say to Klaus Esser ? What would you have like to say to Chris Gent ?
If you had had the opportunity to vote to accept or not Vodafone’s bid, how would you have voted (please ignore the subsequent events not described in the case) ? As a shareholder of Mannesmann, I would liked to ask him why he refused an offer of 266€ per share, which is a premium of 72. 2 % compared to Mannesmann’s closing price on October 18th. I would blame him for not having asked the shareholder what they thought about the offer. He took a decision about something which did not own him, but where I owned a fraction.
Finally, I would ask him if he could guarantee me that the share price of Meeresmann would be as high as the Vodafone AirTouch’s offer in the future. Only if this is the case, the Esser would be partly excused. I mention only partly, because even if he thinks that the share price of Meeresmann will be higher in the near future, then he should have explained that to the shareholders. And then, if the majority of the shareholders would agree, then he could refuse the offer. As a shareholder of Mannesmann, I would ask him what would be the strategy of Vodafone AirTouch after the acquisition of Meeresmann.
This is important to me, because I will have to make an important decision if the hostile takeover is agreed: either I keep the Vodafone shares or I sell all the shares the day of the take over. In that way, I would gild the premium. I would definitely have accepted the deal. During that time, it was quite sure that a consolidation of the telecommunication market would happen. As a result, I think that it would have been very difficult for Meeresmann, as one of the smaller companies, to survive in that market environment. Furthermore, the offered premium was so high, that I could not deny this offer.

Vodafone AirTouch’s bid for Mannesmann

Contemporary Managment – Vodafone.
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Avoidance partners with three firms for recruitment process outsourcing, each of which manages a different aspect of its recruitment process. Alexander Mann Solutions manages specialist and head office roles Adduce handles retail adviser roles and Reed manages recruiting customer service advisers. All have been working with Avoidance for the past four years. This has improved the effectiveness of Avoidance’s recruitment systems, says Tompkins, and the company has an ongoing improvement programmer designed to encourage partners to deliver the best possible experience for the candidate during the process.
Working with resounding partners helps us take stock of what opportunities there are to do things more efficiently,” she says. “For instance, each partner provides regular activity information and suggests improvements to the process and experience. “Last year, we found we were running a number of assessment centers for roles where we felt this was not the most appropriate approach. By developing and implementing interview skills training for line managers, we were able to give them more confidence to participate in the right type of assessment at the right time.
It also helped streamline our approach and improve the candidate experience. ” The company is also using input from external recruitment specialists to help improve the experience of candidates applying for Jobs, and to hone the recruitment skills of line managers. “We are careful not to expect line managers to accommodate too many changes at once and we plan our calendar of improvements around what the business is doing overall,” says Tompkins. She believes that while the perspective of external specialists is useful, any findings should be fed back to staff if they are to have an impact.
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Contemporary Managment – Vodafone

Vodafone Egypt.
Vodafone is the largest international mobile telecommunications company in the world. Vodafone has its headquarters in the UK. This paper focuses on what Vodafone had to consider in concerns to entering the Egyptian market in 1998. “Vodafone’s corporate growth strategy is to use the technical and managerial expertise of the parent company to enter markets and leverage this knowledge in its subsidiaries. A major Vodafone corporate goal is to be the market leader in each market it serves” (Harlow, 2011, p.1). Vodafone, being the market leader, and wanting to expand, had to take into account many points of emphasis as a decision was being made.
Vodafone decided to look into the possibility of expanding into Egypt after the deregulation of the Egyptian telecommunications market in 1998. The decision involved strategic issues and internal considerations. Vodafone put emphasis on global growth expansion into mobile markets worldwide, and they had a decision matrix for assessing new investments. The first investment point of emphasis was looking at the country’s political stability. Although there was some political unrest in the region, Vodafone’s executives decided that Egypt was a stable country, and more importantly had the opportunity to provide substantial returns without a lot of upfront initial investment.
Another important criterion to Vodafone was the role of the National Telecommunications Regulatory Agency (NTRA). “Egypt was opening its economy to more foreign direct investment in order to grow more quickly and provide jobs for an ever increasing and young work force. The NTRA had promised quick decisions on rates and tariffs and was anxious to get a competitive multinational company established in the Egyptian mobile market to compete with the locally owned Mobinil which had started mobile service in 1995” (Harlow, 2011, p.6).

