VODAFONE: An Analysis of a Multi National Telecommunication Company
Abstract
A Multi-National Company named Vodafone is one the leading companies in Telecommunication Industry. To determine the factor that became their key to success is a good implication that all the company can be as successful as Vodafone, although they engaged in different kind of industry. The study also includes the company’s brief history, vision, and different challenges that leads the company in making formulas to trap the success on their side.
History
Vodafone was formed in 1984 as a subsidiary of Racal Electronics Plc. Then known as Racal Telecom Limited, approximately 20% of the company's capital was offered to the public in October 1988. It was fully demerged from Racal Electronics Plc and became an independent company in September 1991, at which time it changed its name to Vodafone Group Plc. It also merged with AirTouch Communications, Inc. (‘AirTouch’), the company changed its name to Vodafone AirTouch Plc, following the approval by the shareholders in General Meeting, reverted to its former name, Vodafone Group Plc.
Vision
Our vision is to lead the industry in responding to public concerns regarding mobile phones, masts and health by demonstrating leading edge practices and encouraging others to follow.
Company Strategy Review
In May 2006, the company formulated a five point strategy which served well for more than two years. And broadly maintained or improved share against our largest or reference competitors in most of our markets and delivered on our key cost targets. They increased the share in revenue successfully increased the exposure to higher growth markets.
However, a number of challenges have evolved. Elasticity on core voice and messaging services remains below one, competitive and regulatory pressures continue to be strong, and meeting the expectations in some market is hardly attainable. Those factors which affects the continuous growth of the company, undergone into on-going company strategy review.
PEST Analysis
Political – political factors involved the tax policy, labor law, environmental law, trade restrictions, tariff, and political stability.
Due to the customer relationships that the company value most, Vodafone is willing to shift their approach away from unit pricing and unit based tariffs to propositions that deliver much more value to customers in return for greater commitment, incremental penetration of the account or more balanced commercial costs. This will require a more disciplined approach to commercial costs to ensure our investment is focused on those customers with higher lifetime value. In essence, we are confident that by targeting our offers, we can deliver more value to our customers and have a better financial outcome for Vodafone.
Economic – economic factors includes the economic growth, interest rates, exchange rates and the inflation rate. The pricing factors the company usually do is giving the consumers a right and justly cost so that, everybody can avail or purchase their product in a broad sense.
Social – social factors include the cultural aspects and include health consciousness, population growth rate, age distribution, career attitudes and emphasis on safety. The need for an equipment that can be a good device for every age range is available, since everybody are fully oriented in the use of the mobile technologies.
Technological – technological factors includes ecological and environmental aspects, like R&D (Research and Development) activity, automation, technology incentives and the rate of technological change. The technology is the thing that Vodafone is very proud of. The technological advancement enables the company to make a customer relationships stronger because of their customers trust that built over the years.
The PEST factors have major impacts on how businesses operate and make decisions. With the help of PEST analysis, the business can penetrate to the market with readiness. The determination of its four keys, the business will answer the common questions that revolve around the business society. These basic questions are what to produce, how to produce, when to produce and for whom to produce. No matter how many times a business answer these questions, the needs from the market will remain constant and unchanged.
It is an advantage of the company to know the scope and limitation of their business. It is done so that the company is prepared enough to face a future and ready to give solutions as possible when the demand for the products are satiated or already diminished.
SWOT Analysis
Strengths – The Company’s strengths can be the reputation of the business in the local market because of the product in long run. The company’s strengths are the strong bond of the company towards the customer and valuing them most as they craft another product. Another strength that can be depicted is the technology that is their greatest asset above the competitors.
Weaknesses – The result of the weaknesses can be shortage of materials needed or more expensive purchase of materials in the target country. Meeting the customers’ demand is sometimes hard to cope. Every company must admit that reaching the customers’ taste and preferences are really hard to achieve. But this weaknesses will serve as a challenge in the company and they must prepare actions in answering this needs.
Opportunities – The opportunities can be a well established position when the business successfully landed in the foreign market. On growth opportunities, the three target areas are Mobile data, Enterprise and Broadband
Threats – The threats can be large competitors that are waiting for the business that were undiscovered before conducting the study. This possibility is not that new. The Vodafone is not the only company that serving a kind of delicacy. Some companies might surpass their achievement, and therefore, they must maintain their company culture in dealing with their customers and being ahead in the products and services. The threats will not mean bankruptcy, but it can be a contributing factor in the bankruptcy of the company.
The SWOT analysis is a tool that assesses the company in its position in the market, or commercial viability. The method of sales distribution with the accordance to brand or product, business idea, strategic option, such as entering a new market or launching a new product, opportunity to make an acquisition, potential partnership, changing a supplier, outsourcing a service, activity or resource, and investment opportunity, in short, SWOT measures a business unit, a proposition or idea.
Key to Success
The foundation of every company to reach the success is how effective the research made and the continuous development in it. The further innovation is another great factor. The service of Vodafone towards its customers can generate a strong cash flow, based on the high-demand on their communication products. A greater range of data devices and portable computers, at increasingly lower costs, are enlarging the addressable market. On the cash cost side, only about a third of operating costs are fixed, and about a quarter depend on growth in voice minutes and data traffic.
Vodafone has three key attributes which strongly differentiate from the competitors: firstly, the scale in technology with which we continue to drive network and IT savings through consolidation and centralization of core activities; secondly, the strong presence in the enterprise market, in large corporate as well as in small and medium sized businesses; and finally, the brand, especially in consumer pull markets. The Vodafone’s strategy is focused on four key objectives: drive operational performance, pursue growth opportunities in total communications, execute in emerging markets and strengthen capital discipline.
Conclusion
The fast growth of the company doesn’t depend on its strong cash flow but also affected by the assurance of the company’s customers loyalty. The exposure of the products in the market eye is a great help in earning the customer’s trust. The proper use and taking the chance of innovation considers a fifty-percent risky and the other half is fifty-percent successful. But in doing a business, the company must keep into their mind that it is better to lose a little in the income in trying to make a difference than to lose all because of doing nothing.
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