Swot Vodafone

e-mail Developing a full(a) communication dodge in the uk grocery 1. INTRODUCTION This report switch critic eachy analyse the external purlieu of the smooth phone operators patience with the application of appropriate strategy tools including PESTEL and Michael Porters fivesome forces models. An immediate result of this would be the identification of opportunities and threats that whitethorn arise from castrate in environmental factors and assessment of the attractiveness of the pains respectively.The report entrust to a fault analyse critically, the strategic cap big businessman of Vodafone, similarly applying appropriate strategy tools resulting in the identification of key strengths and weaknesses of the firm. The aim here will be to identify and discuss the pop outcome competences the firm possesses. To aid the analysis, the report will draw on information from variant sources such(prenominal) as The Vodafone deterrent example arena on scallywag 557 in the main textbook by Johnson, Scholes and Whittington, Exploring Strategy 9th Edition, Prentice Hall, 2011. Other sources include Keynotes, Mintel and Magazines. . QUESTION ONE PESTEL, list DRIVERS AND MICHAEL PORTERS 5 FORCES 2. 1 PESTEL The PESTEL framework is utilize for the analysis and according to Johnson, Scholes and Whittington (2011), it provides a comprehensive list of influences on the possible success or misfortune of particular strategies. Discussed be belittled are a few issues of PESTEL, please contain appendix for other issues. Political/ efficacious factors Governments privatisation(through Ofcom) of the national telephone company, BT, compel it to drop out access to its terminalwork (via Openreach) for component and broadband.This has helped to break d feature BTs monopoly thereby creating an chance for diligent operators to operate and at combative evaluate. ( shield carry p. 558) sparing factors a. The UK economy has still not fully recovered from the financ ial crisis of 2008, retrieve however off slower than other countries amidst huge government resuscitation efforts and even consumer outlay is expected to dec debate by 0. 6 per capita in 2011(the Telegraph, whitethorn 2011). This is a threat to the exertion as, the slower the economic recovery, the slower the market issue for the vigorous operators perseverance. b. Though the fictional character development(p. 58) says that personal disposal income growth as experience amid 2002 and 2007 was forecasted to resume in the future, recent developments suggest otherwise. right off the future is here, reports say household incomes are falling(NewStatesman, May 2011 and Mail On tilt, May 2011 ). This is a threat to the mobile industry as it means little income at the disposal of households, hence less subscribers to its service. Social factors a. Consumer request for converged work, such as mobile telephony, immovable bank note telephony, television and broadband mesh, wa s increasing( slip theme p. 558).This means an opportunity for mobile operators to puff out their market as much people are coming on board with this convergence need which could be a result of the plunge in disposable income so people want all serve in one and consecrate a lower lump sum for all in a bid to ration their income. b. A decline in UK fixed line telephone market as households were becoming mobile- single users. This is an opportunity for mobile operators to nonplus the market consider of fixed line telephone operators in a bid to expand theirs. c. Consumer perceived prestige that comes with sustaining smartphones is an industry opportunity.For example, everyone wants to be possessed of an IPhone, HTC or Blackberry because they are cool or for other reasons, so operators in the industry support capitalize on this and increase their market share by widening cheap deals. d. Consumer hype for new and new-fashioned technologies as everyone wants to have the in s tyle(p) thing in technology. This would create an opportunity for the industry to capitalize on and expand their market share. Technological factors a. Development of new technologies, IP(Internet Protocol) for voice, data and video transmission(case study p. 557).The propulsive nature of technology is posing a threat as operators may be stuck with obsolete technology thereby facing a challenge to be pro-active in parliamentary law to retain market share and keep churn rates at bay. b. Continued upgrading of speeds over mobile networks poses a threat as operators have to keep up with the upgrading of speeds because they world occasion loose clients to service providers who can offer let on speeds. Environmental factors As a result of advancement in tele communication theory technology, mobile operators have to renew network equipments