Global Business Strategy

Global Business Strategy

Introduction - Global Business Strategy

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In this module, strategic management and how a company will implement the strategies in their organization for improvement will be discussed. The critical knowledge and the understanding of the strategies to develop in contemporary management will be provided in this study. In the executive summary part, the best strategic actions for the selected organization will be recommended on the basis over the next 3 to 5 years. In this module, a company will be selected that is making losses over the past 3 years and the strategic audit will be discussed (Suresh, 2021). With this, the critical analysis will be demonstrated. The strategic concepts will be applied to analyze the environment of the organization. In the strategic audit analysis, the reason for the losses the company made will be discussed. The strategic audit is analyzed based on several analyses such as value chain analysis, performance analysis, resources audit, and portfolio analysis (Suresh, 2021). These analyses are the main analysis to analyze the strategic audit. The recommendation will be provided based on the loss of the company. The SWOT analysis will be included in this study. By analyzing all of these at the end of the study a critical reflection will be discussed on the learning of this study.

Strategic Audit

The purpose of the strategic audit is to examine how successful a company is and how the company operates with its resources to achieve the goal of the company over a period (Elommal and Manita, 2022). For analysis of a strategic audit, an organization should consider the resource audit, Value chain analysis, core competence analysis, performance analysis, portfolio analysis of the company, and SWOT analysis.

Portfolio Analysis

The portfolio analysis is the process of reviewing the elements of the entire portfolio of products and services of a business (Endovitsky, Korobeinikova, and Korotkikh, 2021). The analysis shows how the company is categorizing the products and services based on performance and competitiveness.

Vodafone’s financial and business performance over the past 3 years.

From the financial year, 2018 to 2020 Vodafone made continuous losses.

The losses have been shown by calculating the income statement.

Income statement of Vodafone	In $
FY2018	FY2019	FY2020
Revenue	61,785.75	50,565.23	50,011.09
Cost of Goods sold	43,477.29	34,925.28	34,118.00
Gross Profit	18,308.46	15,639.95	15,893.09
SG&A Expenses	12,809.29	10,770.56	10,701.89
Other Operating Income or Expenses	43272.97	36,813.98	32,877.39
Operating Expenses	56,082.26	47,584.54	43,579.28
Operating Income	-37,773.80	-31,944.59	-27,686.19
Total Non-Operating Income/Expense	-558.54	-6,006.55	-5,547
Pre-Tax Income	-37,215.26	-37,951.14	-33,233.19
Income Tax	-1,166.17	1,732.37	1,390
Income After Tax	-36,049.09	-39,683.50	-34,623.19
Other Income	NIL	NIL	NIL
Income from Continuous Operations	-36,049.09	-39,683.50	-34,623.19
Income From Discounted Operations	-2,612.27	-4,093.53	NIL
Net Income	-38,661.36	-43,777.03	34,623.19

In the year the revenue of the company was $61,785.75 while the cost of goods sold in the company was $43,477.29. The gross profit of the company was $18,308.46. In that year the operating income of the company was $-37,773.80 by subtracting the operating expenses from gross profit. The operating expenses of the company were $56,082 which was more than the gross profit of the company. The Pre-Tax income of the company was calculated by subtracting the total non-operating expenses from the Operating income where the value was $-37,215.26. The pre-tax income was negative for the company (Macrotrends.net. 2022). The Net income of the company is calculated by adding the income from the continuous operations and income from the discounted operations where the value came in negative $-38,661.36. In the financial year 2018, the company made losses.

During the financial year 2019, the revenue of the company was $50,565.23 which decreased compared to the previous year 2018. In the year 2019, the Gross Profit of the company was $16,639.95. The amount of gross profit was less than the previous year. However, the operating income of the company in that year was negative where the amount was $-31,944.14 (Upadhyay, 2022). After calculating the rest of the components in the Income statement the Net income of the company in the financial year 2019 was $-43,777.03. The company made huge losses compared to the year 2018.

In the recent year 2020, the company made $50,011.09 in revenue. The Gross Profit of the company was $15,893.09. The Operating income of the company was calculated at $-27,686.19. The amount of the company came in negative. After calculating the rest of the part in the Income statement the Net Income of the company was $-34,623.19 (Lashitew, Bals and van Tulder, 2020).

Over the past three years, the company made continuous losses. As the operating expenses of the company were more than the gross profit the expenses should reduce.

