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Vodafone Case Study BUS402 - Business Policy Girne American University

Submitted To Emete A. Toros 14 May 2010

Group Members

Mehmet Akif Uçar Student ID:050211050 Merve Özgören Student ID:050201014 Asım Eren Çörüş Student ID:050205153 İbrahim Bektaş Student ID:050205033 Ali Us Student ID:060211003 Gözde Yörük Student ID:050205103 Ali Rıza Özer Student ID:050205144 Umut Can Esenergül Student ID:050205045

Mission Statement / Objectives

Nature of Demand

External Analysis

Five Force Analysis Buyer Power, Barriers to Entry Five Force Analysis Degree of Rivalry, Treat of Substitutes, Supplier Power Internal Analysis

Financial Analysis

Strategy Alternatives and Choices / Conclusion

II

Table of Content Cover Page Group Members Table of Content Introduction Mission Statement Objectives Nature of Demand External Analysis Five Force Analysis Degree of Rivalry Buyer Power Treat of Substitutes Barriers to Entry Supplier Power Internal Analysis Financial Analysis Strategy Alternatives and Choices Conclusion 7 9 10 11 12 12 16 24 25 4 4 4 6 1 2 3 III .

Strategically Vodafone Group Plc announces Board changes and a new organizational structure which will enable continued improvement in the delivery of the Group’s strategic goals. Vodafone. That really affected buyer decision black box. on the same network without having to worry about high fees. which had one of the largest markets for mobile telephony with more then 60 million customers and a high population density. for example. Arun Sarin took some tough decisions. For example 48% of the German users signed contract with Vodafone. estimates that once the initial investment had been made. Nature of Demand Vodafone is a global company and competing both in global and local markets. however in Italy 92% of people using mobile services prefer pre paid cards. It IV . uniting all Vodafone strategic members and remaining leader in revenue globally and remain important player in every local market that we compete. we value our costumers to make their lives richer more fulfilled and more connected. He faced up to slowing growth in his core market by unveiling an impairment charge of 23 billion pound to 28 billions of punt and exited the Japanese market by selling its stake to Tokyo-based Softbank in a deal valued at 15.5 billions dollar to its shareholders.Introduction Mission Statement As Vodafone company we mainly focus on mobile telecommunication service business while achieving the purpose. This structure will become effective as from 1 January 2005. the threshold for an acceptable return on investment was estimated to be around 20% of the total market share. Objectives Financial Beginning of 2006.4 billions dollar and confirmed that after the sale it would return 10. employees to attract develop and reword out standing individuals and finally. Vodafone created a tariff option that enabled customers to roam the globe. In Germany. Different cultures need exactly different marketing and sale strategies. Absolutely every country has different needs and wants from a mobile communication company. We value World around us to make people’s life fuller with our service provided. on a special per minute rate. less than ten percent of revenues were needed to maintain the network.