Vodafone had to consider their ability to get returns on an initial investment in Egypt, due to the company being involved with acquisitions of late, which meant there was less money for capital investing in other areas. Egypt being looked upon as a developing market meant that it was difficult to assess how the buying public would look at mobile phones. Would they consider this as something to spend their money on when so many had minimal income? Many Egyptians earned less than $1,000 in US dollars, per year.
Several positive influences were in place in concerns to Egypt’s potential market. They identified several companies to look at to be partners with them which would lighten the initial investment and risk potential. “Telecom Egypt was their strategic partner which ensured knowledge of the regulatory process, political connections and access to customer lists and other intelligence for marketing” (Harlow, 2011, p.7). Internally, Vodafone had management in place that could be used for business and technical resources, and they could be assigned to Egypt if the decision was made to go into this market. Looking at the potential customers, Vodafone estimated
3 million could be possible within just a few years. Also there were 2 large cities, Cairo and Alexandria, with over 19 million between them, with the rest of the largest population area being along the Nile River and delta making it concentrated along certain lines for future further coverage areas. Another important population point was that there were a large number of college educated people available in the area so another key would be to attract, find and train the best people from this group, if Vodafone were to be successful and competitive within Egypt. It was determined there would be an initial investment of £175 million, which was a small amount to Vodafone, and they had secured a partnership with Egyptian Telecom.
If I were to hazard a guess as to the people involved in presenting this investment decision to the Vodafone board I would believe it to be people in the financial department. Looking at this decision in concerns to their strategy it seems that they did not follow their overall stated strategy completely, but still stayed close to their self-proclaimed ideals, which was to use their technical and managerial expertise. In this venture they appear to be relying on their ability to find the right people and train them to fit their needs, which would be the managerial piece, and from the technical standpoint it tends to reason that they will expand the mobile areas to reach those in the majority of the populated regions that they will likely want to target.
As a postscript to the case, according to Vodafone.com, “Vodafone Egypt staff is now 6000-member strong and is proud to be serving more than 31.8 million customers (March 2011) all over Egypt. Its success relies on its superior network, privileged customer service, innovative products and a determined goal-based strategy. Vodafone Egypt is also proud to offer effective roaming communication supported by agreements with 564 partners in 188 countries pning the world” (vodafone.com, 2011). With a current population of approximately 83 million people, Vodafone has approximately 44% of the market, while Mobinil leads with 48%, and Etisalat has the remaining 7+%, according to IT News Africa. In conclusion it appears to be safe to say that Vodafone has become a major player in the Egypt market, which can be seen through their profits, with a second quarter 2011 profit of $137 million (US), according to cellular-news.com.

Vodafone Egypt

Marks & Spencer and Vodafone.
Marks & Spencer and Vodafone are both listed on the London Stock Exchange and if a certain investor wanted to put his money in either of the two shares, then he would have to carry out a number of analyses to find out which of these two shares would yield a higher return. The two companies belong to different industries. Marks & Spencer conducts business in the consumer goods industry and Vodafone conducts business in the telecommunications industry. Thus the analyses would have to focus on not only the different internal structure specific to each company but also on the industry dynamics that are specific to each company.
A comparison of the two analyses would reveal which of the two companies would continue to generate greater profits in the next five years. Whichever company has the greater positive expectations of the future would be a better buy. Porter’s five forces analysis A company’s business performance is not a world of its own. It operates in an industry the performance of which will affect the performance of its own operations. It happens rarely that one business organization can alter the course of an entire industry. One of those rare cases is the software industry which Microsoft dominates.
Microsoft has such a commanding presence in the software industry that whatever it does has a major impact on the industry as a whole and the other players in the industry have little choice but to follow its lead. In the consumer goods industry however, in which Marks & Spencer operates, the situation is hardly that simple. The consumer goods industry is a highly competitive industry and therefore Marks & Spencer on its own will not be able to make an impact to the extent that it can turn the whole industry around assuming that the industry is not doing so well.