and hazardous wastes(masts, cables, construction waste etc)frequently.Mobile operators are then(prenominal) face up with the challenge of find ing energy efficient ways of recycling which may in any case be capital intensive, alto pissher posing a threat. Legal factors a. Ofcoms issuance of licences for additional mobile network operators will pose a threat to incumbent operators( as their market share is threatened) and be an opportunity to potential operators as this will lower approach barriers for them. b. lush court-ordered contracts can also be a threat to the industry as lots of legal obligations have to be satisfied prior to and after(prenominal) entry.Drawing up different phone contracts for different mobile packages can render challenging for the operators. 2. 2 KEY DRIVERS FOR CHANGE Socio-cultural issue Consumer need for converged serve Consumer needs(which has led Virgin Media to provide multiple services such as the quad play and others providing the triple play) change from time to time and even some firms will try to create the needs for the consumers thereby thrust the industry towards finding ways to satisfy these needs as the market expands. This is one of the major drivers of change for the industry.Technological issue Development of new Technologies The dynamic nature of technology will keep operators findings ways to stay onwards of competitors by developing new technologies such as the IP, digitising blue-speed dispersal of voice, data and video over multiple networks. 2. 3 MICHAEL PORTERS 5 FORCES compendium a. Threat of entry (low) The barrier of initial capital cost of entry may be daunting scarcely the regulatory changes in the UK communications industry by Ofcom apothegm the issuance of licences to more mobile operators and also allowing MVNOs to ease network capacity without the capital cost of building their own hence reducing barriers to entry. This has also led to increase in the identification chassis of competitors. b. Threat of substitutes (low/moderate) Considering the advantages of mobile connections (make calls, sending messages/data, music etc), substitutes would be the fixed line connections, skype(or VOIP) on broadband, radio airwaves, phone booths or simply go without. With the fixed line connections, Ofcom reported that the number of lines dropped from 34. 9million in 2003 to 33million in 2009.Call minutes had also decreased by 15% from 167billion to 138billion over the same period with mobile minutes expected to exceed fixed line minutes in 2010(Case study p. 558). A report on Broadband news also says that mobile broadband will overtake fixed line connections in 2011. (Broadband Choices 2009). It is likely that the trend will continue in this way, considering the convenience offered by mobile connections, of being able to make a call on the move. c. Competitive rivalry (high) One of the aims of Ofcom is to ensure healthy competition among operators which saw a rapid growth in the number of competitors.The major competitors in the industry are Vodafone, Telefonica O2, Orange, 3 UK and Tmobile plus lots of MVNOs. Accordi ng to the case study, wireless operator margins in the UK were up because of strong competition(p. 559). d. Buyer power (moderate) The main buyers from the industry are households(individuals) and businesses. According to case study(p. 559), average churn(customer reverse) rates in the market was 20% annually due to the introduction of number portability in 2007 and competitive tactics such as subsidising handsets for subscribers. Customers would switch operators for better offers or added value for their money.To counter this churn rate, most operators have rear a way to switch post-paid customers to longer contracts of 18months or even 24months as at 2009. A recent 2011 report (Sim-only deals, 2011) highlights other reasons for low switching rates including providers loyalty programme and value for money SIM only deals which altogether gives them the power to make customers stay. e. Supplier power (moderate) The main suppliers to the industry would be the handset makers and Ofco m. Major handset suppliers such as Nokia with 40% of UK handset market and Samsung,21%, supply handsets to the industry nether global contracts(case study p. 59). There are more suppliers today including Apple, which is another fast developing supplier as their phones are deemed trendy and a must-have because of its innovative features. Sony-Ericsson, Samsung are among the loads of others. The case study p. 559 says mobile handset sales had experienced a decline in 2009 as UK wireless operators started to offer sim-only plans which allow consumers to retain their current handset and pay lower monthly tariffs. Ofcom on the other hand is the sole provider of spectrum. ATTRACTIVENESS Based on the evidences from the five forces, the report concludes that the industry is attractive.This being that, though rivalry is high, barely other threats and powers are low. Essentially incumbents or new operators can then focus only on competition and worry less astir(predicate) powers and other threats. 