Voice call users could use extra services and internet too. Vodafone is not an innovator. People were excited with such a technology. internet (3G) users. If contracted users pays 1€ for 10 minutes than pre paid card user needs to pay 1€ for 10 minutes. Suppliers (Nokia. From time to time. Having long term contracts and customers using pre paid cards. The introduction of 3G showed really good statics at the beginning. They are the user of technology. investing and advertising. Also big communication companies like Vodafone started to focus on this technology because buyer propensity to substitutes available increased in voice calling services. However pre paid card users won’t be able to get this kind of privileges. As it is mentioned in the case. It is much easier and costs less. Vodafone is having problem at US. They are purchasing the technology from companies like Nokia. Selling them their Vodafone card with a cell phone asking that customer to talk some amount of minutes or have some amount of bill every month for some year. But you cannot charge them different money. That means people won’t be using 3G services if there is Wi-Fi zone nearby. Alcatel. Vodafone realized that calling and 3G operations with mobile phone will decrease as in quantity much more in near future and Vodafone started to focus on extra services like texting. However long term contracts are stable and can be forecasted easily for future budgeting.is really attractive to talk cheaper than anything else while you are away from your country. However you cannot separate them. inventing new technologies sharply decreased because we are pushing the limits. For example if I cannot use my cell phone in specific areas (most of them in metropolis areas) I won’t be attracted by Vodafone’s campaigns. For example people started to use internet telephone to make their calls instead of using Vodafone cards and a cell phone. Vodafone cannot separate them. That is V . extra service users. This is really good offer. and Ericsson) have invented Wi-Fi enabled mobile phones. Ericsson. Also mobile technology becoming old technology. wallpaper download and etc. More services mean more customer and people will be attracted more even if they won’t use internet at all. We can see examples of it. In both ways Vodafone is earning same money. Customers not able to use their cell phones in Verizon Wireless network (which is owned by Vodafone itself) because it operated under a different standard. On the other hand there are 2 types of users. That really affects buyer propensity. In another case. ringtone download. Vodafone is offering much more privileges to contracted customers. It doesn’t really matter if a customer is pre paid card user or having long contract. Actually you can separate them. They have to provide all of these things to attract more customers. Voice call users. Alcatel and etc and providing services to it’s customers to use that technology. There are 3 segments.

Technological In the US Vodafone customers still could not use their cell phones on the Verizon wireless network because it operated under a different standard. That is a reality due to investment options and the quasi-political situations of Chinese mobile telephony market. External Analysis PESTEL Political China mobile can never become Vodafone china. VI .why Vodafone is giving privileges to dedicated customers. Introduction of 3G which had a very promising start in Germany with good sales of mobile connect cards might shift the focus of the whole industry away from networks to content. Like in anywhere else loyalty rewarded generously. Social-Cultural 48% of Vodafone’s customers in Germany had a contract while this kind of long-term commitment to an operator was almost unheard of in Italy. The mobile phone market was characterized by extremely high fixed costs that affect rivalry. Revenue from voice traffic was flat or even declining due to competing technologies as internet calling that was fundamentally changing the telecom industry. Economical Vodafone had competitive advantage over rivals after the telecom crisis because Vodafone was the only company used shares for its acquisitions. Vodafone had trailed behind NTT DoCoMo and KDDI since its entry in 2001 in Japan due to fickle consumers. Customers who are loyal.

Verizon. Bellsouth Corp. SFR. “Vodafone dominance tipped to keep rolling” Utility Week.Legal Regulatory constraints would require it to sell its stake in Verizon Wireless first because it was prohibited to own more than a 20% stake in two competing operators. Opportunities and Threats Opportunities: In 1999. 2003 (say. Vodafone merged with AirTouch Communications Inc. of the US The mobile telephony boom reached its peak. Erickson. 2003.. “A new voice at Vodafone” The Economists. There are news about rivals success in the press. Verizon refused to adopt the single Vodafone brand Verizon Wireless is the largest mobile phone operator in North America Technology developed by companies such as Nokia. “Nokia takes leap into Wi-Fi phones” Wall Street Journal Europe. August 2. August 2003. AT&T Wireless. January31. The merger of AT&T with Bellsouth Corp. “Vodafone keeping pole position” Total Telecom Magazine. had put pressure on Verizon Wireless to buy of Vodafone and force it to exit the US market. February 23. There were good news about Vodafone in the press. Vodafone signed sponsorship agreement with Manchester United Football Club and Ferrari Formula 1 Team. Five Force Analyses Degree of Rivalry Exit barriers Vodafone group is the world’s largest cell phone provider by revenue and invested $270 billion in stock also the company competes in 26 countries and it controlled cell phone operations in 16 countries and had minority stakes in companies in ten other countries. it had more than 150 million customers and VII . There were good news about Vodafone in the press. Nortel if WiFi powered phone technology should ever become popular. it would undermine Vodafone’s current business model and could turn billions of fixed assets into worthless electronic scrap. There was good news about Vodafone in the press. etc. Positive publicity in important magazines like ……. O2. 2004.) Threats: Vodafone has many big and strong competitors such as.