Therefore the five forces analysis will have to be conducted rigourously to make sure that the future projections concerning the company’s profitability are reliable. In the case of the consumer goods industry, barriers to entry are very low. This has happened because of the emergence of the e-commerce business model which Amazon. com pioneered. Because most of the consumer goods can be sold online, capital expenditures have been brought down to a minimal. A company like Amazon. com does not have to invest billions of dollars in renting space.
It does have to maintain distribution warehouses, but then those companies in the consumer goods industry which do not conduct operations online or which, at the very least, jumped on the internet bandwagon a bit late in the game and are currently selling online and the traditional way concurrently, have to maintain not only the distribution warehouses but also miles of space for brick-and-mortar department stores. This nearly doubles operating expenses for companies like Marks & Spencer. Therefore, the low barriers to entry are definitely a threat for MarksSpencer.
The remaining four forces of Porter’s industry analysis do not present a brightly glowing prospect either. There is the threat of substitutes which is a very real threat indeed for the company. Consumer goods like sports equipment are widely available resulting in the fact that consumers shopping for sports equipment have a wide array of choices. When this happens, majority of the consumers look for price rather than quality. Therefore whichever company can offer these goods at the lowest price will attract the greatest number of customers.
E-commerce companies are in the best position to do that. Amazon. com, which developed the e-commerce business model to the level of popular support that it enjoys today, sell their products at a much lower price than its counterparts following the traditional business model are in a position to. Because operating expenses at Amazon. com are minimal compared to those that traditional business models like MarksSpencer have to bear, Amazon. com can get away with charging very low prices.
For the same reason, MarksSpencer is not in a position to set a price that will compete effectively with those set by the businesses like Amazon. com doing their businesses exclusively online. Because the operating expenses of maintaining department stores are high, the company will have to set proportionately higher prices and that will not work in the company’s favour. By the same token, threat of competition facing MarksSpencer is not to be taken lightly either. Low barriers to entry and the high threat of substitute products ensure that the consumer goods industry will never be short of competition.
This is good for the consumers but not for MarksSpencer. The fact that consumers welcome competition and suppliers like MarksSpencer do not and the additional fact that there is a high level of competition in the consumer goods industry ensure that as far MarksSpencer is concerned, buyers will be enjoying higher bargaining power than suppliers. Consumers in this industry enjoy so much in terms of choices that any company which seeks to set a slightly higher price than the industry average stands to lose market share drastically.

Marks & Spencer and Vodafone

Strategic Analysis of Vodafone Group PLC.

Beginning with a basic tool, a mobile wallet and how Vodafone (rated 10th on the FTSE 100 index) is engaging this issue, then moving on to discuss smartphones and how their popularity is increasing. An assortment of examples where strategic management is occurring within the organization alongside the frameworks used by managers to calculate the company’s future expansion will be reviewed; plus, where threats are causing concern and how Vodafone plans to start a new strategic approach to tackle them. Finally, a conclusion based on the evidence will provide recommendations on how the organization should progress in order to sustain future growth.
Introduction

