Swot Vodafone

Email Developing a total communication dodging in the uk securities constancy 1. INTRODUCTION This tale pass on criti craby analyse the away environment of the agile ph wiz operators industry with the application of becharm st aimgy excessivelyls including PESTEL and Michael Porters five forces models. An immediate result of this would be the identification of opportunities and scourges that may become from change in environmental factors and assessment of the attractiveness of the industry respectively.The topic will too analyse critic aloney, the strategic capability of Vodafone, also 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 core competencys the firm possesses. To aid the analysis, the report will draw on information from various sources much(prenominal) as The Vodafone case depicted object on page 557 in the important school text by Johnson, Sc holes and Whittington, Exploring Strategy 9th Edition, Prentice Hall, 2011. Other sources include Keynotes, Mintel and Magazines. . QUESTION angiotensin converting enzyme PESTEL, KEY DRIVERS AND MICHAEL PORTERS 5 FORCES 2. 1 PESTEL The PESTEL framework is used for the analysis and harmonise to Johnson, Scholes and Whittington (2011), it nominates a comprehensive list of influences on the possible success or failure of particular strategies. Discussed be kickoff be a few issues of PESTEL, divert see appendix for former(a) issues. Political/Legal factors G overnments privatisation(through Ofcom) of the national call in lodge, BT, compelling it to allow access to its network (via Openreach) for voice and wideband.This has attended to break mountain BTs monopoly thereby creating an opportunity for wandering(a) operators to operate and at competitive rates. (case dis bounce back p. 558) Economic factors a. The UK economy has still not fully recovered from the pecuniary crisis of cc8, re cover charge regular slower than other countries amidst huge government resuscitation efforts and even consumer spending is expected to dec spot by 0. 6 per capita in 2011(the Telegraph, may 2011). This is a threat to the industry as, the slower the economical recovery, the slower the market reaping for the mobile operators industry. b. Though the case training(p. 58) says that personal disposal income growth as experienced between 2002 and 2007 was forecasted to resume in the future, recent heightenments conjure otherwise. Now the future is here, reports say household incomes argon falling(NewStatesman, May 2011 and military post Online, May 2011 ). This is a threat to the mobile industry as it message less(prenominal) income at the disposal of households, hence less subscribers to its services. Social factors a. Consumer pack for converged services, such as mobile telephony, determined line telephony, television and broadband net income, was increasing(ca se report p. 558).This means an opportunity for mobile operators to expand their market as more people are coming on board with this product ask which could be a result of the plunge in spend fitted income so people want all services in one and pay a lower lump sum for all in a bid to ration their income. b. A decline in UK hardened line telephone market as households were becoming mobile-only users. This is an opportunity for mobile operators to capture the market touch of obstinate line telephone operators in a bid to expand theirs. c. Consumer perceived prestige that comes with owning tonicphones is an industry opportunity.For example, everyone wants to possess an IPhone, HTC or Blackberry because they are cool or for other reasons, so operators in the industry fucking metropolisize on this and make up their market share by spelling cheap deals. d. Consumer hype for new- do and modern technologies as everyone wants to capture the current thing in technology. This would create an opportunity for the industry to capitalize on and expand their market share. Technological factors a. increase of new technologies, IP(Internet Protocol) for voice, data and picture transmission(case study p. 557).The dynamic nature of technology is posing a threat as operators may be stuck with obsolete technology thereby liner a challenge to be pro-active in order to retain market share and keep churn rates at bay. b. Continued upgrading of speeds over mobile networks places a threat as operators rush to keep up with the upgrading of speeds because they might loose customers to service providers who foot offer break away speeds. environmental factors As a result of advancement in telecommunications technology, mobile operators watch to replace network equipments and hazardous wastes(masts, cables, construction waste etc)frequently.Mobile operators are thus faced with the challenge of finding energy efficient ways of recycle which may also be capital intens ive, altogether posing a threat. Legal factors a. Ofcoms upshot 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 entry barriers for them. b. cypher legal contracts can also be a threat to the industry as lots of legal obligations have to be satisfied introductory to and after entry.Drawing up different phone contracts for different mobile packages can prove challenging for the operators. 2. 2 KEY DRIVERS FOR CHANGE Socio-cultural issue Consumer pack for converged services Consumer needs(which has led Virgin Media to provide multiple services such as the quad play and others providing the triple play) change from clip to time and even some firms will try to create the needs for the consumers thereby pushing the industry towards finding ways to satisfy these needs as the market expands. This is one of the major drivers of change for t he industry.Technological issue Development of new Technologies The dynamic nature of technology will keep operators findings ways to collar ahead of competitors by developing new technologies such as the IP, digitising high-velocity distribution of voice, data and video over multiple networks. 2. 3 MICHAEL PORTERS 5 FORCES ANALYSIS a. Threat of entry (low) The barrier of initial capital damage of entry may be daunting but the regulatory changes in the UK communications industry by Ofcom saw the issuance of licences to more mobile operators and also allowing MVNOs to ease network capacity without the capital cost of build their own hence reducing barriers to entry. This has also led to increase in the number 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 wit hout. With the fixed line connections, Ofcom reported that the number of lines dropped from 34. 