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May 21,
CHANGE MANAGEMENT BUSINESS REPORT
2010
Vodafone History:
In 1982, Racal granted UK’s first mobile license and the first ever call mobile
was on 1st of January, since then it’s been Vodafone achieving various
milestones in the field of mobile telecommunication.
In 1990, Vodafone Subscriber base reached 500,000.
In 1991, Vodafone and telecom Finland linked up to make the world’s first
international roaming call.
In 1993, Vodafone extended its market with license and partnerships to
Australia, Germany, South Africa, Greece and Fiji.
UK’s first Vodafone plc emerged as the Vodafone’s commercial GSM-digital
service launched. In 1996, Vodafone launched UK’s first-ever contract free
service (Vodafone prepay)
2000 the beginning of 21st century, Vodafone established multimedia in to
mobile communication in response to the technical advancements and
innovation including GPRS, 3G and Wireless internet.
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Products portfolio
Pay as you go
Pay monthly
Mobile broadband
Fixed line broadband
Wired
Cordless
Top-ups
3G data cards
Smart phones
BlackBerry business phones
Services portfolio
3G service
GPRS
Vodafone live
Mobile Office
Voice
Entertainment
Games
Ringtones
Application
Wallpapers
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Chat
News & Updates
Downloads
Easy payments
Voice activated dialling system for people with restricted sight problems
Text to speech software
Trained staff crew on customised stores
Vodafone live!
Vodafone Values
Vodafone Vision
The vision of Vodafone is based on its five year (Corporate Responsibility) CR strategy
and the last CR strategy was to be developed in 2005, the CR strategy helps Vodafone
realise its vision.
Vodafone understands the fact that it is never easy to predict the future through
identifying the footprints of the company in the past therefore Vodafone perceives
the company’s future in understanding data services and products offered to the
customers according to their needs. The extensive journey of Vodafone has already
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begun with 3rd generation mobile internet, mobile broadband, and fixed broad band
services by embracing new technologies.
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The top 10 mobile telecommunication operators around the world are as follows 1)
China mobile with overall Subscriber base of over 538.887million 2) Vodafone with
overall Subscriber base of 427.99million 3) America Movil with subscriber base of
over 203million 4) Telefonica/movistar/O2 collectively owns a customer base of over
188million 5) Orange with overall subscriber base of 189million.
Source:http://www.google.com/images?q=mobile%20phone%20subscribers%20per%
20100%20inhabitants&um=1&ie=UTF-8&source=og&sa=N&hl=en&tab=wi
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Fixed line of Vodafone connection provides its customers with fixed broadband.
Business oriented services include mobile advertising and business marketing
services, incoming roaming and wholesale mobile virtual network operations are
under provision.
On December 30, 2008, the carrier services and business network solutions a
subsidiary of Gateway Telecommunications SA was acquired by Vodacom group
On May 18, 2009, Vodacom became a subsidiary of the Company since the
company’s 15% stakes are acquired Verizon wireless on April 20, 2009.
The Vodafone fear not in its confidence, the company committed that UK
mobile phone group to increase its dividend by a minimum of 7% on a yearly basis for
the next 3 years. This is the first time Vodafone has committed to a 3years dividend
target; however the response from the investors were considerably low. Shareholders
side brief that Vodafone’s decision as “embarrassing”
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Vodafone must realize that the company still trails its larger UK rivals. O2, the
second-leading mobile network operator, who has recorded cash inflow growth of
3.1% in the last 3 months i.e. until March 31.
Vodafone started to sell the Apple’s world popular iPhone, which partly
contributed to the decline in 2.6% of revenue paid by UK customers in the last 3
quarters, which considerably a better performance compared to the last year same
period data.
Though Vodafone does not really rely on its European business, the company is
still planning get back to the actual revenue growth in 2010-11, to raise the group
sales as it is getting adequate support from the Asian markets and Turkish business
which secured considerable growth in the second half of 2009-10.
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http://www.ft.com/cms/s/0/f5f9b12a-62b4-11df-b1d1-00144feab49a.html
Vodafone is planning to produce sum £6bn to £7bn of free cash flow during
each of the coming three years. , compared with 8.31p in 2009-10, the company has
planned to increase the dividend to at least 10.18p by 2012-13.
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Verizon Communications, the US telecoms group that owns 55 per cent of the
mobile operations has blocked the dividend to be paid to Vodafone since 2005.