This report will illustrate how Vodafone Group PLC (the world’s leading mobile network company), is using key strengths and opportunities; with a series of analytical frameworks employed by managers, explaining how capitalization is being accomplished. An overview of Vodafone’s M2M markets will be provided, to illustrate the importance of the organization’s interest in merging and acquisition to compete globally with rivals and their substitutes. The examples and strategic methods will identify how the company will protract future growth and emphasize areas of concern in mature European markets. Finally, implications toward what needs to be enhanced and maintained to maximize growth will be examined, because Vodafone currently stands 10th on the FTSE 100 index; and, since 2010, revenue has become ‘organic’.
M2M Marketing and Future Innovation
Most consumers seem not too bothered by having a mobile wallet – younger people do not feel as subdued as older users. Vodafone is working with Visa to reach out to consumers who are willing to use one; also, to combat substitutes such as Orange who have merged with MasterCard. A smartphone is needed by consumers to obtain a mobile wallet. ‘Smartphones now make up the majority of consumers’ handsets, with 53% of mobile phone subscribers using a smartphone as their primary handset. This is a rise of 17 percentage points from one year ago,’ (Mobile Network Providers, Mintel, 2012). Ten percentage points of this rise included a Vodafone competence, their Blackberry device. Vodafone has noticed augmentation in smartphone usage ‘with 27% of customers in Europe using these devices today, compared to 19% last year,’ (Vodafone Annual Report, p. 22, 2012). Generic strategies in the U.K. seemingly target the younger generation (16-24 year olds) and Vodafone appears to be thinking broadly with what seems to be a cost leadership strategy to trounce rivals.
Technological innovation and Vodafone’s vigorous market position enables it to offer new commodities to its consumers; but however, robust competition from telecommunications companies are threatening overall growth. Vodafone has merged with and acquired organizations to strategically position itself globally in the M2M market.
‘The global cellular machine-to-machine (M2M) connectivity cervices market is growing rapidly. M2M refers to technologies that allow both wireless and wired systems to communicate with other devices of the same ability. The M2M market has become a mainstream segment of the cellular industry. The market for cumulative cellular M2M connections is expected to grow at a CAGR of more than 25% between 2011 and 2016 and is expected cross 360 million connections.’ (Vodafone Group PLC, SWOT Analysis, Marketline, p. 6, 2012)
Corporate strategies seem centred on market penetration, as Vodafone aims to increase its share in a growing market. The ‘new markets and existing products’ quadrant of the product/market matrix is one Vodafone often selects to obtain new territories, segments and uses. Currently, tactics in the M2M market are seemingly being reconsidered, since Vodafone ‘is focused on offering value added mobile data services to its customers. In addition, is also focused on improving technologies to deliver data faster,’ (MarketLine, p. 7, 2012). This indicates Vodafone is also enhancing ‘existing markets and new products/services’ with product development. ‘Vodafone has a strong focus on providing M2M services. The group serves around 5.3 million M2M connections around the world. In addition, Vodafone is in the best position to take advantage of the Vodafone Group Public Limited Company global M2M communications opportunity and was topped in a benchmarking study by Machina Research. The group’s diversified geographic presence and long-established network of partner markets would further accelerate this opportunity. Hence, the positive outlook for these services would allow Vodafone to increase its revenues and market share in the future’ (MarketLine, p.p. 6-7, 2012).
Vodafone is frequently expanding its M2M market. After bidding for the troubled telecoms group Cable & Wireless Worldwide (C&WW), the group’s shares increased by almost ‘45% after Vodafone confirmed that it was interested. […] Confirmation of Vodafone’s interest pushed up shares in C&W Worldwide 28.5p, taking the company’s equity value to more than ?700m,’ (Financial Times, 14-02-2012). On April 23rd 2012 Vodafone’s strategic capability increased with a deal, alongside external interest from shareholders. ‘Under the conditions of the deal, Vodafone will pay 38 pence per C&WW share, meaning the firm has a value of ?1.044bn. The deal will add a U.K. fixed-line network to Vodafone’s mobile network currently in place.’ (BBC, 24-03-2012).
European markets are an area of concern (particularly competency in mature markets), also, various legal proceedings – perceived as external threats – have been occurring there, which could potentially damage intangible resources such as reputation and popularity in the region alongside attitudes, opinions and interests (AOIs); plus, ‘high penetration rates in these markets signify weak prospects for the group to report growth, making it dependent on differentiation and value added services for future growth,’ (MarketLine, p.9, 2012). So, the company’s development of ‘long-term evolution technology’ (LTE) seems to be an attempt to tackle this, which can produce ‘user speeds of up to 12 Mbps, compared to up to 6 Mbps on 3G. In Germany, our first market to launch LTE, we have already deployed the capability on 12% of our radio sites,’ (Vodafone Annual Report, p.24, 2012).
Conclusion
Vodafone’s value chain will need to be altered upon acquiring C&WW. Firm infrastructure, technology development and service will possibly be enhanced; especially by obtaining C&WW’s unique resources including corporate voice, data and hosting services; which can potentially impinge on the primary activities within the value chain; increasing marketing and sales, operations and service. Vodafone should continue with their penetration strategies in growing markets as acquisition has been functional for growth. In Europe, decisions should be based on consolidation to protect the company’s shares; because the business has selected a differentiation strategy, which seems sensible with weak prospects. Therefore, LTE should be prioritised for ‘4G’ phones now and in the future, because the experience curve will potentially increase in emerging markets (i.e. India etc.) as it decreases in Europe and the U.S. hence, entrepreneurial innovation and core competences are practical to uphold cost leadership.