The pie chart and columns show the performance of the company.

Gross Profit of the company from the year 2018 to 2020

Operating Income of Vodafone from the financial year 2018-2020

Pre-Tax Income of Vodafone from the year 2018 – 2020

Net Income of the company from the financial year 2018 to 2020

Strategic analysis

There are a range of strategic analytical tools that can be used for evaluating a company’s current condition. These may include SWOT, PESTLE, Porter’s Five Forces Analysis, VRIO, Value Chain, Four Corners’s Analysis, Gap Analysis, Strategic Evaluations, BCG Matrix, etc. Among them, few are explained on behalf of Vodafone to evaluate its strategic condition in the market.

SWOT Analysis

Strengths

A new approach to the UK's internal market is needed to avert a gap between the UK government and the devolved administrations. If trade obstacles are reduced, consumer value is increased, and the economy of the United Kingdom is flourishing, an internal market is advantageous. If the UK economy is to grow, the government must prioritize public R&D and productivity development initiatives. Customers' convenience and marketing are also very important to Vodafone. To promote its goods and services, the company utilizes a variety of marketing methods. The company's zoozoo advertisements have become a worldwide sensation (Papageorgiou, 2017). These advertisements are hilarious and instructive at the same time. In addition to zoo advertising, the Vodafone app and the corporate website are utilized to attract and market new consumers. A b brand identification has resulted from this approach, which in turn has led to an increase in sales for the organization.

Weaknesses

When it comes to marketing and customer service, Vodafone goes all out. To promote its goods and services, the company utilizes a variety of marketing methods. “The company's zoo advertisements have become a worldwide sensation. At the same time, these commercials are both amusing and educational. Digital channels, such as the Vodafone app and the company's website, are also used to acquire and advertise new customers alongside the zoozoo advertising”. As a result of this strategy, the firm has been able to establish a brand identity, which in turn has increased sales (Howell and Potgieter, 2019). Furthermore, Vodafone is not a major participant in the United States, despite its powerful technical infrastructure. The United States is one of the world's most important telecom markets, and it has the potential to generate significant income. Hence,” even though Vodafone has a solid foothold in Europe and other parts of the Asia-Pacific region, it has struggled in the United States as well”.

Opportunities

Artificial intelligence (AI) and digital technology, both on the rise, hold enormous promise for the future. Using these tools, companies may improve customer retention and expand their market share by reducing churn and increasing customer engagement. In the 21st century, customer experience has become an important part of marketing and advertising. Vodafone's development may be accelerated with the aid of digital marketing (Suresh, 2021). The company's investment in digital technology has increased over the last several years. It is leveraging its Vodafone app and website to expand its marketing reach and to better connect with its customers. As a result, the firm has to make use of social media and other platforms to broaden its audience.

Threats

Competition in the telecommunications business is a big risk for Vodafone. There were losses in 2018 for the brand in key European regions due to the increasing penetration of rivals. Even though India is one of Vodafone's primary markets, competition has risen, and the company will need to concentrate on price, marketing, and engagement to expand its subscriber base there (Jha, 2021).

Porte’s Five Analysis

Bargaining Power of the Customers

A Vodafone customer has a lot of influence on the company's pricing. Customers have the option of switching their telecom provider at any point in the process. This reduces the customer's switching costs significantly. In the telecom industry, there are just a few major firms. As a result, clients are limited in their selection. People shop about for the best deal, comparing the costs and features of various service providers (Kalam, 2020). The products and services offered by all telecom providers are almost identical. None of Vodafone's products or services are particularly noteworthy. Because of the lack of differences between products, customers can readily move to a new product.

Bargaining Power of the Suppliers

There is a wide range of suppliers of telecom technology equipment's raw materials, all of which are standardized. For Vodafone's network infrastructure, the company has simple access to the raw materials it needs. Because of this, the supplier's negotiating leverage is limited. There are few customers in the sector, so providers have little choice but to stick with one. This diminishes its negotiating leverage (Yaremenko, Taranenko, and Yazykova, n.d). Because Vodafone operates in a variety of nations, it requires a large amount of raw materials or other equipment. Because of this, it can command a cheaper price. As a whole, suppliers have little clout when it comes to negotiations.