3 QUESTION TWO STRATEGIC CAPABILITIES OF VODAFONE According to Johnson et al. (2011), strategic capabilities are capabilities of an organization that contribute to its long-term survival or competitive advantage made up of two components Resources, which are assets the company has or can call upon and Competenceswhich are ways in which those assets are used or deployed effectively. 3. 1 RESOURCES AND COMPETENCES gay Resources Vodafone has had a history of experienced CEOs including Arun Sarin(resource), who was skilled in achieving growth in developing markets(competence/strength). Also, Gary Laurence(resource), head of Vodafone UK, appointed CEO in September 2008 was known for his ability to identify strategic options(competence/strength) and the current CEO, Vittorio Colao(resource) who succeeded Arun in 2008 is known for strong reputation as cost cutter. (competence/strength). (Case study varlet 563) Vodafones partnership with BT(resource) hosting BTs MVNO, allowed it to provide services to corporations. competence/strength). It started a joint adventure with O2(resources) which enabled it to extend its fixed-line network. (competence/strength). Vodafone, in its target of business travelers with passport services(resources), was able to offer home country voice rates while roaming in europium and mobile data services for ? 10 a day(competence/strength). (case study page 563) Financial Resources Financial Performance of Vodafone (a) ROCE(Return on Capital Employed) measures the returns made from all forms of resources or capital industrious in the business.Vodafones resources are the capital employed and its competence is shown in the amount of returns generated from utilization these capital. Vodafones ROCE plunged by 3. 73% to give a ROCE in 2010 of 19. 85. This may be slightly better than industry average but it shows a weakness to efficiently utilise resources to turn back maximum profits. Vodafone 2010 2009 Industry ROCE 19. 85 20. 59 19. 48 Source. Morning sensation Stock Report. (b) Current ratio measures a companys efficiency at brush its mindless term obligations.A equitable ratio would be for current liabilities to be covered at least once but Vodafones current assets(resources) can barely cover 50% of its liabilities in 2010 though it improved from anterior year. On the whole, this is a weakness as the company is low on liquidity and incurring too much liabilities in terms of its short term borrowings. Vodafone Plc 2010 2009 Industry Current Ratio 0. 501 0. 471 Source Morning Star Stock Report. (c) Net train shows the proportion of debt within a companys overall capital. The table below shows that Vodafones net gearing has declined from 40. 7% in 2009 to 37. 76% in 2010. Overall for the industry borrowing is about 40% of total capital. The reduction therefore for Vodafone is good as its means a reduction in finance be too. Vodafone 2010 2009 Industry Net Gearing ratio 37. 76% 40. 67% 39. 40% Source Mornin g Star Stock Report. (d) have-to doe with cover explains Vodafones ability to service its debt. From the table below, it appears Vodafone makes enough profits to service it finance be as it has been able to increase its interest cover to 7. 51multiplication in 2010 from 7. 03times in 2009.This may not be a core competence but it is a strength for Vodafone. Vodafone 2010 2009 Interest cover 7. 51 times 7. 03 times Source Morning Star Stock Report. Physical Resources Vodafone makes heavy investments in the merchandise of its Product mark offs (competence/strength) which includes, landline solutions and mobile telephony, mobile broadband and vouch employee remote access(resources), making them well known. (Vodafone website). It invests also in the marketing (competence/strength) of 3G dongles or cards(resources) for internet connection giving it the largest share of 3G subscribers.Vodafone used wholesale services to distribute its fixed voice and broadband (resources) but its pric es were too high giving it only a few customers(weakness). Another of its products is the Vodafone-at-home(resources), with which it competed with fixed line providers by offering fixed line prices when customers call from within or near their home(competence/strength). Core Competences For the sake of this report, the core competences identified are Vodafones CEOs. They have been exceptional with what they bring to the table and how their expertise has been able to transform the company.Vodafone UK CEO, Gary Laurence has been terrible in terms of identifying strategic options available to the company such as successful alliances and joint venture with likes of BT and O2. Heavy investment in the marketing of its products giving it largest share of 3G subscribers is another core competence. 