Online References
Mobile Network Providers, 2012. Mintel. [online] Available at: http://academic.mintel.com/sinatra/oxygen/display/no_redirect&id=614468&?select_section=614469 [Accessed 7th June 2012].
Vodafone Group PLC, 2012, Vodafone Annual Report. [pdf]. 31 March 2012, Available at: http://www.vodafone.com/content/dam/vodafone/investors/annual_reports/Vodafone_Annual_Report_12.pdf [Accessed 6th June 2012].
MarketLine, 2012. Vodafone Group Public Limited Company, SWOT Analysis. [pdf] Available at: http://web.ebscohost.com/ehost/pdfviewer/pdfviewer?vid=3&hid=123&sid=387f388a-6245-440f-8c14-41aa6663438b%40sessionmgr112 [Accessed 6th June 2012]
Financial Times, 2012. Vodafone confirms talks with C&WW. [press release], 14 February 2012, Available at: http://academic.mintel.com/sinatra/oxygen_academic/search_results/show&&type=NSItem&class=News&sort=recent&display=abridged&page=1/display/id=611097&anchor=611097 [Accessed 7th June 2012].
BBC, 2012. Vodafone agrees takeover of C&W Worldwide. [press release], 24 March 2012, Available at: http://academic.mintel.com/sinatra/oxygen_academic/display/id=52609/display/id=619664 [Accessed 8th June 2012].

Strategic Analysis of Vodafone Group PLC

How Vodafone applied the principle of comparative advantage in its operations.
In international trade such as the one conducted by Vodafone, the principle of comparative advantage plays a very critical role. Comparative advantage is said to be one of the most straight-forward and simple economic concepts Lee (2008). The principle of comparative advantage is highly regarded not only in the business circles but also in the world of academia. It is said that when mathematician Stanislaw Ulam challenged Nobel Laureate Paul Samuelson in 1969 to state a preposition in all of the social sciences that was both true and non-trivial he gave his answer as the principle of comparative advantage (WTO, 2008)
This is why a better understanding of this theory needs to be established first before we proceed with finding out how Vodafone applied it. The theory of comparative advantage simply deals with the benefits of specialization and trade Suranovic (1997). The theory states that trade can benefit all thecountries/companies/individuals so long as they produce goods with relative costs. The theory is also known as the Ricardian model after the 19th century classical economist David Ricardo who is credited with creating better awareness of this concept.
Others who had earlier tried to explicate the benefit of this concept included Adam Smith and Robert Torrens Suranovic (1997) Adam Smith wrote in The Wealth of the Nations that “If a foreign country can supply us with a commodity cheaper than we ourselves can make it, better buy it of them with some part of the produce of our own industry, employed in a way in which we have some advantage. ” (Book IV, Section ii, 12). But it is David Ricardo who is viewed as having brought the theory into prominence by using a gripping and simple numerical example in his magnum opus, On the Principles of Political Economy and Taxation.