Threat of Substitutes

It is fairly uncommon for employees to often switch jobs. Most consumers can move to another Vodafone rival if they are dissatisfied with the service because of the dual SIM-Card idea. As a result of this, landlines, CDMAs, and 2G services are becoming less popular in favor of broadband services, which provide quicker, and more reliable data and voice (Khan and Suhaib, 2019). Mobile services are being replaced by web-based services like video conferencing and instant messaging. Satellite internet connections like Star Link projects are also making it possible for people in rural places to access the internet. This is just another alternative that puts the telecom firms on the defensive. Overall, there is a significant risk of substitutes.

Threat of New Entrants

Global telecommunications company Vodafone Group Plc operates in Europe, Asia, and Africa. Customers may make and receive phone calls, send and receive text messages, and use the internet using the company's mobile services. Additionally, it provides services such as broadband, television (TV), and telephone through the fixed-line infrastructure. Mobile and fixed networks are managed across Europe, and the Internet of Things (IoT), security, and insurance services are all provided by the company as well. About 20 nations have mobile and fixed networks operated by Vodafone, which interacts with other mobile networks (TATARU, FLEACA, and FLEACA, n.d). There is little risk of a new competitor entering the market. To access this market, companies must pay a large license fee to acquire the spectrum band (2G, 3G, 4G, and 5G spectrum). Only enterprises prepared to make significant investments in the spectrum may compete in the telecommunications market, which is decided via auction. In addition, new entrants to the market face several government regulations with which they must comply. As a result of the restricted number of telecom providers in each nation, it is difficult for a newcomer to get into the industry. In general, there is little risk of new entrants.

Competitive Rivalry

There is fierce competition among the already operating businesses. The competitiveness in the telecom business is fierce, and the level of competition and rivalry is quite high. Vodafone's competitors aim to provide a wide range of services to its customers in a single year. Most of the world's markets have reached saturation point and are no longer expanding (Kalam, 2020). As a result, firms in Vodafone's sector are willing to drop their prices to win market share and minimize operational costs via economies of scale. It is impossible for any of the companies involved to get out of the business now that they have made such significant investments. Because there are just a few players, they are very competitive.

PESTEL Analysis

Political

In Spain and Italy, Vodafone has had to contend with increased competition over the years. In South Africa, too, the corporation had some challenges in the second part of last year. This specific year, despite the difficulties, the company's revenue from services increased by 0.3 percent, EBITDA increased by 3.1 percent, and EBIT increased by 9.4 percent (Howell and Potgieter, 2019). It had to reposition itself owing to price competition in Spain while in Italy, a new competitor in the mobile industry had to be challenged. As a consequence of new data regulations, the South African market has grown more slowly.

Economic

By the end of FY21, the business intends to save 1.2 billion euros in European net expenditures, resulting in an annual savings of 400 million euros. The announcement of the Liberty Global merger has shifted the emphasis of the firm to reaping significant opex and capex synergies (Suresh, 2021). Run-rate synergies in Germany and Central and Eastern Europe are 535 million euros, according to the business.

Social

In the wake of the surge in internet demand, Vodafone and other global telecom carriers have reaped the benefits. Even the tiniest discrepancies in educational backgrounds might be a challenge when it comes to effective information flow. Since Vodafone is primarily a European corporation, it would be beneficial for Vodafone to have a better knowledge of the lifestyle, values, education, and purchasing habits of consumers all over the globe. This would allow Vodafone to better target the right people in the right places.

Technological

Using the MyVodafone App has been a success in creating and keeping client connections. A leading global IoT platform is available to the organization, allowing for the continuation of commercial collaborations across borders. In addition, “the M-Pesa platform, Africa's biggest payment platform, was built to make payment methods simpler for its clients” (Raju and Madhuri, 2020). But even though they have assets and infrastructure, “the corporation is more focused on optimal asset utilization with continuous network leadership via capital smart infrastructure partnerships and leading the gigabit networks, rather than competing with their rivals”.

Environmental

“Vodafone realizes that it is responsible for connecting more than 650 million people and a variety of organizations throughout the world”. By 2025, they want to enhance the quality of one billion people's lives while reducing their environmental impact by over half (Papageorgiou, 2017). With concrete actions in three areas: digital society, inclusiveness for everyone, and the earth they might accomplish their goal.

