VODAFONE

‘We aim to bring the benefits of modern communications

to the world's citizens and businesses’.
 VODAFONE
(Designing a global strategy)
ECP006N: International Business Strategy

Osinloye Adedeji
Samzun Vanessa
Shah Pankaj
• What, according to the case study, is Vodafone’s primary objective? In
your opinion, how likely is it that Vodafone can achieve this
objective? Does the nature of the mobile telephone industry have
implications for the desirability and realism of this objective?

• What are Vodafone’s fundamental business strategies? Can they be

justified in terms of (a) competitive advantage theory? (b) global
positioning theory? (c) sustainable competitive advantage theory?

• Does Vodafone enjoy economies of scale and/or of scope? If so, what

are the sources of these economies of scale and/or of scope?

• Where did Vodafone go wrong with its strategy? Answer with

reference to the theory of competitive advantage/global
positioning/sustainable competitive advantage.

• T-mobile.
 STRUCTURE
• Introduction
• Objective
• Mobile phone industry
• Strategies/theories
• Sources of economies of scale/scope
• Where did vodafone go wrong?
• T-mobile
• Conclusion
 INTRODUCTION
• Vodafone was formed in 1984 as a subsidiary of Racal
Electronics Plc.
• Independent company in September 1991
• In 2000, changed the name to Vodafone Group Plc so as
to position itself as a global brand
• Leading mobile telecommunications company
• As of 30th of June 2010, the Group had 347 million
customers
• Vodafone is in 72 countries, through direct operations and
partnerships

www.vodafone.com
 OBJECTIVE

Become a dominant global brand

 MOBILE INDUSTRY

• Big business “Mobile technology has simply become the

most global, the most pervasive and the most loved form
of technology ever invented.” (WEHMEIER)
• Very competitive
• Changing industry standards
• The future of the mobile phone is secured but the future
of operators and networks is challenged
 MOBILE INDUSTRY

• Competition is high, intense and increasing.

• Saturated market in Western Europe – price competition
• Numerous players in emerging markets – price competition
• Affected by a tough regulatory environment
• Telecoms and web convergence :the threat to mobile operator
• Internet
• China in the form of China Mobile
 WHAT CAN THEY DO?
• Continuous innovation
• Collaborate with other players
• Concentrate on emerging markets
• Become the bigger internet providers – potential source
of revenue
• Develop new strategies to increase customer loyalty
• Open-network policy

Source: Open Innovate  - Science and Business

CAN VODAFONE ACHIEVE ITS OBJECTIVE?
Very likely:

•Vodafone’s brand culture, image, recognition and power

•Presence around the world
•It has established strategic alliance to provide better service to client.
•Shift from one-dimensional service
•Innovative and persistent
•Vodafone will continue to unite sustainability with progress
•The telephone mobile industry still offers potential and opportunities

We believe that it is desirable and realistic for Vodafone to have this

objective because it has the potential and capabilities to achieve it.
 BUSINESS STRATEGIES
Fundamental strategy:
• “The bigger the better” : expand and grow worldwide
through acquisitions to avoid being acquired by other big
players

Other strategies
• Concentrate on consolidating the company’s far flung
operations - merge operations in different countries into a
streamlined and efficient business
• Concentrate on emerging markets were growth
opportunities exist
 COMPETITIVE
ADVANTAGE THEORY
Competitive advantages are capabilities that are difficult to
replicate or imitate and are non-tradable.(Franko,1976)

• VAS (value added service) – vodafone 360.

• Viral Marketing/Buzz Marketing - various special
character
• Technological Advantage – SAP (system analysis and
program development)
• Cost Advantage – in terms of buying licenses for service
like 2g and 3g
• Continuous Improvement – over a period of time
SUSTAINABLE COMPETITIVE
ADVANTAGE THEORY

Sustainable competitive advantage is the focal point

of your corporate strategy. It allows the maintenance
and improvement of your enterprise's competitive
position in the market.
SUSTAINABLE COMPETITIVE
ADVANTAGE
SOURCE OF SUSTAINABILITY
Customer Network Accumulated Pre-emption
Loyalty Externalities Volume
FIRST MOVER
ADVANTAGE
LEVERAGE
ADVANTAGE
(taking advantage
of the global
network)
 GLOBAL POSITIONING
Identifying strategic importance of a country

• Key countries : Western Europe

(UK), USA.
• Emerging countries: ASIA
(India); Central Europe
(Romania)
• Marketing countries
• Sourcing countries
SOURCES OF ECONOMIES
OF SCALE/ SCOPE
• Spreading the fixed cost:- in terms of R&D and Advertising
adaptation of advertisement from region to region

• Learning by doing:- as you grow you learn

experienced – expertise

• Purchasing in bulk:- by buying raw material in bulk at cheaper price

• Specialization:- in terms of providing service

large customer base.
WHERE DID VODAFONE GO WRONG?
• Cumulative volume of the market through expansion lead to loss due to
difficulty in monitoring the expanding market
• Superior technology problems leading to financial inadequacies: the 3G
technology problems (£6billion to acquire license & £10 billion budgeted
required to build infrastructure)
• Vodafone was not selling solutions to the Japanese Market: Phones were
primitive & Clunky
• Low quality product offerings in terms of design innovation, superior
quality & technology
• Network Externality Issues: Vodafone couldn’t easily understand the New
market which affected brand positioning adversely (see Pg 6, paragraph 10).
• Inefficient process technology, cost leadership problems and poor responsive
distribution
 VODAFONE V/S T-MOBILE
Comparison using the
theories
Leveraging (which has helped
its consumer base)
Innovative Design & Superior
Quality
Brand Image/ Perception
Cummulative Volume
(Preference for Economies of
Scale)
 
 
Network Externalities
VODAFONE
It uses its global leverage to innovate
products and capture markets which
has lead to a market share of
347million customers in 5continents,
with 32 partner networks
Has stronger quality & innovative
products for global competition
Has a stronger brand image &
acceptance.
Due to its network effects, it
produces in mass, which helps its
economies of scale.
 
 
Good network externalities
T-MOBILE
Also has a networking strength with
125million customers and 12
markets worldwide.
Has a strong quality & product
innovation.
Strong Brand Image
Produces in mass but not as much
as Vodafone due to its market share.
Has a strong network effect in the
UK, because users of T-mobile can
be accessed via the Orange
Network as well.
 CONCLUSION
RANK BRAND VALUE
(USA$MILLION)
2010 2009 NAME COUNTRY 2010
1 1 Walmart USA 41,365
2 5 Google USA 36,191
3 2 Coca-cola USA 34,844
4 3 IBM USA 33,706
5 4 Microsoft USA 33,604
6 6 GE USA 31,909
7 8 Vodafone UK 28,995
8 7 HSBC UK 28,472
9 9 HP USA 27,383
10 10 Toyota JAPAN 27,319

Source: Brand Directory

 BIBILOGRAPHY
• 2002. When global strategies go wrong. The Asian Wall Street Journal  04/04/02.
[http://www.bain.com/bainweb/publications/publications_detail.asp?
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[http://coolbrandsstories.wordpress.com/2010/10/07/weapons-of-mass-
communication/#comment-8]
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[http://www.brandfinance.com/Uploads/pdfs/BrandFinanceGlobal500.pdf]
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• Vodafone.[http://www.scribd.com/doc/36121724/vodafone]
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[http://www.huawei.com/publications/view.do?id=6094&cid=11396&pid=61]
• www.vodavone.com