According Ricardo the benefits of trade come about if in an economy where specialization thrives. A clear example is offered by P. A. Samuelson in his paper ‘The Way of an Economist’ when he writes: If a country is relatively better at making wine than wool, it makes sense to put more resources into wine, and to export some of the wine to pay for imports of wool. This is even true if that country is the world’s best wool producer, since the country will have more of both wool and wine than it would have without trade.
A country does not have to be best at anything to gain from trade. The gains follow from specializing in those activities which, at world prices, the country is relatively better at, even though it may not have an absolute advantage in them. Because it is relative advantage that matters, it is meaningless to say a country has a comparative advantage in nothing (WTO, 2008). However comparative advantage is many times incorrectly taken to mean to have absolute advantage over other countries that do not hold the same advantage Lee (2006).
So how did Vodafone use the principle of comparative advantage to gain a foothold in global mobile telephony market? The management of Vodafone seemed to have realized early the importance spreading your wings and expanding your operations to countries outside the country of origin. The first strategy involved making acquisitions. Vodafone is a company has almost become synonymous with the word acquisition. Starting from the earl 1990s the UK Company embarked on a worldwide acquisition spree, buying stakes in other mobile telephone companies.
It acquired stakes in European, American and Asian companies and in no time it had established itself as the world’s biggest mobile phone company with footprints in almost every nook and cranny of the world. Vodafone’s operating slogan ‘bigger is better’, saw the company go for one acquisition after another, pouring billions upon billions to this end allowing them make inroads into far-flung markets. (BNET. com, 2008) Once acquisitions had been made the thing that came next was establishing the market compositions in the different countries the acquisitions were based.
This important as without market insight Vodafone would not have been able to best utilize the conditions on the ground that would have otherwise made the provision of mobile telephone services relatively cheap. The trick with acquisitions is that the company has to make sensible ones, not making acquisitions for its sake. This is one area that Vodafone did not seem to pay close attention to and in the end some countries like Japan, the United States and in some Nordic countries did not turn out to be particularly good hunting grounds for Vodafone.
(ICFAI) Another big strategy that Vodafone came up with was the decision to make forays into markets where technology was relatively underdeveloped. This strategy went hand in hand with another strategy that involved going into regions where mobile penetration was low. It is for this reason that Vodafone bought stakes in Romania and Czech with the buying of Mobifon and Oskar Mobil respectively. Vodafone was also quick to notice the Indian potential and was quick to find partners there.
Such entry into the untapped markets with enormous potential is the very essence of the principle of comparative advantage. In November 2007 Vodafone announced plans to acquire a stake in Telekom Malaysia a company whose fixed line operations p nine Asian countries. (TIMES ONLINE, 2008) Operations in far-flung places showed Vodafone that it was easier for them to establish themselves in places telecommunications infrastructure were underdeveloped because then they would have to supply these equipment themselves and establish a market of their.
This was in contrast to moving to countries were technology had taken off like Japan and the United States where the consumers were spoilt for choice and therefore were in the habit of switching to what they viewed as companies that provided up-to-date mobile telephony technology. It is for this reason that Vodafone experienced immense difficulties in Japan where people user their mobile phones not only for calling but for many other services like the accessing the internet, photo-messaging and video-calling. The problems in Japan proved too huge for Vodafone to handle and they finally sold off its stake in J-Phone.