Legal

“Post-merger, legal scrutiny was brought to bear on Vodafone and Idea's dues-raising practices. Vodafone purchased Hutchinson in 2007”. The “Indian Income Levy Department” levied a substantial tax of $2.5 billion on the firm as a result of the aforementioned purchase. Arguments were raised about whether taxes should be levied in India since the deal included the acquisition of assets from an Indian company. In all, “the deal gave Vodafone a 67 percent interest in the firm” (Khan and Suhaib, 2019). “The Hong-based company's Indian rights were also terminated as a result of the purchase. It was only in 2012 that the Supreme Court ruled that a tax could not be levied on an international transaction involving entities that had been created and incorporated outside of India”.

VRIO

Valuable

Regular participation in social responsibility activities is part of Vodafone's corporate social responsibility role, which the company makes open to the public (TATARU, FLEACA, and FLEACA, n.d). A non-substitutable capability may be built via Vodafone's CSR efforts, which are connected with the company's overall business objectives and developed strategically. As a result, the “Vodafone brand's image has been built over time and with consistent effort and a high-quality product offering”.

Rare

Employees and managers at Vodafone have a problem-solving culture. This allows the firm to be more creative and innovative as a result of this (Dixit and Sinha, 2021). Thus, it acquires a competitive advantage and reaps the rewards of its creation in the short and long term.

Inimitable

Vodafone is present in several nations and locations throughout the world, all of which are served by a network of outlets. All of the locations where Vodafone sells its goods are conveniently located, giving the band more exposure (Amaya et al., 2022). Customers in all of Vodafone's operating nations and territories may simply acquire Vodafone's goods and products.

Organization

Developing a competitive edge is made possible in large part by Vodafone's technology developments and integration. It helps Vodafone to keep its numerous business processes and activities running at maximum efficiency and effectiveness (Raju and Madhuri, 2020). The company’s worldwide operations may be effectively managed as a result of its integration, which is essential for efficient logistics. Vodafone may get a long-term edge over the competition by using this strategy.

Critical Reflection

From this module, I have learned strategic auditing analysis. The analysis assists me in showing the way of analysis. The study shows the organization’s strategic plan and the areas the organization should consider. From this study, I got information about the resources of the company like telecommunicating and the company operates the telecommunication network by a group of the organization. They control the market around the world. During the analysis of the strategic audit, I got to know about their value chain and how the company operates it. The company identifies the competitive advantage by the sources. The value chain analysis suggests to the organization that they can consider some of the activities as they cannot collect all the activities from the external market. Through information, I gathered information that the company can improve the flow of raw materials and the finances of the company (Macrotrends.net. 2022). The company may lose its vision and strategies if it divides its operations into several activities. The division process may take time and the information that is required for the company may be difficult to find. For strategic analysis, the SWOT analysis has been done and I got to know the nine different types of analysis tools.

The effective implementation of the value chain does not require familiarity rather it requires detailed expertise. The company might face difficulties with the information that is required in the business only if the business information system is structured not well or accordingly. The company’s value chain analysis has been done according to Porter’s forces analysis where I get to know about the primary competitive prospects of the company. By analyzing the VRIO of the company, the Vodafone company can use it as a tool for negotiating the prices of the services and they can alter the valuation of their brand in the market. To analyze the strategic audit of the company I gathered information about its portfolio. The company is facing losses over the past three years. There are recommendations provided for the company. The overall learning from the module is about the company and the strategic analysis of the concepts to the environment of the organization.

Recommendation

From the following information based on the company, the value chain of the organization can be improved by optimizing the inventory of the company. With that, the company can improve the distribution and its network as the services are based on that. To gather more information the advancement of technology is needed in the company (Howell and Potgieter, 2019). The target market of the company is intended to provide high-speed internet and accessibility to users who possess smartphones. Reviewing the procedures regularly is important for the company.

The company has to focus on leadership in the market. Vodafone has to develop the quality of the network so that the group can maximize customer satisfaction. To grow the financial health of the company they have to reduce the debt of the company and focus more on productivity. They have to utilize the assets of the company. Vodafone is working on its financial health and transforming to digitalization. To improve its financial health the company has to focus on efficiency and day-to-day operations (Dixit and Sinha, 2021). The improvement of the company depends on the engagement of the customer. The collection policy should be improved and managing the expenses and payables is necessary for the company. There are other strategies that the business owns for the development long long-term financial health and the improvement of strategies is needed in the workplace so that the company can improve its upcoming projects.

