Executive Summary
The proposed report focuses on the investigation of Vodafone company, the sphere where it operates, peculiarities of its functioning, resources, and strategies used to generate a competitive advantage, as well as the major challenges the company faces at the moment and how they can be resolved.
Vodafone Group Plc is one of the telecommunication sphere leaders with the developed networks in 22 countries and Vodafone Global Enterprise Division’s clients in 150 states. The company is concentrated on providing high-quality and diversified services to individuals who can fulfill their needs for communication, cooperation, and data sharing. The corporation operates in the telecommunication industry, which is characterized by several features. First, it provides multiple opportunities to all actors because of the increasing demand for offered services and the critical importance of information in the modern world. Second, the sphere is extremely changeable because of the high pace of technologies’ rise, which means Vodafone has to invest in innovations. Finally, it is a competitive environment with powerful corporations holding leading positions. That is why there is a need for effective competitive strategies.
Vodafone uses the differentiation strategy along with the focus on customer engagement. It means that the company offers different products to various groups regarding their needs and requirements. The three major groups, Europe Customer, Vodafone Business, and Emerging Customer, are managed differently and are provided with offerings attractive to them. The free calls between all Vodafone clients is another factor contributing to the increased attractiveness of the company. Moreover, the constant improvement in quality and use of new generation networks help to remain a leader and struggle with competitors. Mobile services remain the most important unit for the company as it generates about 70% of all income. The company continues to invest in technologies as a way to be innovative and creative.
The corporative culture of the company presupposes the cooperation between units located in various regions to adapt the core strategy to the needs of the customers living in the country and guarantee that they enjoy the high quality of services that are needed at the moment. The coordination center plays a vital role in analyzing reports provided by other departments and incorporating it in guidelines that can be employed to improve outcomes.
Finally, the analysis shows that Vodafone might experience some strategic challenges resulting from the peculiarities of the market. These include environmental issues because of the increased energy consumption, problems with data protection due to the digitalization of the environment, and the COVID-19 pandemic along with the rise of rivals. The given challenges can be managed by using available resources and focusing on the development of sustainable methods of production, renewable energy resources, and better data protection methods. Altogether, the report shows that the strategies employed by Vodafone and available resources help to generate a competitive advantage and remain one of the leaders of the telecommunication sphere with the potential for further development and empowerment.
Introduction
The proposed individual strategy analysis report outlines the main aspects of Vodafone Group Plc., its functioning, strategies, and challenges it faces in the modern fast-evolving business environment. The chosen company can be considered one of the leaders in the sphere of telecommunications. In accordance with the firm’s report, in 2020, it operates and has developed networks in 22 countries, which the plans for further growth and entering new global markets (Vodafone Group Plc, 2019). Vodafone Global Enterprise division offers telecommunications and IT services to clients in 150 states, making it one of the most powerful companies affecting the evolution of the industry and the strategies employed by the closest rivals to remain competitive (Vodafone Group Plc, 2019). The analysis outlines the major strategic challenges, peculiarities of the industries, and how it creates the basis for future achievements.
Industry Attractiveness and Change
The telecommunication industry can be viewed as one of the most attractive and promising sectors in the modern world because of multiple opportunities if guaranteed to companies operating in it. It includes all activities and processes needed for data exchange by using all technologies available at the moment. Because of the critical importance of information nowadays, the sphere acquires strategic meaning. In 2019, the telecommunication services market size was valued at about $1.74 trillion, and it is expected to group, comprising about %5 of a compound annual growth rate from 2020 to 2027 (Deloitte, 2019). Moreover, the change in technologies and their availability to clients contribute to the significant growth in demand, which means that leaders, including Vodafone, can expect additional revenue and an increase in the number of clients globally (Sweney, 2020). For this reason, the sector remains favorable to companies operating in it.
At the same time, the sector is characterized by an extremely changeable environment and the high speed of its evolution. The Third Generation (3G) and the Fourth Generation (4G) have significantly altered the sphere and preconditioned the shift to new standards of data transmission. However, today, a new technology, the Fifth Generation (5G) wireless technologies become the priority for industry leaders (Deloitte, 2019). Telecommunications companies make serious technology investments and focus on establishing business models providing an opportunity to monetize 5G opportunities, meaning that the fast change of the working environment is one of the factors vital for all actors who operate within a sector (Deloitte, 2019). In such a way, the industry is highly promising for corporations and evolves fast, which influences the choice of strategies and methods to remain competitive and meet the altering requirements of clients.
Strategies to Generate Competitive Advantage
Correctly realizing the extreme competitiveness of the telecommunication industry because of its attractiveness to companies, Vodafone group devote much effort and resources to generate a competitive advantage and acquire new loyal clients. For instance, one of the factors explaining the high popularity of the company is the free Vodafone to Vodafone calls for a lifetime (Our strategy, no date). This service is available for all clients, which makes the firm more popular, which the increase in the number of individuals using this service means that free calls become more valuable and find new customers (Our strategy, no date). At the same time, the company guarantees the high quality of calls and data transmission because of the better network strengths compared to the closes rivals (Our strategy, no date). Finally, Vodafone invests in innovations and offers individuals innovative and advanced solutions for communicating and sharing information with other people (Our strategy, no date). The combination of these factors helps the company to generate a competitive advantage and remain one of the industry’s leaders.