Vodafone follows the cost leadership strategy and differentiation but fails to adopt
the focus strategy as Vodafone does not focus on a niche market. Vodafone needs to
compete on a focus strategy in order to sustain its customers from moving on to
different networks and thus the company can achieve competitive advantage
through driving down the costs.
Current strategy
PESTEL Analysis:
The strategic position of a company can be analysed based on the important
factors that affects the internal and external factors of the company. The PESTEL
analysis focuses on the external environment of the company and gives a complete
analysis of the business, and strategic position of the company (Vodafone plc).
Political Factors
Political factors influences the company as the business decisions can be changed
based on the rules set by the political forces. Business can be affected by the
legislation in terms of competition, collusion, acquisitions and mergers, national laws
etc.
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Health issues and concerns: The research towards the effects of mobile phone
usage is still in process, and there is no definite public opinion on the issues
concerned with usage of mobile phone. Besides these, the technologies in
mobile phones are still developing.
Economical Factors
The economical factors can have critical impact on the business and its performance;
the economic impact can have a direct impact on business due its effect on supply
and demand power. Economic influences include costing, unemployment, increased
competitors, growth of economies and scale, etc.
Licence cost: Vodafone and other mobile service providers face economic issues in
the cases when there is increased cost for acquiring licences for mobile phones.
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Calling cost: Due to increased competition, costs of calls have been bought down as
customer tends to focus more on low-priced products where the demand will be
more. Hence to meet the increased demand the Vodafone was pulled out in situation
to reduce the cost of calls.
Socio-cultural Factors:
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Technological Factors
The latest technology like 3G, Bluetooth, Wireless and WAP, has made human life
very simple to get connect with people across the world. People nowadays can
picture or capture videos of memorable moments and share them with others just
like that. All this have been made possible through the innovation of new
technologies and with the help of a simple device “The Mobile”.
Environmental Factors
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Legal Factors
Vodafone has marked down a set of marketing strategies In order to retain market
leadership;
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Strengths: Weakness:
Omni presence Legal issues
Diversified Geographical existence Lack of R & D
Vodafone plc
Opportunities: Threats:
“Third Generation “3G” Wrong Strategies- effects
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Strengths
• The primary strength of Vodafone is its omnipresence and Diversified
geographical existence.
• Vodafone widespread its brand by acquiring emerging markets and retaining
the Vodafone brand name to the existing brand while controlling the existing
network and retaining the internet value in each of the acquired markets
• Choosing and Sponsoring the Famous events and sports games for e.g. Ferrari
Formula 1 team enables the company to portray itself uniqueness and brand.
• Due to the company’s global presence, Vodafone self analyses existing
network and incorporates future technologies to enhances the company’s
ability to introduce products considering both the pace of the market and
stability of the group networks
• Well trained customer relations crew members and time bound queries
handling specialists adds value to the Vodafone’s group. The company’s
strategy in developing a globally specified group standard in customer
relations management ensured awareness of its customer base and serve
according to their preferences and thus enabling the company to develop user
friendly products and services.
• Vodafone plc has recorded a high operations margin in the last five years of at
least 30% has been recorded.
• Vodafone offers data services in which a customer can access the internet
using “3G” a 3rd generation network that was rolled out in many markets in
the beginning of the year 2000.
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Weaknesses
• Vodafone on expanding its brand and geographical existence has invested
some quite a huge amount on fixed tangible assets in the past five years on an
average has exceeded the depreciation charge by 58% and represented a 50%
of operating profits therefore there is a greater chance of the company
meeting meet a cash shortage.
• Exploring new technology will require huge R&D and infrastructural costs. If
the company could not meet the profits on resourced project, the company
will held under tremendous pressure in recovering the costs spent. On some
occasion spent may never be recovered. In addition the company’s present
technologies will not be flexible to adopt new technologies.
Opportunities
• “Third Generation” 3G Mobile Phones are considered to be a key player in the
product and services portfolio mobile telecommunications industry as it will
allow the users to access the internet much faster, with greater efficiency and
hi-speed data transmissions this effectiveness will also facilitate
videoconferencing through mobile Internet at broadband speeds, and
restructure future multimedia messaging.
• The trend of people change from time but in the case mobile phones from the
time of mobile phones launched till this moment, mobile phones remains to
be a special devise among individuals. This is due to effective service offered
by the mobile operators attracting new technologies. There people across the
world hold at least one mobile phone for them, we can even say mobile
phones are considered to be a ‘must have’ device by people of developed
countries. This enables greater opportunity for Vodafone to keep searching for
potential markets and increase the count of customers with its extensive
products and services.