Conclusion

From this module the recommendation and the advice provided for the loss company Vodafone. The purpose of the project is to analyze the strategic audit. There are several activities have been discussed in the study. Due to the lack of strategic planning of the company, Vodafone failed to perform over the past three to five years. The reasons are mentioned in the study. For strategic analysis, the tools have been discussed by the company. In the module, the SWOT analysis has been discussed. There are major weaknesses and threats present in the company and in the market that the company is unable to perform. The suggestions have been provided based on the weaknesses and threats. Lastly in the report, a critical reflection has been provided according to the analysis of the module.

References

Amaya, N., Bernal-Torres, C.A., Nicolás-Rojas, Y.W. and Pando-Ezcurra, T.T., 2022. Role of internal resources on the competitive advantage building in a knowledge-intensive organization in an emerging market. VINE Journal of Information and Knowledge Management Systems, (ahead-of-print).

Batra, S., 2021. Case Analysis II: AGR Challenge for Bharti Airtel and Vodafone Idea. Vision, 25(2), pp.258-260.

Dixit, R. and Sinha, V., 2021. Training as a Strategic HRM Tool to Foster Employee Development in SMEs. In Handbook of Research on Strategies and Interventions to Mitigate COVID-19 Impact on SMEs (pp. 609-628). IGI Global.

Elommal, N. and Manita, R., 2022. How Blockchain Innovation Could Affect the Audit Profession: A Qualitative Study. Journal of Innovation Economics Management, 37(1), pp.37-63.

Endovitsky, D.A., Korobeinikova, L.S. and Korotkikh, V.V., 2021. Adaptive Portfolio Analysis based on the Trend Decomposition of a Financial Time Series: Case Study of the Moscow Exchange. Universal Journal of Accounting and Finance, 9(5), pp.1159-1168.

Howell, B.E. and Potgieter, P.H., 2019. Bagging bundle benefits in broadband and media mergers: lessons from Sky/Vodafone for antitrust analysis. Telecommunications Policy, 43(2), pp.128-139.

Jha, B., 2021. Case Analysis II: Vodafone India Ltd—Managing in a Turbulent Emerging Market. Vision, 25(1), pp.120-121.

Kalam, K.K., 2020. Market Segmentation, Targeting, and Positioning Strategy Adaptation for the Global Business of Vodafone Telecommunication Company. International Journal of Research and Innovation in Social Science (IJRISS), 4(6), pp.427-30.

Khan, S.S. and Suhaib, M., 2019. Evaluating an International Human Resource Management Strategy for New Telecommunication Group in Developing Countries, Concentrating on Pakistan (A Case Study of Vodafone). Science International-Lahore, 31(3), pp.457-461.

Lashitew, A.A., Bals, L. and van Tulder, R., 2020. Inclusive business at the base of the pyramid: The role of embeddedness for enabling social innovations. Journal of Business Ethics, 162(2), pp.421-448.

Macrotrends.net. 2022. Vodafone Group Financial Statements 2009-2022 | VOD. [online] Available at: <https://www.macrotrends.net/stocks/charts/VOD/vodafone-group/financial-statements> [Accessed 5 August 2022].

Papageorgiou, C., 2017. Strategic Analysis of Vodafone Greece and Future Prospects.

Raju, R. and Madhuri, G., 2020. Vodafone and Idea Merger: A Shareholder’s Dilemma. Global Business Review, p.0972150920934256.

Suresh, G., 2021. Case Analysis I: Vodafone India Ltd—Managing in a Turbulent Emerging Market. Vision, 25(1), pp.118-119.

TATARU, I.M., FLEACA, E. and FLEACA, B., MODELLING THE IMPLEMENTATION OF HR BUSINESS PROCESSES TO ACHIEVE SUSTAINABLE DEVELOPMENT IN A TELECOMMUNICATION COMPANY. STRATEGICA, p.462.

Upadhyay, R.K., 2022. Conversion of AGR into Equity and Revival of Vodafone Idea. ACADEMIA Letters (2022).

Yaremenko, S.S., Taranenko, I.V. and Yazykova, O.?., STRATEGIC PRIORITIES OF THE MOBILE OPERATOR «VODA-FONE» IN THE TELECOMMUNICATION MARKET OF UKRAINE.