(The Economist, 2001) Having been the first company to acquire a cellular license in the United Kingdom, the company also felt that they should also lead the way in the 3G technology. By becoming amongst the first mobile phone companies to offer this technology, Vodafone thought it could it to as many countries where its subsidiaries were based and a make a kill, so to speak. However the 3G experienced some teething problems and it took long time to roll out and by the time Vodafone was able to get it on the market there were other new problems contend with as is the norm in the capricious mobile telephony market.
No matter Vodafone did finally launch this service with promises to keep improving this service every other time. (ZDNet, 2008) Vodafone realized it could no longer rely on the voice-based operations only as its competitors were offering more than that. At the same time it also realized that there needed to be restructuring the running of its operations as far as its far-flung operations were concerned. Operations of these subsidiaries started becoming a matter of concern because it was proving difficult to follow their progress and so it was decided that they needed to be consolidated.
Therefore Vodafone under its new CEO, Arun Sarin, launched its ‘One Vodafone’ program with the aim of ensuring that all the company’s subsidiaries could be reconciled together to represent the objectives of Vodafone. This is one of the reasons why Vodafone decided to buy controlling stake in South Africa’s Vodacom. (TIMES ONLINE, 2008) On a more positive note Vodafone through its Kenyan subsidiary Safaricom was able to come with a very innovative product for its Kenyan subscribers that allowed them to transfer money through their mobile phones. The service called M-PESA registered so much success and so far over 1.
6 million people have registered. After observing the success in Kenya, Vodafone decided to launch the same service in Afghanistan called M-paisa with its partner Roshan. (Cellular-News, 2008) In conclusion it must be said that despite all of Vodafone’s concerted efforts to tap into the advantages that come with setting up oprations in other countries it has not necessarily been smooth sailing. Its shareholders have argued that these problems were caused by a lack of proper planning and the failure to identify the workings of the different markets.
Many have accused the management for going for growth at all costs and they strongly believe this is the reason their company has continued to make staggering losses despite the fact that it has built partnership with many mobile phone companies than they can care to catalog. (BBC News, 2003)
References
BBC News, (2003). “Q;A: The Secrets of Vodafone’s Success”. Available from http://news. bbc. co. uk/1/hi/business/1357172. stm (accessed on April 23, 2008) BNET, (2008). Copyright © 2008 CNET Networks, Inc. All Rights Reserved.
‘Research and Markets: Vodafone, success secrets of the Global Operator’. Available from http://findarticles. com/p/articles/mi_m0EIN/is_2005_Jan_19/ai_n8700389 (accessed on April 23, 2008) Cellular-news, (2008). ‘Vodafone Launches Mobile Payments in Afghanistan’. Available from http://www. cellular-news. com/story/29186. php (accessed on April 23, 2008) Econmist. com, (2004). Vodafone and Japan. Available from http://www. economist. com/displaystory. cfm? story_id=3252464 (accessed on April 21, 2008) Lee, D. , (1999).
©2008 Foundation for Economic Education. ‘Comparative Advantage’. Available from http://www. fee. org/Publications/the-Freeman/article. asp? aid=4962 (accessed on April 22, 2008) Lee, Dwight R. (2006). ‘Comparative Advantage Continued’ – the Freeaman Ideas on Liberty. Available from http://www. fee. org/publications/the-freeman/article. asp? aid=4962 (accessed on April 22, 2008) Suranovic, M (2007). ‘International Trade Theory and Policy’. Available from http://internationalecon. com/Trade/Tch40/T40-0. php (accessed on April 21, 2008)
The library of Economics and Liberty, (2004). ‘Comparative Advantage’. Available from http://www. econlib. org/Library/Topics/Details/comparativeadvantage. html (accessed on April 21, 2008) TIMES ONLINE, (2007). ‘Malysia opens up to Vodafone’. Available from http://business. timesonline. co. uk/tol/business/industry_sectors/telecoms/article2799361. ecem (accessed on April 23, 2008) WTO, (2008). ‘Comparative Advantage’. Available from http://www. wto. org/english/res_e/reser_e/cadv_e. htm (accessed on April 21, 2008)