The company employs the differentiation strategy and focuses on deepening customer engagement to remain competitive (Vodafone Group Plc, 2019). Vodafone differentiates the number of services it provides and creates multiple offerings for people with various requirements and paying capacity to ensure that their products are appreciated by most clients globally (Vodafone Group Plc, 2019). At the same time, the corporation affects clients’ engagement and improves their loyalty by affecting all three customer segments, such as Europe Customer, Vodafone Business, and Emerging Customer (Vodafone Group Plc, 2019). Vodafone offers 5G networks, fixed market share gains, and mobile data growth as they are important for all these cohorts (Vodafone Group Plc, 2019). Moreover, the Vodafone group transforms its operating model to achieve greater effectiveness and agility (Vodafone Group Plc, 2019). It is described as digital-first, radically simpler, and with a leveraged group scale (Vodafone Group Plc, 2019). The given approach presupposes a 1.2 billion euro operating cost reduction, which is also vital for generating a competitive advantage (Vodafone Group Plc, 2019).
The creation of the given strategy and its observation is possible because of the availability of significant resources devoted to developing plans and their implementation at different levels. First of all, in accordance with the report, the company possesses about €41 billion of assets that help it to engage in new projects and compete with the closest rivals (Vodafone Group Plc, 2019). Additionally, because of the focus on new technologies and innovations, Vodafone is the leading corporation offering unique access to 5G networks, high-quality Wi-Fi, and other technologies appreciated by the population today (Vodafone Group Plc, 2019). The existence of such technologies and strong financial resources transform Vodafone into a company with a substantial competitive advantage and the opportunity to engage in new activities and strategies to increase clients’ loyalty and ensure their high interest in the firm’s products.
Regarding the competitive advantage, the company’s customer care and consumer business unit acquires the top priority as one of the major contributors to its success. First of all, the department is responsible for clients’ data collection and its processing with the primary goal to outline the current state of the target audience, its central demands, requirements, and factors that either increase or decrease their satisfaction (Our strategy, no date). Second, most strategic decisions, including the focus on the differentiation strategy, are accepted using reports provided by the given business unit. Moreover, it includes smaller regional departments providing their data for the analysis and creation of a unified approach to boost sales. Due to the given unit’s functioning, Vodafone enjoys an annual growth in revenue of around 2-5% and empowers its global presence and dominance in the industry (Vodafone Group Plc, 2019).
At the same time, mobile services offered by Vodafone account for about 70% of revenue (Simply Safe Dividends, 2019). These include calling, texting, and accessing data using smartphones (Simply Safe Dividends. 2019). The given unit is another extremely valuable resource of the company. The report shows that the European customer group generates the most revenue (52%) and mobile services’ sales are the main product bought by them. For this reason, Vodafone manages to acquire a serious advantage by employing the given resource.
Corporate Level
Vodafone is characterized by the evolved infrastructure needed to support the functioning of a global company with departments in 22 countries. For this reason, the company has a unique and developed corporate culture that ensures effective collaboration and improved data sharing. Thus, the company’s report emphasizes that the heads of departments have an opportunity to meet by using telecommunication technologies provided by the corporation and discuss the most problematic issues. The information exchange between units is organized on a regular basis presupposing reports and emergency meetings if some problem occurs (Vodafone Group Plc, 2019). Moreover, the local departments are responsible for monitoring and tracking the changes in demand and its in-time reporting to the head office, which is central for improved outcomes and the ability to compete with rivals.
The company’s corporate culture presupposes the use of a unified strategy focused on the high levels of excellence and the constant improvement in the quality of provided services. The given method is accepted by the board of directors and serves as the main guideline for all units. However, because of the diversity peculiar to clients living in different regions and the existence of various demands among them, the local units’ functioning in many countries can adapt the core strategy to new requests to guarantee that the clients will remain satisfied with the proposed services and unique offerings existing only in their countries. This flexibility is presupposed by the differentiation strategy and the focus on clients’ involvement and engagement (Vodafone Group Plc, 2019). For this reason, the units’ plans result from the core approach offered by the main office, and, at the same time, they might differ because of the demands of the local market.
Under these conditions, because of the focus on global presence and the need to adapt strategies to local requirements, the role of the corporate center increases. Vodafone accepts the need for flexibility and variability because of the complexity of the modern business environment. Under these conditions, its corporate center functions as the coordination unit collecting information from all departments and analyzing it to create the strategy to generate an advantage. This task is performed using telecommunication technologies and helping to exchange data and avoid its corruption or loss (MoneyShow, 2018). Moreover, the corporate center has the supervising function of monitoring the work of other units and departments and offering recommendations for further improvement or strategies that can guarantee the achievement of the desired outcome.