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Threats
• Failure to build an effective model or technology would put the company
under immense pressure and will lead to lose greater amount of money in
shot.
Wrongly defined strategy would impose a false image on the company’s brand
name
• If the use of mobile phones was restricted due to medical and environmental
hazards reason, the entire mobile and telecommunication industry would
suffer.
• Users wishing to change their network services provider may expect better
service from Vodafone, failing to fulfil such customer will lose customer trust
on Vodafone.
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Competitive rivalry
Competition between mobile operators is very high as a number of companies
operate in a specified location, O2, Orange, Virgin, 3 and T-Mobile. Rivalry is high as
when customers from other networks switches to Vodafone and finds there is no
brand loyalty i.e. difference in services offered other than price.
Buying power
Vodafone’s accounts on the number of customers disconnect the service
during one complete year enables Vodafone to know about its customer and their
expectations. Customers are provided with a number of choices to choose from new
packages, new phones and new tariffs through newspaper, advertisements and mass
communication medium the internet.
Power of suppliers
Suppliers play a vital role in any industry and notably suppliers in the mobile
telephone industry are too strong. Vodafone, Vodafone due to its omnipresence and
geographical existence reduces the cost and operates with greater margins than
their competitors. This ultimately allow Vodafone to attract increased price from its
suppliers and remain competitive than its competitors. Being the largest mobile
operator in the mobile telephone industry, Vodafone has a greater advantage of
holding suppliers costs down, the company’s sustains returns at higher average.
Threat of substitutes
Vodafone faces a low threat of product substitutes. The focused cost
leadership strategy that Vodafone operates under makes it difficult for a similar
substitute to be produced at a lower rate by their use of economies of scale, their
buying power and their use of temporary price increases that come from suppliers
that do not need to be passed on to the consumer.
Threat of entry
Even though the threat of new entrants is less for the Vodafone operations,
the company must reduce costs below their competitors. This can be achieved by
maintaining high levels of efficiency, Vodafone being the major supplier of mobile
products and services can reverse the trend set and make it harder for the
competitors to make a potential entry.
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High
Divest
Selectively grow
rate
Defend Share
Divest
Low
High Low
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BCG matrix comprises of four segments, which clearly depicts which product and
service falling under which category:
They form the basic foundation for the business and they are the past
stars of the company
The products or services in cash cows are located in the mature stage
of the product life cycle and not in growing or declining phase.
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Dogs don’t provide cash to the business and has less potential to yield
profit to the business
The products and services that fall under dog category should be
minimized to earn more profit in the business
At this stage if business has more dogs, then this means that the
business is in a declining stage.
This is the beginning phase of the business, where the company invests
large amount of cash if there is low market share.
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“People dimension of change” requires managing five key goals that form Effective
management which is based on the ADKAR model:
http://www.connectingforhealth.nhs.uk/systemsandservices/capability/phi/personal
/learningweb/leadership/change
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Change Management:
A simplest definition for change management is;
Types of Changes:
There are four different types of changes in an organization with the definite
possibility of overlap among them:
Operational changes:
Strategic changes:
Changes that occur towards the strategic business direction, e.g.,
moving from an inpatient to an outpatient focus.
Cultural changes:
Cultural changes are those which affect the basic philosophies of the
organization with which the business is being conducted, e.g., continuous quality
improvement depends on (CQI) system.
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Political changes:
These sorts of changes occur at staffing in government agencies for
high positions with political interference.
Though it is understood that different changes make different impacts in
various levels of the organization, operational changes tend to have significant
impact even on lower hierarchy level of the organizations. The higher authorities at
organizations may never notice those changes which roots for employees stress and
confusion behind the change and after the change is implemented. Eventually, the
impacts of political changes have been felt, only by the top management. Usually
these changes are made for Power to lead, and supporters of particular group or
entity. Therefore these rules are not really set to make any real changes in technical
industries that needed to be incorporated for the organizations development; The
employees at the lower levels of organizations are often not aware off or not allowed
at all times to understand changes happening at the higher management. The key
concept is, the performers were not much affected, and the reason being that is the
employee’s performance does not form the basis of the change.
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Understanding Environment:
In order to envisage and establish an appropriate relationship with
government, customers and society, it is important for an organization to
understand, assess and gauge the dynamics in its external environment.
Therefore managers by knowing the subject of change management can be
prepared to realize whatever is going on in the environment.