9million in 2003 to 33million in 2009.Call proceeding had also decreased by 15% from 167billion to 138billion over the same plosive speech sound with mobile minutes expected to exceed fixed line minutes in 2010(Case study p. 558). A report on Broadband give-and-take 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 gismo offered by mobile connections, of being able to make a call on the move. c. Competitive aspiration (high) One of the aims of Ofcom is to ensure healthy tilt 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. match to the case study, wireless operator margins in the UK were up because of strong competition(p. 559). d. leveragingr power (moderate) The main buyers from the industry are households(individuals) and businesses. check to case study(p. 559), comely churn(customer twitching) rates in the market was 20% annually due to the innovation of number portability in 2007 and competitive tactics such as subsidising handsets for subscribers. clients would switch operators for better offers or added value for their silver.To counter this churn rate, most operators have found 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 providers to the industry would be the handset makers and Ofcom. Major handset suppliers such as Nokia with 40% of UK handset market and Samsung,21%, supply han dsets to the industry under spheric contracts(case study p. 59). There are more suppliers today including Apple, which is another immediate growing supplier as their phones are deemed trendy and a must-have because of its advanced features. Sony-Ericsson, Samsung are among the loads of others. The case study p. 559 says mobile handset gross gross revenue had experienced a decline in 2009 as UK wireless operators started to offer sim-only plans which allow consumers to retain their genuine handset and pay lower periodic tariffs. Ofcom on the other hand is the sole provider of spectrum. ATTRACTIVENESS base on the evidences from the five forces, the report concludes that the industry is attractive.This being that, though rivalry is high, but other threats and powers are low. Essentially incumbents or new operators can then focus only on competition and worry less about powers and other threats. 3 QUESTION TWO STRATEGIC CAPABILITIES OF VODAFONE harmonise 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 alliance has or can call upon and Competenceswhich are ways in which those assets are used or deployed effectively. 3. 1 RESOURCES AND COMPETENCESHuman Resources Vodafone has had a history of experienced chief executive officers including Arun Sarin(resource), who was dexterous 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 live CEO, Vittorio Colao(resource) who succeeded Arun in 2008 is known for strong reputation as cost cutter. (competence/strength). (Case study page 563) Vodafones partnership with BT(resource) hosting BTs MVNO, allowed it to provide services to corporations. competence/strength). It started a joystick 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 domicil country voice rates while roaming in Europe 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 employed 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 engage resources to yield maximum profits. Vodafone 2010 2009 Industry ROCE 19. 85 20. 59 19. 48 Source. cockcrow Star Stock Report. (b) Current ratio measures a social clubs efficiency at meeting its short term obligations.A good ratio would be for latest liabilities to be covered at least once but Vodafones current assets(resources) can barely cover 50% of its liabilities in 2010 though it meliorate from previous year. On the whole, this is a weakness as the company is low on liquidity and incurring too much liabilities in damage of its short term borrowings. Vodafone Plc 2010 2009 Industry Current Ratio 0. 501 0. 471 Source Morning Star Stock Report. (c) simoleons Gearing shows the proportion of debt at heart a companys overall capital. The table below shows that Vodafones net gearing has declined from 40. 7% in 2009 to 37. 76% in 2010. general for the industry borrowing is about 40% of total capital. The reduction and then for Vodafone is good as its means a reduction in pay costs too. Vodafone 2010 2009 Industry Net Gearing ratio 37. 76% 40. 67% 39. 40% Source Morning Star Stock Report. (d) Interest cover explains Vodafones ability t o service its debt. From the table below, it appears Vodafone makes enough profits to service it finance costs as it has been able to increase its interest cover to 7. 51 time 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 morose investments in the selling of its Product brands (competence/strength) which includes, landline solutions and mobile telephony, mobile broadband and secure 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 sell services to distribute its fixed voice and broadband (resources) but its prices were too high giving it only a few customers(weakness). Another of its products is the Voda fone-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 ableise has been able to transubstantiate the company.Vodafone UK CEO, Gary Laurence has been formidable 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 harbor CHAIN Primary Activities Inbound logistics Vodafone possesses its own network equipments, backbones and infrastructure to provide various communication services, and purchasing of handsets (Annual Reports 2010, p. 21).Now, its in a network sacramental manduct ion agreement (sharing masts, sites and towers) with O2 covering the UK and 4 European countries,. (case study page 559, shielder March 2009). , Another inbound logistic is the ownership of spectrum. Spectrum is of particular greatness 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 trading operations are ground 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 West Midlands. (Unipartlogistics. com) Out-bound logistics Vodafone has consumer on-line purchasing systems in place that allow customers to purchase its services directly(Vodafone website). It also has its own billing system. Marketing and Sales Vodafone has several(preno minal) own brand 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 encompass 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/), stomach Activities Infrastructure 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 employees for the quality of its services to customers. It ensures an inclusive wo rking 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 deliver innovation to the business. (Annual Report, 2010. p. 20) Procurement Vodafone, like other networks, purchases branded handsets from suppliers. Vodafone holds several training courses for its procurement team for efficient management of supplier performance. CONCLUSION SWOT 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 inefficient channel of distribution for fixed voice and broadband. OPPORTUNITIES1. Governments privatization of Ofcom. 2. Consumer need for converged services. 3. Decline 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 lead in the rapidly growing market for high speed internet services in its UK home market due to the fact that it real cannot improve its core activities in order to gain compet itive advantage.Please rate the quality of this look for Good Neutral Poor Struggling with your essay? You can get your essay custom written by an expert in your subject area. 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