000 people around the world.7 billion.5 million. Product differentiation Vodafone created a tariff option that enabled customers to seamlessly roam the globe on a special per minute rate on the same network. Product differentiation is High so Degree of Rivalry Low. it sponsored the Manchester United Football Club and the Ferrari Formula 1 team to improve awareness over the world. of which Vodafone has about 3. great value and great innovation and they never used “low prices” to attract new customers instead. without having a worry about high interconnection fees or different technical standards. in five years if the Vodafone could be able to touch these untapped areas they can offer service to the half of the world which is approximately 2. Vast untapped markets lay ahead with today’s mobile penetratition of about 1. Also the Vodafone group selected two globally recognized brands. Additionally the company has many acquisitions with the other companies in many countries so it is not easy to end the contract with its acquisitions and the customers mutually have long-term contracts but in the case of the Japan Telecom according to the Vodafone’s strategic decisions the Vodafone decided to divestiture it but it does not mean that they can totally close the business hence it is so hard for them to exit so both Exit Barriers and Degree of Rivalry High. Brand identity Throughout the past years Vodafone has done a terrific job of building brand awareness by offering its customers great service. it focused on creating and marketing new value-added services that enticed customers to sign up with Vodafone.5 billion so there is a huge growth potential for the future and Industry Growth is High so Degree of Rivalry High.employed approximately 67. Globally they have appeared in 26 countries with more then 150 million customers and they aimed to collect its acquisitions under the same umbrella as “One Vodafone “and in many of the branding cases they fallow the same path to adopt them and some of the processes ended in almost one night and in some other cases it took more than 2 years to change the name from original situation to “One Vodafone”. Vodafone gives to their customers. Industry concentration ratio There is no any exact ratio but the company is in 26 countries out of 200 and biggest in the world so accordingly we can give a meaning that the Vodafone group has High Industry Concentration Ratio and Degree of Rivalry is high Industry growth Vodafone vas not present in Latin America and in many African countries. In addition they have Vodafone Life which offers a service to listen free music from the internet and also you can download ringtones. change for connecting to their company’s IT systems and special rates for international calls on the network. These applications by Vodafone give power of being a challenger for local VIII .

From here we can understand the buyer power is low. voice call and Vodafone Live! Etc. From here we can understand buyer power is low. great value and great innovation and they never used “low prices” to attract new customers. There are 3 High and 2 Low. Which cause Vodafone to lower their tariffs? So price sensitivity is low. However Vodafone is not immune to the pricing policies of its competitors. IX . So trade of backward integration is low. buyer information is high. Brand Identity: Vodafone is offering to their customers. Technology is developed by companies like. Buyer Information Vodafone is in mobile telecommunication sector. always continue to use these services. Vodafone is the 11th most valuable company of the world. Price Sensitivity: Vodafone never tried to attract new customers with low prices instead they focused on full filling the needs of customers by giving them the best quality service. They are technology users. Buyer Power Buyer Volume Vodafone doesn’t sell just sim card. Vodafone collects these services prices. Natel etc. To reduce the degree of rivalry they should have to enter the untapped areas so they can increase their market share and they can be more a Challenger company. They purchase a little bit money from sim cards.companies under the “One Vodafone” Brand identity is High so Barriers to Entry Low. In this sector companies compete with each other aggressively by advertisements so most of the consumers are aware of pricing and existing services provided by these companies. So. From here we can understand the buyer power is high. They purchase their services. So brand identity is high. They sponsored the Manchester United and Ferrari Formula 1 team to improve their awareness and perception of the brand. great service. From here we can understand the buyer power is low. 3G services. Erickson. instead of Vodafone group having different product and brand identity the Degree of Rivalry is still high because of there are untapped profitable markets and growth opportunities for the firms and also to be able to compete with its competitors they should fallow the technological requirements. Nokia. Vodafone wants to collect their acquisitions under the same umbrella as “One Vodafone”. Trade of Backward Integration: Vodafone do not develop their own technology. So. buyer volume is high and also buyer power is high. As a conclusion. Consumers.