Employees:
Whenever a change plan is implemented, the employees are the
recipients. It is the concern of senior managers to make organization highly
reliable in order to have high performing employees in today’s competitive
world.
Technology Issues:
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Operational Change:
Vodafone incorporates
operational change to achieve
operational excellence in the field of
telecommunication industry, Vodafone
due to years of expertise in
telecommunication industry plans and
implements operational change with
greater level of control
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Strategic changes:
Vodafone incorporates strategic changes when there is a real and extensive
need for them to take place in their organization structure, strategic changes are
sensitive to both intrinsic and extrinsic environment, since these changes would
make drastic effects on company’s strategic policy and establishment of company’s
brand image to the end-user.
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The trend of people change from time but in the case mobile phones from the
time of mobile phones launched till this moment, mobile phones remains to be a
special devise among individuals. This is due to effective service offered by the
mobile operators attracting new technologies. There people across the world hold at
least one mobile phone for them, we can even say mobile phones are considered to
be a ‘must have’ device by people of developed countries. This enables greater
opportunity for Vodafone to keep searching for potential markets and increase the
count of customers with its extensive products and services.
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Conclusion:
Vodafone achieves success through its strategic investments, constant innovation,
and its focus on customer services. Vodafone plc has taken various strategies like,
branding, which has accomplished using value added services to cope up to the
changing environment and customer needs. However, there are still a number of
problems lies behind Vodafone
E.g., Extreme competition in the European market, the product life cycle point and
view for Vodafone is in a matured stage, and the fact that the Japanese and Germany
market restricts Vodafone’s goal of being a global leader.
As we all aware of Vodafone invested in 4G and high speed broad band market, with
less concentration and far behind the trailing companies, since 4G is considered to be
latest innovation in technology and Vodafone was expected to be a frontrunner.
Wherein the trailing companies such as O2, Skype and T-mobile’s are far beyond and
have started targeting broad band users with frontend 4G technology. Vodafone
holds a large proportion of market share in developed countries; However Vodafone
must also need to concentrate on developing countries also if they wish to remain
global leader in the mobile telecom industry.
Bringing value to developing and developed countries has been the main motto of
Vodafone. It is a clear picture that the recent years of economy is experiencing a
greater amount of growth with the growing impact of mobile technology in
developed markets. Customers are provided with added up value through innovative
functions and features. The impact of technology and Vodafone together helps
people to review the employment opportunities and take advantage of them even
when they are away in their home towns and villages.
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Recommendations:
Vodafone must explore the opportunities for materials processing in Kenya
Vodafone must try and focus on a long-term business case solution
The case study must also involve stake holders both internally and at local
levels.
The future of Vodafone and improvement in managing and reporting CR lies in the
following areas
• Proper training of staffs in customer handling and query handling (Customer
service management).
• Vodafone’s status of compliance on Codes of Conduct to publicly available codes at
local operating level company (network roll-out, content standards, others).
• Organising the CR reporting practices of local operating company to ensure
consistency in reporting principles at group level.
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References
Gelder. D & Woodcock. P, Marketing and Promotional Strategy (2003). Nelson
Thornes
Jobber. D & Fahy. J, Foundations of Marketing 2nd Edition (2006), McGraw-Hill
Education
Lynch. R, Corporate Strategy 4th Edition, (2006), Pearson Education Limited
Websites
http://uk.reuters.com/business/quotes/overview?symbol=VOD.L
http://www.businessballs.com/changemanagement.htm#John%20P%20Kotter%27s
%20eight%20steps%20organizational%20change
http://www.proactiveinvestors.co.uk/companies/news/13315/vodafone-verizon-and-
qualcomm-expect-increased-demand-for-m2m-networks-as-they-seal-strategic-
alliance-13315.html
http://www.knowyourmobile.com/blog/5967/vodafone_launches_musicstation_unli
mited_download_service.html
http://www.management-issues.com/change-management.asp
http://www.ft.com/companies/telecoms
http://www.vodafone.com/start/investor_relations/strategy0.html
www.3g.co.uk/PR/July2006/3382.html
http://www.vodafone.co.uk
http://tutor2u.net/revision_notes_strategy.asp
http://www.rcn.org.uk/data/assets/word_doc/0007/288655
http://www.vodafone.com/etc/medialib/attachments/cr_downloads.Par.46720.File.t
mp/VF_CR_Dialogue_2_Assurance1.pdf
Vodafone Group Plc, Annual Review and Summary Financial Statement (2007),
Newbury, London
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