Challenges
At the same time, the strategic importance of the sphere and its attractiveness preconditions the emergence of additional complexity for companies operating in the telecommunications sector. Vodafone is not an exclusion, and the company faces serious strategic challenges that should be resolved to create the basis for future evolution. The first challenge is linked to environmental issues that are topical nowadays. Every new device joined to the network demands energy, which means that its amounts should increase to meet the needs of growing industries, such as the telecommunication one (Vodafone Group Plc, 2019). With the dominance of the ideas of sustainability, Vodafone faces the challenge of how to evolve and what strategies to employ to avoid causing serious harm to the environment and support the quality of services at a high level.
The second challenge is preconditioned by the extremely digitalized nature of the environment where the company operates. The high speed of technological evolution and the growth of the telecommunication sphere create the basis for the corresponding rise in cybercrime and bara breaches rate. Today, malefactors might steal personal data stored on devices by using networks and vulnerabilities that exist in them. In such a way, Vodafone acquires the need to establish a safe environment and create continuously evolving security systems that can protect their customers from data theft and guarantee privacy to them (The Vodafone Business, 2019). This challenge is vital for the further evolution of the whole sphere, and Vodafone, as one of its leaders, should be ready to engage in appropriate activities and actions to resolve this problem. Otherwise, it will lose its clients because of its growing dissatisfaction.
Finally, another strategic challenge is the constantly growing number of competitors peculiar to the sphere. As stated previously, it remains highly attractive for various agents, but at the same time, there are some leading corporations decreasing the threat of a new entry (The Vodafone Business, 2019). However, because of the strong capabilities of these companies and their focus on generating competitive advantage, the level of rivalry remains high ant the company has to focus on the constant monitoring of the market and other companies’ functioning to stay informed about the recent changes and how to respond to them to preserve its leading role and avoid being replaced by a new service provider with offerings that are viewed as better ones by clients globally. The situation is worsened by the COVID-19 pandemic demanding new solutions and decisions to find clients and meet their demands (Makortoff and Sweney, 2019). That is why there is a serious strategic challenge of remaining competitive and struggling with other companies for dominance.
In such a way, Vodafone’s central points of concern come from the unique features of the telecommunication sector and the problems of the modern world. The gradual deterioration of the environment and the questions linked to the use of energy and renewable resources influence the work of the selected company and its strategic decisions. Vodafone Group has to remain capable of providing high-quality services in terms of the COVID-19 pandemic and the growth in the number of users, which can add pressure and stress to existing networks. Furthermore, there is a need for sustainable solutions to improve the image of the company and emphasize its environmentally friendly nature. Finally, all these decisions should contribute to the preservation of the competitive advantage and existence of robust security systems that can protect users’ data from theft and breaches.
The first challenge can be resolved by focusing on sustainable strategies and innovating technologies. Vodafone is known for investing in the development and supporting sustainable technologies that can help the company to evolve. One of the possible financing areas is the solar and wind energy sectors that also depend on technologies and can benefit from resources available for the corporation. In such a way, promoting the spread of environmentally friendly power plants, the company can find additional energy for supplying its networks and minimizing the harm done to the environment.
Analyzing the second challenge, it should be said that cybersecurity is a growing concern for all businesses and organizations, both in the private and public sectors. For this reason, Vodafone’s focus on its resolution is vital for its further growth. The possible solutions presuppose the cooperation with developers and integration of robust security systems guaranteeing the protection of existing networks. Clients should be promised that their personal data remains protected and untouched by malefactors who try to generate benefits by stealing valuable information.
Finally, strong competitors and COVID-19 challenges can be managed by the appropriate improvement in the quality of networks and services offered to clients. Vodafone is already known for the stability of its networks; however, there are some problems with the increase in demand preconditioned by lockdown or multiple simultaneous requests from users (Makortoff and Sweney, 2019; Sweney, 2020). For this reason, the capacity of existing equipment can be improved by using available resources and focusing on innovative technologies. It will help to generate a competitive advantage and, moreover, increase the clients’ satisfaction levels during their stay at home caused by the pandemic.
Conclusion
Altogether, Vodafone is one of the leaders of the telecommunication sphere, which remains an attractive and promising sphere for companies. It evolves fast and requires a focus on innovations and significant investment in technology. Employing the differentiation strategy, and trying to improve clients’ engagement, Vodafone managers hold central positions in the market. The high quality of provided services, consideration of clients’ needs, and use of new generation networks are the advantages of the company helping it to spread its influence and enter new regions important for its further development and dominance.
Reference List
Deloitte. 2019 telecommunications industry outlook.
Makortoff, K. and Sweney, M. (2019) Vodafone UK faces complaints about call connection problem’, The Guardian.
MoneyShow (2018) How Vodafone is a global leader in telecom.
Our strategy (2020). Web.
The Vodafone Business (2019) Future-ready reported 2020.
Vodafone Group Plc. Annual report 2019. Web.
Simply Safe Dividends (2019) Vodafone: a high-yielding telecom facing growth challenges.
Sweney, M. (2020) ‘Vodafone reports 50% rise in internet use as more people work from home’, The Guardian.