X . substitutes available is high.Product Differentiations Vodafone created a tariff option that enabled customers to seamlessly roam the globe on a special per minute rate on the same network. As a conclusion. chance for connecting to their company’s IT systems and special rates for international calls on the network. Because. The Relative Price Performance of Substitutes High so Threat of Substitutes High. So. And their aims are very high to substitutes. Relative price performance of substitutes People are able to talk from internet by paying very low prices or they mutually can talk free by using Skype also fixed line telephones are cheaper compared to the mobile phone charges so when people are able to reach internet and fixed line telephones thus the importance of mobile telecommunication is declining. So product differentiation is high. From here. Vodafone gives to their customers. Conclusion We have 4 low sign and 3 high sign. Threat of Substitutes Buyer propensity to substitutes By the improving of sophisticated internet opportunities revenue from voice traffic was flat or declining and the competing technologies as internet calling was fundamentally changing the telecom industry. without having a worry about high interconnection fees or different technical standards. Vodafone always stronger than their consumers. both of them are high which means substitute products affect the company negatively in terms of growing by profit so the Vodafone group needs to decline the communication charges for not losing its existing customers. Substitutes Available Customers can use fixed-line telephones and internet telephones. Normally. From here we can understand the buyer power is high. Also Skype is another important consideration which allows people to talk over internet that’s why Buyer Propensity to Substitutes High so Threat of Substitutes High. buyer power is low. we can understand the buyer power is low. Also Nokia had just presented its first Wi-Fi powered that did not need the traditional mobile network but a wireless LAN hotspot.

But. So. Brand Identity Vodafone is offering to their customers. They sell their services to consumers.Barriers to Entry Access to Input Vodafone’s network equipment suppliers are Alcatel. how Vodafone buy so many companies’ shares? Or. So. Capital Requirement Mobile telecommunication sector is need to so much money. Vodafone is working on 26 countries. Who wants to enter to this sector. they cannot find easily their inputs. Government Policy Vodafone is a global company. Vodafone is a global brand. So. Who will plan for enter to this sector. Vodafone wants to collect their acquisitions under the same umbrella as “One Vodafone”. if anybody wants to enter to this sector. Vodafone is the 11th most valuable company of the world. They sponsored the Manchester United and Ferrari Formula 1 team to improve their awareness and perception of the brand. From here we can understand the barriers to entry is high. For that. and Siemens. they have to venture this situation. they must have so much money for set up the all systems. capital requirement is high. who wants to enter to this sector. Economic of Scale Vodafone effect to economy extremely high. they will be ready to low government policies. open the retail shops etc. Nokia. These companies are network equipment suppliers. XI . access to input is low. economics of scale is high and also barriers to entry is high. great service. brand identity is high and also barriers to entry is high. Government policy is low as. we can understand the barriers to entry is high. Vodafone can enter the different countries and continents easily. So. If this sector doesn’t have the big scale. why did buy? So. So. government policy is low and also barriers to entry is low. From here. Brand identity is so important for this sector. great value and great innovation and they never used “low prices” to attract new customers. government policy doesn’t effect to Vodafone.