How Vodafone applied the principle of comparative advantage in its operations

Effectiveness of the Vodafone’s Change Response.
The technological changes that the company has adopted in the past have helped it expand its operations and gain a better market share from its competitors. Compared to other companies that started to adopt the new technologies in recent years, Vodafone has gone far and that it is having a better market potential in comparison to its competitors Vodafone has strived to grow in its business as the worlds leading telecommunications and mobile network company.
Its main goal states that it endeavours to maintain a strong but conservative financial position through the implementation of new marketing strategies. With careful management of its net working capital, the company intends to strike a good financial objective in the near future and one of them is the new joint venture with the other companies (Richard, 2007). Through research and development, this company has developed new innovations in the past making it a global prowess.
Currently the company holds to its name a whooping 3,000 patents including numerous licensing agreements around the world making the most innovative company of the century. It was estimated by an annual world report that, the company in technology and innovation is ranked among the top ten companies in the world, the best in UK and second in Europe. This has put the company in one of the strategic positions to out-compete its competitors in the mobile network such as China Mobile Company (Vodafone, 2008).

The strategic and policy planning which has been adopted with reference to technological changes in the industry has incorporated the following issues; identification processes, responsibilities and products for web development and other forms of mobile communication. The company’s policy on laws and regulations has also been severely affected by legal suits that have brought the company to a lower level. Some information informative policies have not met the required strategic awareness to all the staff members and other employees in the industry.
Other policies that touch on security concerns involve copyright intellectual property which will make sure that users are restricted and know their boundaries. To implement all these policies, several additional technological advances need to be put in place first with a view to meet the policy requirements of the company (Grant, 2005). General Strategies to Vodafone’s Board of Directors New product development especially when it comes to adopting new technologies is one of the areas that need to be improved. The internet is one of the tools that are needed to be incorporated in its marketing technology.
Today, the internet has become one of the necessities that a company must utilize very much in order to meet the global market. Vodafone can in the future provide ads that could be possible to make its customers access them through the internet. The consumers of the products and services that are provided by the company can be able to download very larger materials through the internet; this is because at the moment, it can only allow simple messaging and limited downloads making it a disadvantage (Uhlenbruck, 2004). The company can also improve on its leadership structure.
It is now time to have manager and leaders to be technologically oriented with what is happening in the industry. The current crop of leaders in this company is management oriented and thus the combination of the two approaches will ensure that the company propels further. The company’s strategy that is required to meet the core principles of the objectives is to fully exploit the mobile industry market through the potential technology it currently offers (Blaszejewski and Dorow, 2003). Market and customer operations have for a long time supported the various business groups available in the company.
The other horizontal entity that has provided enough support for the business groups is the new technology platforms created to allow for the management and driving force for Vodafone products and services. These are some of the strategies that the company can implement to meet the technological challenges for the future. The company has in to develop business models, marketing strategies and new innovations in the telecommunication and network operation sector serve its consumers to the fullest and satisfactorily (Foster and Harris, 2005).
In order to implement new technologies, the company needs to extensively do internal and external research to see if the technology will be possible. GSM technology s for example was difficult to implement as it required both customer and company approval. Vodafone had formed a task force to look into the issues raised by the [proponents of the technology. The task force took looked into other policy and strategy issues which arose before and during the implementation process. The most urgent task would be to see if the company’s budget allow for its implementation
Generally the board of directors should define the company’s mission statement which will involve clarifying and analyzing this mission statement to meet the present challenges of the organization. This will offer guidelines to management of the company when considering how business should develop and in what direction, for example how it will increase its current market share to greater levels. The strategies adopted by the company should clearly direct efforts towards accomplishing the organizations basic mission or objective.
The company needs to improve on in its response to globalization. For instance Vodafone Company has responded to globalization by opening up some branches around the globe but this have not been enough as it still faces competition from other mobile operators. Vodafone Company should explore more new markets and try to be the dominant market leader in order cope with change and competition in the industry. This company requires restructuring of the entire company structure such that it is able to withstand the pace of growth in the telecommunication industry (Rosenbloom, 2004).
Organization structures of Vodafone Company should be clearly outlined such that the employees will know what they are expected from them in the course of their duties. This will lead to reduction of conflicts between management and the workers because there will be no vague policies. Vodafone Company structures should be in such a way that it fits the modern world and should be adaptable by the employees. Groups’ dynamics should also be encouraged in order to enhance cooperation among the workforce. Workers should be left to join groups of their choice to avoid conflicts that may arise (Anthony and Govindarajan, 2003).
In order to improve the organization effectiveness Vodafone Company, the management concerned should always avoid poor managerial leadership through doing away with authoritarian style of leading and instead encourage democracy to prevail in decision making that is, an all inclusive decision making structure. Also motivation of employees should be encouraged and offering of fringe benefits, house, medical, hardship allowances and other social services for example swimming pools, televisions sets will make the employees feel respected and recognized in the work place (Buck, Filatotchev and Wright, 2003).
A good communication channel should be identified by Vodafone Company in order to boost organizational effectiveness. Any barriers to effective communication that may be encountered e. g. selective perception, language barrier among others should be dealt with in order to pave way for efficient passing of messages in the workplace. The company should immediately implement the strategies that will counter competition as a result of globalization from other firms and thus the company should continue to explore new markets around the globe (Bagley and Savage, 2006) Conclusion
In a move that is seen as a strategy to develop in business volume, Vodafone Company has since its inception adopted technological changes in its departments including; new product development, better service provision, marketing and strategic planning. One main factor that has been usefully adopted methods of evaluation is the SWOT analysis. The main issues in this analysis are; Strength which is the profitability levels and the international branches the company has built abroad. The Weakness the company has experienced is poor leadership; the opportunities include globalization while the threat is competition from rival firms.
We can therefore deduce that for any firm to be successful in the market place it must formulate workable marketing plans that will eventually ensure the success of the company both in the short-run and long-run. Marketing strategies adopted by Vodafone Company should be those that go in line with the company’s mission and vision’s statements as well incorporating the issue of corporate social responsibility so that the strategies implemented are of benefit to the company, its employees and the surrounding society (Spicer, Dunfee and Bailey, 2005).
Vodafone Company should also utilize the opportunities that arise in the market place particularly in the telecommunication industry by ensuring that it fully utilizes its strengths to accomplish those opportunities. Since modern businesses are faced with stiff competition as a result of globalization, companies including Vodafone Company must carry out marketing research in advance in order to be informed with all the marketing activities in the market thus formulating market plans that will ensure profitability in the long term
Reference
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Effectiveness of the Vodafone’s Change Response