Vodafone swot analysis

Executive Summary
Vodafone Group plc. is a global telecommunications company headquartered in Newbury,
United Kingdom. It is the world's largest mobile telecommunications company measured by
revenues and the world's second-largest measured by subscribers (behind China Mobile),
with around 332 million proportionate subscribers as at 30 September 2010. It operates
networks in over 30 countries and has partner networks in over 40 additional countries. It
owns 45% of Verizon Wireless, the largest mobile telecommunications company in the
United States measured by subscribers.
The name Vodafone comes from voice data fone, chosen by the company to "reflect the
provision of voice and data services over mobile phones". [7][Non-primary source needed
It’s primary listing is on the London Stock Exchange and it is a constituent of the FTSE 100
Index. It had a market capitalisation of approximately £92 billion
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Introduction
Vodafone Group Plc. is a mobile network operator with headquarters in Newbury,
Berkshire, England. It is the world’s leading mobile telecommunications company
with mobile operations in 25 countries around the world with over 260 million
customers worldwide, as well as 38 partner networks, generating a turnover in 2007
of £31 billion. Vodafone networks can be found on almost all continents – in Europe,
the Middle East, Africa, Asia, Pacific and the United
States. The name of the company (“Vodafone”) comes
from Voice data fone and it was chosen by the company
to “reflect the provision of voice and data services over
mobile phones.”2
The company’s goal is: “To be the communications leader in an increasingly
connected world.”3 In order to achieve it, Vodafone does not only offer basic
telecommunications services (calls and SMS4), but also many other advanced
services:
http://brage.bibsys.no/xmlui/bitstream/handle/11250/168107/Saplitsa%202008.pdf?sequence
=1
Strengths

Diversified geographical portfolio with strong mobile telecommunications
operations.
* Network infrastructure
* Leading presence in emerging markets.
* Strong in Cities
 Building the world’s leading wireless communication provider
 Adaptation to local market needs
 Integration of subsidies under the Vodafone umbrella
Weakness

* Negative return on assets (ROA) underperform key competitors like AT&T, BT
Group, Deutsche
* No Network in Rural Areas
Opportunities
 Focus on cost reductions improving returns.
 Majority stake in wireless communication services for Vodafone’s international
spread
 Research and development of new mobile technologies, increasing 3G and 4G
coverage.
 Good Tariff packages was also applauded by most commentators.
 Acquisitions fuelled growth to Vodacom users.
 Vodafone’s escalating share price

Threats
Highly competitive market.
Still lags behind major competitors in the US.
Extremely high penetration rates in key market areas.
European Union regulation on cross-border cell phone usage by customers.
Twenty first century challenges, government auctioning licences to third generation wireless.
Porters Five Forces
Porter’s Five Forces framework is utilized in order to evaluate the attractiveness of the
particular industry on the basis of the measurement of the strengths of the following forces,
namely power of buyers, power of suppliers, threat of new entrants, threat of substitutes and
degree of rivalry (Kotler and Armstrong, 2010).
Buyers
The main factor that have marked recent developments in the mobile services
market is the enlargement of subscriber bases in the developing economies,
particularly in the major emerging markets but also in the industrialised countries,
despite already high penetration rates

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Rivalry
As the European telecommunications market is highly saturated and regulated, it is
characterized by high levels of competition, whereas the situation in the emerging
market is more favourable for Vodafone. Telefónica O2, T‐Mobile, Orange and “3”
are the main competitors of Vodafone in the telecommunications market.
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Substitutes
The increasingly vague scope of the market boundaries has drawn considerable
interest within the industry. Fixed‐mobile line conversion is a real future prospect
for network operators. Research shows that the total number of fixed lines fell by
1% in 2004 and by 1.8% in 2005. One of the main driving forces of this change is
their substitution by mobile service. A survey by the European Commission
indicates that within Europe‐5 countries, 15% of the households are mobile only.
=1
Entrants
New initiatives from outsiders are not likely in an industry that is highly regulated
and protected by significant barriers to entry and high initial fixed cost
requirements. Yet the increasing interdependence between mobile network
operators and online entertainment providers (music, video, data downloads) leads
to a redefinition of the industry boundaries. In the long run, communications’ usage

and purchases will be increasingly intertwined with those of other digital goods.
This is already happening now “with VoIP28, cablecos and Internet access providers
(who) are now addressing the traditional fixed voice market of the incumbents and
plan to enter the mobile voice segment as MVNOs. Making the opposite move,
incumbents are pushing TV through their IP pipes, and mobile carriers have
introduced mobile TV through 3G. As a major driver in the industry, fixed mobile
convergence (FMC) will increasingly drive fixed and mobile carriers to the same
battlefield
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Political factors
Vodafone is generally subject to regulations governing the operation of its business
activities. Such regulations typically take the form of industry specific laws and
regulations covering telecommunications services and general competition (antitrust)
laws applicable to all activities
=1
Economic factors
The most common indicator for measuring a nation’s economic activity is gross
domestic product (GDP). This indicator covers the production activity of resident
producers, calculated as the sum of gross value added from all activities/industries
within an economy. Figure 3 shows the evolution of constant price GDP (at fixed