The Vodafone group has more then 150 million customers so it absolutely affect these companies hence this situation so important for suppliers accordingly Importance of Volume to Supplier is high and Supplier Power is Low. Differentiation of Input The companies such as Nokia. Offering Vodafone Live! Service Offering 3G (fast data transfer) Provide customers to connect to companies IT systems. Nortel. Ericksson and Nortel do not provide telecommunication opportunities like Vodafone they are just the producers of the technology and not the users in telecommunication business. Sponsorship with Manchester United FC and Ferrari Formula 1 team. So Threat of Forward Integration High and Supplier Power is Low. As a conclusion. Technology is developed by companies such as Nokia. Ericksson. XII . Presence of Substitute Input There is no related information in the case of Vodafone.Supplier Power Importance of Volume to Suppliers The case indicates that we do not develop technology. Therefore Differentiation of Input is high and Supplier Power is high. there are 2 Low and 1 High. Nortel has strong power when they come up with a new product like in the case of Nokia which had just presented its first Wi-Fi powered phone that did not need the traditional mobile network but a wireless LAN hotspot so when they came up with such as technologically different product the suppliers are able to force the company to change its current business model. Free roaming. The Vodafone group has strong volume to squeeze suppliers’ margins and the suppliers need to produce their products almost according to needs of the technology that the Vodafone has used. Threat of Forward Integration The companies such as Nokia. Ericksson. Internal Analysis VRIO • • • • • Billed same as in home country while in same network.

Vodafone live! Service provides ringtones. XIII . Costly to Imitate? No it is not costly. Organization This service will give extra benefits because it is given by Vodafone. Probably all other mobile communication companies offering these kind of services. That is why Vodafone remain leader in international calls. wallpapers and application to its customer. Valuable YES Rare YES Costly to Imitate YES Organization YES Sustained competitive advantage • Offering Vodafone Live! Service Valuable? Yes it is valuable. No other company offering this kind of service. Free roaming. Rare? No it is not rare.• Pricing customers same as in home country while in same network. This service doesn’t need much investment because it is basically a virtual shop. Using voice communication with low prices or prices as same as in using voice communication locally will bring more customers. Rare? It is rare. To let customers use their sim cards in wide range while they are still billed same as in home country. Valuable? It is valuable. Most of the potential customers could be attracted by this service. Costly to Imitate? It is costly. Absolutely yes. Uniting all Vodafone branches and sign agreements with other operators from other countries to extend their capacity. Definitely it is costly to imitate Organization? Organization done great job here.

3G is enables people to transfer data with their mobile phones. Organization Vodafone is the pioneer in 3G technology. Vodafone keeps companies as their customer by giving them price discount. It is really good service for businessman or any employee that needs to connect their ERP program while they are away from headquarters.Valuable YES Rare NO Costly to Imitate NO Organization YES Temporary Competitive Advantage • Offering 3G services Valuable? It is valuable. Rare? It is not rare. Costly to Imitate? It is costly however all the companies need to invest into 3G technology to keep doing business in sector. Because international calls are too costly these days. With 3G people can use Video Call and connect to internet. Organization? Absolutely organization worked a lot here. XIV . So it is not costly. Valuable? It is valuable. Costly to Imitate? It is costly. To agree with rival network providers to extend their coverage. Valuable YES Rare NO Costly to Imitate NO Organization YES Temporary Competitive Advantage • Provide customers of agreed companies to connect to companies IT Systems and have privileged pricing with international calls. To give price discount in international calls needs high investment and agreement costs. Most of the mobile communication service provider companies offering 3G to its customer. Rare? It is rare.

Rare? It is not rare. Valuable YES Rare NO Costly to Imitate NO Organization NO Strengths and Weaknesses Strengths: In 2006. There are several other companies being sponsor to well known sports team. In 2005. There are many fans of both Manchester United FC and Ferrari Formula1 Team.Valuable YES Rare YES Costly to Imitate YES Organization YES Sustained Competitive Advantage • Sponsorship with Manchester United FC and Ferrari Formula1 Team Valuable? It is valuable. Vodafone hosted the first ever mobile phone call in the UK in 1985. Vodafone was the leading mobile phone operator in the world Vodafone had more than 150 million customers worldwide. Than it is not costly Organization? There is nothing organization is doing. Vodafone’s free cash flow exceeded ₤8 billion. Since 1999. Vodafone is in list on the stock exchanges of New York. Vodafone’s market capitalization was $165. That helped Vodafone to have extreme global awareness. Vodafone is operating in 26 countries. Vodafone had ₤564 million as cash dividend in financial year 2002/2003. Vodafone was the eleventh most valuable company in the world. Vodafone has capability to transform and adapt itself to the dramatically changing market environment. In this situation. In 2004. Both are the most well known sports team globally. Vodafone Group PLC was the world’s largest cell phone provider by revenue. 7 billion. Vodafone had invested $270 billion. In FY2004. London and Frankfurt. In 2004. Costly to Imitate? It is not costly to imitate. If the company be sure that advertisement will bring new customers. XV .

