Vodafone presentation
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Analysis of SWOT, PESTEL and Porters 5 forces
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Vodafone presentation
- 1. Vodafone Developing a total communications strategy in the UK market Student: Yerzhan Beisengaliyev and Aidos Bespayev Professor: Jean Christophe Vautrin
- 2. Name The name Vodafone comes from voice data fone, chosen by the company to "reflect the provision of voice and data services over mobile phones
- 3. Table of Contents: General Info about Vodafone PESTEL Analysis 5 Forces Analysis SWOT Analysis Value Chain Recommendations Bibliography
- 4. General Info about Vodafone Vodafone Group is a British multinational telecommunications company headquartered in London Vodafone' brand started in 1982 with the establishment of Racal Electronics plc – UK's largest maker of military radio technology. It is the world's 3rd-largest mobile telecommunications company measured by both subscribers and revenues It is a globally operating company, since Vodafone owns and operates networks in 21 countries and has partner networks in over 40 additional countries. They have 92,812 employees worldwide
- 5. General Info about Vodafone MISSION We will be the communications leader in an increasingly connected world 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.
- 6. General Info about Vodafone Corporate Strategy: Growth objectives Drive operational performance through value enhancement (maximize value of existing customers) and cost reduction. Total communications – expansion in mobile data services, enterprise customers, high value consumers as priority Expanding into newly emerging markets Strengthening capital discipline – generating 5-6 billion pounds in free cash flow annually to support investments for the future growth
- 7. PESTEL Analysis Political Government policies Privatization of British telecom Phone licensing Tax policies Technological Technological advancements Additional Services Licensing, patents, 3G Environment Dispose handsets Social Responsibility Recycling programs Legal Current market legislation – convenient and stimulates competition Changing environmental regulations Use of phone while driving Social Health awareness Growing older population in UK More social media users Increasing access to internet and internet users Economic Economic stability – after crisis High labor cost in UK High cost of building and maintaining network Competitive industry
- 8. PORTER’s 5 Forces Porter five forces analysis is a framework to analyze level of competition within an industry and business strategy development.
- 9. PORTER’s 5 Forces Bargaining power of Consumers: HIGH • Lack of differentiation among service providers • High competition • Low switching costs • Lack of brand loyalty Bargaining power of Suppliers: MEDIUM • A few major suppliers • Lack of substitutes • Outsourcing network abroad • Common platform across the groups • High switching costs • Nokia, Apple, Samsung etc.
- 10. PORTER’s 5 Forces Threat of substitutes: MEDIUM-HIGH • Landline users are declining • Videoconferencing • VOIP – Skype, Yahoo Messenger, Gtalk • E-mail & Social network websites • Very few companies providing 3G card or DSL services in UK Threat of new entrants: LOW • Huge license fees to be paid upfront • High initial capital required • Complex regulatory issues • Infrastructure cost – very high • Rapidly changing technology Industry rivalry: HIGH • Virgin media, 02, Orange, SKY, Talk Talk, BT • Less or no brand loyalty for specific product • Little discrimination other than cost/price • Open market for competition – legislations favor competition
- 11. SWOT Analysis STRENGTHS • Globally renowned brand name • Great geographical exposure • Gained economies of scale due to its size • Highly innovative company • Integration of subsidiaries under Vodafone umbrella • High level of network infrastructure • Leading mobile company in the UK WEAKNESSES • Mainly concentrated in Europe and Asia • Lost the 2nd position in UK to Orange & 02 partnership • Weak in fixed network area • Lack of rural network wireless access
- 12. SWOT Analysis OPPORTUNITIES • Increase the 3G coverage • Tao into emerging markets • Reduce costs through efficiency – offer better prices • Diversification into new areas • Invest in R&D and innovate new offerings • Expand towards non-mobile services THREATS • Market saturation in UK and Europe • Uncertainty of regulatory climate • Increasing usage of Skype, Teleconferences, Whatsup, iMessage • Increasing competition
- 13. Value Chain A value chain is a chain of activities that Vodafone performs in order to deliver a valuable product or service for the market.