2000 exchange rates)
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Social factors
The EU and other regions are facing unprecedented demographic changes that will
have a major impact on many areas of society such as social systems, consumption
patterns, education, and job markets in the coming decades. People are living much
longer and in better health, while fertility rates have dropped. These factors have
resulted in the profile of the EU’s population becoming increasingly older.
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Technological factors
Research and development (R&D) is a driving force behind economic growth, job
creation, innovation of new products, and increasing quality of products.
R&D intensity for the EU showed a positive evolution in the six years up to 2003.
However, when compared with the United States and Japan, the EU lags behind
(Table 1). Gross domestic expenditure on R&D (GERD) in the EU‐25 was equivalent
to 1.9% of GDP in 2005; this proportion rose to over 3% in just two of the Member
States, namely, Finland and Sweden18. One structural weakness often cited in
relation to Europe’s research effort is the lack of business financed research.
Business enterprise R&D accounted for over 2% of GDP in Japan and the United
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Suppliers
In the context of the mobile network operators market, the concept of
suppliers
should be redefined indicating the providers of mobile devices, but also
the

providers of network infrastructure, software and additional digital
services. While
it is very important for network operators to sustain a close relationship
with device
providers, there has been a shift to increase independence. Indicatively,
Vodafone’s
global presence means it has significant purchasing power allowing it to
secure
exclusive deals with phone manufacturers. Yet it is known in the industry
that
Vodafone is keen to develop its own, branded phones in an attempt to break
the
power of Nokia on the phone market, thus at the same time reducing the
firm’s
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Competitive Advantage
A Company is said to have a competitive advantage if it can sustain a profit that
exceeds the average of the industry .According to Michael Porter there are two basic
types of competitive advantage:-
Cost Advantage:-when a company is able to deliver the same benefits as provided
by their competitors at a lower cost.
Differentiation Advantage:-when a company delivers benefits that exceeds the
benefits provided by their competitors.
There are 4 generic business strategies in order to gain competitive advantage over
others. The four strategies are described in the figure shown below.
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Vodafone came up with differentiation strategy when they launched I phone service, even
though they were charging their customer more than their competitors but they still got the
edge over others by offering free Vodafone to Vodafone calls for life time calls and better
network strength compared to other competitors.

vodafone-over-other-telecom-players-marketing-essay.php#ixzz34pn7WiyE
Strategy - Cost Leadership
In this strategy company's main objective is to be lowest cost producer in the
industry. If the achieved selling price can be at least equal (or near)the average for
the market, then the lowest-cost producer will (in theory) enjoy the best profits. This
strategy is usually associated with large-scale businesses offering "standard"
products with relatively little differentiation that are perfectly acceptable to the
majority of customers. Occasionally, a low-cost leader will also discount its product
to maximize sales, particularly if it has a significant cost advantage over the
competition and, in doing so, it can further increase its market share.
Vodafone has started "Home Cell" tariff for its Metro Digital service. In this offer off-
peak calls from a specified location (such as office) for 5 pence (8 cents) a minute
were provided. By launching this they have clearly scored a cost advantage over
others like O2, 3, orange.
Strategy - Differentiation Focus
In this strategy company aims to differentiate within just one or a small number of
target market segments. The special customer needs of the segment mean that
there are opportunities to provide products that are clearly different from competitors
who may be targeting a broader group of customers. The important issue for any
company adopting this strategy is to understand that what customers really needs
and wants - in other words that there is a valid basis for differentiation - and that
existing competitor products are not meeting those needs and wants.
Vodafone introduced One Net, a hosted fixed and mobile voice service for SMEs .
this move is regarded as to be very effective move for Vodafone as Vodafone's
model is to charge per user, per month and claims the total One Net solution can be
15%-20% cheaper than SMEs pay for typical services currently.
Strategy - Cost Focus
In this strategy a company seeks a lower-cost advantage in just one or a small
number of market segments. The product will be basic - perhaps a similar product to
the higher-priced and featured market leader, but acceptable to sufficient
consumers.
Out of these 4 strategies differentiation and cost leadership strategies operates in
broad range of market to get a competitive advantage over other competitors .By

contrast, differentiation focus and cost focus strategies are adopted in narrow market
to gain edge over others.
Why do so many people choose Vodafone?
First of all Vodafone operates in all 3 segments of market i.e they have targeted low
level ,middle level and high level market which not only make it open to large market
but also gives a competitive advantage over the other major telecom players .
Secondly they have put in large investments on strengthening their network so that
their customers can make more calls more places and there on they can have an
advantage over others by winning costumers confidence over quality and reliability of
their services .
Thirdly they have reduced their effective cost by approximately 5 times in last the 3
years so that they can provide better "value for money" to their customers which in
turn gives them a edge over other telecom giants.
And of lately they have kept a focused on customers services in order to maintain
high standards of customer satisfaction.
In addition to above points Vodafone understands the change in market
requirements with time and have always tried to come up with new innovative idea to
attract more and more costumers for example:-of lately they have understood the
need to penetrate in business organizations for which they have started 3 new plans
which are as follows:-
For small business:- This plan concentrates at those costumers which are sole
traders or those who are running a family firm or those who are working in a growing
enterprise because it offers business phone and accessories at great value price for
calls ,e mail and mobile broadband.
For medium sized and large sized business:- This plan concentrates at organization
more than 100 to 1000 employees .This aims at providing low call cost and flexible
working with in a integrated network. This plan also aims at transforming the
business communication with solutions that makes communication more agile and
more productive than ever before.
For Public Sector:-Vodafone has been working with public sector for more than last
20 years as they are approved supplier in OGC(Office of Government Commerce)
frame work. Vodafone has transformed the public service delivery by providing more
flexibly and efficient working solutions.
Besides targeting the business sector they have also started new services on which
none of their competitor has focus on yet, like disability services .They were quick
enough to notice the increasing complexity in technology and introduced new phone
which are easy to use which in turn has opened a all new market for them ,for those
who like their things to be simple or are disabled this offer by Vodafone is very
lucrative

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