Customer. Annual pre-tax operating profit by ₤2. Vodafone has lost long takeover battle of ‘AT&T Wireless’ to American rival Cingular Wireless. 5 billion. Vodafone is the world’s largest mobile telephone operator. Leadership position on cost and time to market are competitive advantages of Vodafone.5 billion by FY2008. in terms of market capitalization. Handset portfolio. Weaknesses: Vodafone sold Vodafone’s stake in Japan Telecom to Softbank. Roaming. Management and managerial activities are very good in Vodafone. Vodafone is the 8th largest retailer in the world taking together our stores that are owned or franchised. IT. Financial Analysis Liquidity Ratio Current Ratio Values can be converted into cash. The current rate increase. Vodafone live! Multimedia service was launched on Sharp GX-10 handsets branded for Vodafone. Vodafone was operated in matrix format. Vodafone acquired Ireland’s Eircell. the increase indicates solvency. Vodafone took over the Mannesmann’s D2 mobile phone business and it was Germany’s largest take over ever. Vodafone found itself ten largest companies in the world. In FY2003 Vodafone suffered a loss of $15.Vodafone signed the world’s first international roaming agreement with Telecom Finland. short-term debt divided by the medium is the ratio.1 billion as gross fixed assets in balance sheet. Vodafone launched its first truly global communication campaign in the 2001. Retailing). Vodafone don’t develop technology. Vodafone had ₤24. there are currently 8 programs (Networks. In 1999. Service platforms. Vodafone has unique marketing and technological capabilities. Vodafone is the first operator in the UK to offer “pre-paid” packages to its customers. XVI . Vodafone has advanced network infrastructure. This rate. Under the One Vodafone. Vodafone used shares for its acquisitions. Vodafone has a power to buy technology. MNC accounts. Vodafone increased its stake in Spanish AirTel Movil.

00 15.70 0.30 1.60 0.377.50 583.00 14.41 0.70 0.529.517.013.00 8.026.52 0.20 590.30 1.432. Quick Ratio An indicator of a company's short-term liquidity.30 495.80 791.49 0.00 17. the current ratio of the Vodafone Company has increased because current asset increased and Vodafone started to investment.293.00 CURRENT LIABILITIES 442.00 9. They have slowed down mergers between companies and instead focused on growing internally.00 13. The quick ratio measures a company's ability to meet its short-term obligations with its most liquid assets.00 341.438. XVII .57 1.00 13. The higher the quick ratio. the better the position of the company.88 In 2001 years.149.690.90 4.20 1.00 12.43 0.59 0.441.00 CURRENT RATIO 0.591.short-term debt payment capacity of enterprises to measure and net working capital is used to determine the proficiency level.445.50 2. YEARS 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 CURRENT ASSET 308.

80 2. the company’s assets are financed through debt.50 561.226. the quick ratio decreased ability to repay debts.56 0.00 17.39 0.691.50 324.925.432.327.377.529.30 1. Vodafone Company’s reached high the quick ratio rate.00 12.CURRENT ASSET -YEARS 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 INVENTORY 297.30 1.00 QUICK RATIO 0.293.013.58 0.00 14.50 475.52 1. And at the end of 2001 the quick ratio rate has decreased gradually.441. Vodafone Company’s ratio is less than one so company’s assets are financed through debt. But Vodafone’s Company with high debt ratio could be in danger.90 4. the company’s assets are financed through debt.84 According to this calculation Vodafone have ability pay short term obligations with most liquid assets in all years.026.20 1. LEVERAGE RATIO Debt to Total Asset Ratio Debt to total assets ratio shows the proportion of a company’s assets which are financed through debt.49 0. XVIII .00 12.40 0.50 583.00 13. If the ratio is less than one.47 0. If the ratio is greater than one.00 CURRENT LIABILITIES 442.67 0. As a result of this.00 15.00 8.90 746.66 0.455.374. In 2001.00 8.