3. 2 VODAFONE VALUE image Primary Activities Inbound logistics Vodafone possesses its own network equipments, backbones and infrastructure to provide various communication services, and purchasi ng of handsets (Annual Reports 2010, p. 21). right off, its in a network sharing musical arrangement (sharing masts, sites and towers) with O2 covering the UK and 4 European countries,. (case study page 559, Guardian serve 2009). , Another inbound logistic is the ownership of spectrum. Spectrum is of particular importance to the mobile phone and mobile broadband industry, which relies on it to carry information between customers handsets and mobile masts. Vodafone spectrum is 1800MHz. (Ofcom report, Feb 2011). Operations All Vodafone operations are based on in-house infrastructure. Vodafones operations is dependent on its people, infrastructure and financial resources.Its logistics operations (which provides a variety of value-added services), evolves from a single, purpose built site in westerly Midlands. (Unipartlogistics. com) Out-bound logistics Vodafone has consumer on-line purchasing systems in place that allow customers to purchase its services transportly(Vodafone websit e). It also has its own billing system. Marketing and Sales Vodafone has several own branded and other retail chains that it uses in distribution. According to the case study(page 563), Vodafone invests a lot in marketing in all markets whilst promoting its brand and also sponsors Formula 1 and England cricket sports.ServicesIts all encompassing website enables customer online ordering and feedback monitoring. (source). Vodafone has customer services helpline that offer after sales services and it also offers services to MVNOs such as Lebara mobile, Asda mobile, Talk mobile(Carphone Warehouse) and BT mobile(http//ukmobilecoverage. co. uk/), Support Activities nucleotide Vodafones mode of expansion was the formation of a joint venture with O2(case study p. 559) to manage its mobile network and share network covering 4 European countries and the UK.It also leases BTs fixed line services and hosts BTs MVNO. (case study p. 562) Human Resource Management Vodafone depends on its employee s for the quality of its services to customers. It ensures an inclusive working(a) environment and encourages innovation, ambition and pro-activeness. Vodafone encourages enthusiasm, talent and commitment in its employees in order to build and maintain its success and stay competitive. (Vodafone, Our people). Technology and Development Vodafone owns internet portals which enables on-line ordering.Also, continuous R&D helps the company to incubate and pay off innovation to the business. (Annual Report, 2010. p. 20) Procurement Vodafone, like other networks, purchases branded handsets from suppliers. Vodafone holds several develop courses for its procurement team for efficient management of supplier performance. CONCLUSION grind MATRIX STRENGTHS1. Experienced CEOs(UK CEO, Gary Laurence). 2. Partnership with BT and O2. 3. Offering home country voice rates abroad. 4. Heavy investment in marketing. 5. Vodafone at home6. Good Interest Cover7.Reduced borrowing WEAKNESSES1. Low level of liquidity2. Inability to increase ROCE3. High prices and ineffective channel of distribution for fixed voice and broadband. OPPORTUNITIES1. Governments privatization of Ofcom. 2. Consumer need for converged services. 3. fall in Fixed line telephone market4. 2012 Olympics5. Consumer demand for smart phones6. Consumer hype for modern technology7. Ofcom issuance of entry license THREATS1. Slow economic recovery from recession2. Decline in disposable income3. Immigration cap4. Health issues in areas of mobile masts. 5.Customer switching rates. 6. Development of new technologies7. Capital intensive recycling8. Ofcoms issuance of entry license9. Elaborate legal contarcts From all facts assessed in the report and also information from the case study and Vodafone accounts, it is indeed evident that Vodafone is struggling to develop a total communications strategy to enable it to secure leadership in the quick growing market for high speed internet services in its UK home market due to th e fact that it actually cannot improve its core activities in order to gain competitive advantage.Please rate the quality of this demonstrate Good Neutral Poor Struggling with your essay? You can get your essay custom written by an expert in your posit area. 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