- 14. Value Chain
- 15. Recommendations Partnering with BT in order in order to gain access to a network with less capital investment than building or acquiring its own Tapping into the rural markets Concentrate more in value added services – target high end consumers such as businesses Diversifying in Broadband services, DTH, Voice over internet protocol (VOIP) Increase presence in emerging markets such as India, Brazil etc Remain innovative, improve 3G speed and prepare for lunching 4G ahead of other competitiors
- 16. Factsheet
- 17. Factsheet
Hinweis der Redaktion
- Political factors: The political environment has a great impact on the performance of business in pursue its mission of achieving the strategic goals and objectives. Political factors are basically concerned with government policies and other regulatory framework. Office of communications was the regulator in UK and its main work was to ensure the competition and service delivery. The first thing it did the privatization of British telecom’s services which entailed it to provide network and internet services to other operators through a process named local loop unbundling (LLU). Through these regulatory changes, Vodafone took an advantage and shed light on its mobile services. Moreover, licenses to mobile phones are controlled strongly and use of phones and access to a range has been limited by the government in order to make its safe n right use Economic factors: These factors comprises of interest rates, changes in area of taxation, economic growth, exchange rates and inflation, etc. Moreover, these factors can affect an organization’s competitiveness. In case of Vodafone, license cost to get hold of a phone is very high in comparison to other traditional industries. There was a war of 3G license bidding at the elevation of economic explosion which resulted in intense payment for that. Apart from that cost of building and maintaining network framework was very high for every network operator organization. It required enough revenue to breakeven and if in any case it is not made possible then the standards will not be approached Socio-cultural factors: These factors include health awareness, growth rate of population, and distribution of age and safety prominence. Concerning Vodafone’s strategy exploration in UK, the population has been getting older day by day and on the other hand it also has been researched that the population of UK will grow 4 percent over the subsequent five years. Mobile phones generally are used by youths more than the old people. In the country like UK where population is ageing, demographics may have chances to swing to more aged inhabitants. It will further ending with the less use of mobile phones in UK Technological factors: The industries of mobile handset have gone through a huge compact of alteration in technologies and equipments used and will also carry on doing so. 3G technology has existed and has come forward with a good arrangement of both content and additional services. This can help increasing the revenue if Vodafone with this 3G technology starts providing a wide range of content to the users Environmental :Vodafone has encouraged customers to dispose of the handsets and accessories safely through the settlement of a recycling program. Legal factors: A law regarding the use of phone while driving any private vehicle was introduced in 2003. Also must look into other market legislations environmental regulations, employment law, consumer protection
- Consumers Power: It includes buyer volume, information, brand identity, price sensitivity and product differentiation, etc. After the price cut and other operating alterations which were forced on BT made Vodafone and other operators capable to buy and install network equipments in case of fixed line service. Concerning mobile phone service, Vodafone purchased handsets under some worldwide contract and then discounted their retail price to attract more new subscribers. Therefore, in recent years it has strong power to buy and negotiate own branded mobile sets from a number of suppliers. Consumers lack brand loyalty and have low switchign costs Power of Suppliers: Through price increases by companies, suppliers were attracted to deal with telecommunication industry in UK. Power of suppliers in UK market for network operators and telecommunication industry is too strong which affect the negotiation and other contracts. Local loop unbundling and BT had a strong approach as a supplier and service provider in fixed line industry. In case of mobile phone industry major suppliers was Nokia having the global contract with most of the largest operators of UK telecommunication industry. Nokia had almost 40% of the UK market for smart handsets and on the other hand Samsung could capture only 21% percent of all. Apple was one of the strong suppliers of the UK industry having over 2 million sold in the first year of its existence in the UK market. For broadband service in UK leader supplier was BT with its 26% of the retail broadband connection followed by Virgin media with 23%, BSkyB with 12% and lastly orange home with only 5%
- Competitive Rivalry: In case of fixed line there were Virgin media, Talk Talk, orange and sky as the main competitors. But major competition came from British telecom fixed line. With respect to mobile phone, competition was strong from orange, T-mobile, Tesco mobile. Next the competitors of broadband were ‘the cloud broadband connection, BT open zone and T-mobile. Virgin also offered the broadband service to the customers with 50mbps speed across its network in 2009. Most probably rivalry seems to be high when there is less or no brand loyalty for a specific product, little discrimination other than cost/price Threat of substitutes: On the basis of analysis of three of the industries, it can be noticed out that among all Vodafone faces the least threat for substitutes. The focused strategy subject to leadership in cost system that Vodafone functions under makes it relatively complex for a parallel alternate to be made available at a lower price by their economies of scale’s use, their purchasing power, and moreover their utilization of provisional elevation in price that arrive from suppliers that generally don’t required to be approved to the consumer. Other operators providing mobile phone has the threat of other substitutes as in case of Samsung and apple providing the same features. Next, in broadband connections, threat has been less because a very few companies have started providing the connections through 3G card or DSL services in UK Threat of Entry: Threat of Entrant can be less in fixed line service’s context because BT is already a leader of this industry providing the higher level of services and generating higher revenue as compare to others. It is very high level of threat as far as mobile phone industry is concerned. There can be other companies who may have the price influence on the population of UK. Threat of new entrants is also high for broadband industry because new companies are entering with offer of high speed. Like Airtel has made a great impact by offering a 3G card with its tremendous and high speed quality which may further make a lead in the UK market
- Vodafone’s competitive strategy works in their competitive configuration but requires to be continuously updated to remain at the forefront of the technology camber and on the other hand not fall at the back to its competitors who will be endeavoring to persistently progress on their services and technologies offered recently. Due to Vodafone’s determined resources such as human resources, innovation and knowledge/competency which are mainly imperative for them to stay at the forefront of their competitors, it takes benefits of the competitive advantage Furthermore, Vodafone holds a very exhaustive and practiced market’s knowledge and technology that it is concerned with. They have utilized this knowledge to the several markets it has penetrated and has proven victorious. On the other hand, Vodafone’s most important vague resource referred to their competencies and experience in the industry and their global presence and these things describe the company as a grand asset and a name anyone can trust upon