07 0. Upper acceptable limit of the debt to equity ratio is usually 2:1.00 159. with no more than one-third of debt in long term.00 26.00 DEBT TO ASSET RATİO 0. Debt to Equity Ratio The debt to equity ratio shows that Vodafone Company has been aggressive in financing its growth with debt.111.40 2. Debt Equity Total Total Debt to Equity = XIX .00 28.10 2.20 We are looking to years by to dept ratio is decreasing this is good for Vodafone company.612.18 0.815.70 3.709.001.394.00 171.75 0.60 153.42 0.00 142.755.175.585.414.507.YEARS 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 TOTAL DEBT 588.50 2.633.932.00 TOTAL ASSET 1.585. .00 10.30 1.00 28. A high financial leverage or debt to equity ratio indicates possible difficulty in paying interest and principal while obtaining more funding.00 160.17 0.66 0.84 0.42 0.406.00 23.010.050.50 2.30 731.60 1. This year in 2000 debt decrease more than other because Vodafone company selling product and paid debt so Vodafone Company can investment.573. This can result in variable earnings as a result of the additional internal expenses.14 0.

023.48 2. Activities Ratio Total Asset Turnover The Total Asset Turnover is measures a company's effectiveness in generating sales revenue from investments back into the company. It looks very good after this year.00 28.00 TOTAL EQUITY 818.40 2.00 1.00 10.YEARS 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 TOTAL DEBT 588.360.050.72 0.00 28.24 Vodafone Company’s total debt equity increased between the years 1995 to 1999.573.709.815.71 1.08 0.60 850. If it keep increasing during the next years it is not a good thing for the company.00 924.93 0.534.16 0.50 2.30 142.428. Sales Total Asset Total Asset Turnover = XX .60 1.00 23.50 828.00 147.782.001.931.111.00 133.585. This is very good for the company because after 2000 dept to equity keep increasing because total dept increasing and the total equity keep declining.00 DEBT TO EQUITY 0.21 0.00 114.00 26.91 2. There is no set number that represents a good total asset turnover value because every industry has varying business models.00 131.612.30 731.20 0. We are decreased ratio chart dept to equity ratio in 2000 because Vodafone Company has paid the debts.

585.470.23 Total Assets for Vodafone generally is high that is good for the company.00 160.82 0.153.10 2.net of depreciation.00 142.559. Fixed Asset Turnover A financial ratio of net sales to fixed assets.14 0.394.70 3.72 0.00 7.00 TOTAL ASSET TURNOVER 0.50 2.932.845.00 15.80 3.09 0. The fixed-asset turnover ratio measures a company's ability to generate net sales from fixed-asset investments .00 159.00 30.00 TOTAL ASSET 1.99 0. plant and equipment .402.05 0.80 0.001.00 1. A higher fixedasset turnover ratio shows that the company has been more effective in using the investment in fixed assets to generate revenues.755.175.19 0.414. Vodafone company’s total asset turnover is increased to 1995 from 1999 because of Vodafone company has been more effective using investment but after years it has been not effective using asset.1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 SALES 1.004.406.00 171.873.92 0.749.30 1.60 153.00 33.360.507.633.00 2. Asset Sales Net Fixed Fixed Asset Turnover = XXI .00 22.specifically property.00 1.375.

00 33.12 0.00 1.375.1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 SALES 1.470.00 30.80 3.50 1.00 1.50 2.00 15.80 Profit Margin = PROFIT MARGIN 0.749.15 0.13 0.20 0. 1995 1996 1997 1998 Net Income Net Sales NET INCOME NET SALES 135.375.99 0.851.980.402.153.462.470.153. Profit Analysis Net Profit Margin Gross profit margin is the amount that remains from sales after cost deductions of goods sold.402.7 1.18 0.00 153.05 0.559.873.101.00 133.00 357 1.00 187.852.689. expressed as a percentage.360.00 156.2 1.00 NET FIXED ASSET 1.004.00 154.00 7.25 Vodafone Company’s fixed asset turnover increased between the years 1995 to 1999 because a higher fixed asset turnover ratio shows that the Vodafone Company has been more effective in using investment in fixed asset to generate revenues.16 XXII .20 0.00 2.29 1.05 0.00 407 2.00 22.926.422.10 1.911.91 1.60 1.10 150.845.749.00 FIXED ASSET TURNOVER 1.10 0.

00 Return an investment = RETURN ON INVESTMENT 0.604.07 0.015.70 3.7 187.885.1999 2000 2001 2002 2003 2004 594 542 9.00 160.00 7.155.819.00 15.633.00 16.885.06 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 NET INCOME 135.755.00 30.00 159.32 0.71 0.27 In 2001 the profit margin of the Vodafone Company has increased because they did profit by reducing cost of expenditures and between 2001 to 2003 the Vodafone group chose internally growing instead of investing for acquisitions so between these years the revenue is quite high.16 0.00 22.10 2.406.00 9.16 0.06 0.585.60 153.50 2.00 33.30 1.414.00 9.873.15 0.374.00 0. Return an Investment Net Income TOTAL ASSET Total Asset 1.00 3.00 171.11 0.175.001.932.00 16.155.845.507.360.10 0.00 142.559.00 XXIII .015.00 9.00 0.2 357 407 594 542 9.18 0.10 0.375.816.63 0.06 0.00 9.

The main aim is to lower fixed and marketing costs. Vodafone can diversify into internet providing business in near future. Since costs are getting lower day by day and customers seek cheaper services. Strategy Alternatives and Choices Vodafone PLC Company is still remaining leader in telecommunication business. However with recent technological improvements. XXIV . In future Vodafone aims to remain leader while providing more high quality services to their loyal customers while fulfilling their needs. Wi-Fi taking over 3G.In 1999. As we said. There might be new companies come into play at challenge Vodafone. In near future Vodafone needs to diversify into new markets with new businesses. Setting up a global internet provider will have absolute advantage. competitors could increase because global arena is getting tougher everyday. Also in near future. They are the 11th most valuable company today. mobile technology becoming old. Their strategy about unifying all Vodafone branches into One Vodafone succeeded. If there won’t be new technologies come into play (related with mobile industry) customers will lose their excitement and have high propensity to substitutes like internet calling and Wi-Fi systems. the return of investment of the Vodafone has increased because of they had May acquisitions with the other companies and these acquisitions become benefit able. mobile technology is dying. Internet taking over voice calling and texting.

Now Vodafone is having too much competition from local competitors. Globally Vodafone have the highest market share for connecting people. There are various options that Vodafone can choose. However being such a big company is not related with problems they are facing and they will face. Through time Vodafone achieved a lot. prestige and management. Probably in future they have new plans and new risks to take. At 2005 they have changed their organization which quite hard thing to do.Like in example of Gillette. Vodafone needed to sell its Japanese branch in order to stay alive. Or else Vodafone can go backward integration and establish their own cell phone brand. However they are harvesting all the risks they have taken at those days. offering privilege services with best quality and earning a lot of profit. reaching 150million customers. Vodafone is one of the best companies in World as in revenue. I think they are doing quite fine and will do quite fine in future and shareholders probably happy about their investment. Now Vodafone have over 150million customers. establishing Braun shaving machinery brand to keep company alive because World is changing. However Vodafone is the most known telecommunication brand globally. With this kind of management strategy it is so odd to think that they will fail. However in near future all balances will change and Vodafone will need to decide on new strategy or new market to compete in to survive in this environment. XXV . Also as it is written in case. Conclusion Currently.