Drawing on the topics covered in the first term, you are required to prepare a management report identifying and discussing the key Political, economic, social and technological factors that are shaping the international business environment for a UK-based multi-national enterprise (to be selected by you), commenting on whether these factors present opportunities or threats to the firm you have selected
Although you are required to draw on the PESTLE framework as the basis for your analysis, you will be concentrating on PEST (political, economic, social and technological factors) which are covered this term
In addition to PESTLE framework, you will be expected to use the various theoretical models discussed in class such as CAGE Framework, OLI Paradigm, and Blue Ocean Strategy among others, to explore the activities of your chosen UK-based multi-national enterprise (MNE) including how it uses different strategies to operate within the rapidly changing political, economic, social, and technological business environments.
It will also be worthwhile to explore and include reliable sources of future trends within the industry of the multi-national enterprise (MNE) that you selected.
Overview of Vodafone
Telecommunication is one of the potential and promising businesses in United Kingdom (Lu et al. 2014). In United Kingdom, all the communication trunks are digital in nature and they used submarine communication cable in case of international business or deals. However, there are many multi-national telecommunication companies in United Kingdom of whom Vodafone is essential (Linge and Sutton 2016). As per the market requirement, many telecommunication organisations have start up their businesses for providing telephone and broadband services there. However, Vodafone had made its place in the competitive telecommunication market in UK. The telecom companies have become one of the leading business segmentation in UK (Ahmadi, Petrudi and Wang 2017). This management report will identify the political, economical, social, and technological factors of United Kingdom and the Vodafone Company as well that are assisting to shape the international business environment. These factors help in presenting the opportunities and threat to Vodafone in accordance with the CAGE framework, OLI paradigm and Blue Ocean strategy to explore the company and to overcome the challenges faced by the company in the international business.
Vodafone is a multinational telecommunication company that has the head quarter in London (Vodafone.co.uk, 2018). Besides providing services in Britain, the operational area of this company has been spread over the countries like Asia, Africa, Europe and Oceania. Considering the global market of the company, it ranked second in the year 2016. The company has been enlisted under the London Stock Exchange and the market capitalisation of this company has been attached £52.5 billion according to the stock exchange report of 2016 (Rowe and King 2015). The evolutionary journey of Vodafone has been started in 1982 and become one of the giant telecommunication industries in the history of Britain. The global enterprise of Vodafone has been subsidiary owned by Vodafone Group. The integrated service of this company is based on the three pillars like cloud computing, unified communication and collaboration. The first 3G voice call has been introduced by the company in the year 2001 in UK and the company is well-known for its creativity and innovations. The company has launched a product for the blind people so that they can enjoy the facilities of telecom services in the year 2003 and 3G data card has been propounded by the company for the laptop users in 2005. SMS billing service has been introduced by the company in 2011 and it takes over the cable and wireless worldwide in the year 2012. Considering the creative mentality and stable nature, the company has positioned as a reputed international company. The company holds a strong position in the domestic as well as international market. More than 470 stores are operated in the domestic level of Vodafone. Except this, the company has opened its outlets in the countries like Africa, Asia, Oceania and Europe. The company has unveiled a global campaign in 2017 with the brand name “The future is exciting....Ready?”
SWOT Analysis of Vodafone
Vodafone is the second largest telecom service provider in the world and it is originated in UK. The company has its stores in more than twenty six countries and the number of users of the company can be estimated up to 435 million for the year 2014. According to this management report submitted by the Brand Finances in 2010, the company has ranked seventh most valuable brand of the world. However, the company has certain weak points too and there are several future threat present that can be posed as a great dilemma for the company if not avoided. Therefore, a SWOT analysis can display the strength, weaknesses, opportunities and threat of the company.
Vodafone has one of the most advanced technologies and network across the earth and helped the company to provide unsurpassed quality in case of communication. Sufficient process has been adopted by the company for wireless signal transmission and the average speed of the network is 28.8 mbps. The customer service of the company is regarded as the best service in the market of United Kingdom (Singh, Kimbahune and Singh 2017). Retaining the position, the company has introduced a service named “Vodafone 360”. The company has its partners in more than forty countries and has retained an equity interest with them. Vodafone has held a prominent position in the domestic and international market as well. This helps to pocket more profit for the company. The company has launched many creative ideas and products for retaining its legendary position in the market. One of the most strong point of the company is that there is no allegation for tax evasion against the company and Vodafone pays billions of money as revenue very year and the company has differentiated its services on regular basis and provide certain premium cost to its customer.
Despite of all the above mentioned strong points, the company has certain weak points that need to be pointed out and avoided with highest priority by the company. Vodafone needs to strengthen its base and core values from the aspect of international market and needs to change its implementation strategies to attract more customers (Entee 2015). It has been observed that the company is suffering from drop in case of brand valuation. However, the company has failed to show sufficient performance in the market of Asia and Europe and lost the position. Sluggish financial condition of Europe has also weakened the market potentiality of the company. Further, the growing competitive market in the telecom service has also reduced the prosperity of Vodafone.
Opportunities and Threats for Vodafone
An increasing rate of customers and emerging market potentiality of the company has made an opportunity for the company to expand its business in the international market. The company is well-known for its creativity and this can be a good opportunity for the company to expand its market potentiality. The company has provided certain value added service like mobile transfer service to its customers and it helps the financial institutions vehemently (Sammut?Bonnici and Galea 2015). By the year 2015, the process of mobile transfer has become an important source of income for the company. The high speed 4G data transmission of Vodafone can be a great opportunity for the company to regain its position in the market of USA and Europe.
The political, economic and legal system of UK has become less predictable in nature and it has posed a serious for Vodafone. The adverse environment has made the investment criteria of Vodafone much vulnerable (Klauer 2015). The emerging competition in the telecommunication market has also posed a great threat for the company. The subsidies for handset have been increased and it creates negative impacts on the revenue sector. Adverse macroeconomic condition of the market is regarded as one of the threats for the company. A sudden rise in the Over-the-top (OTT) service has also become a threat for Vodafone.
It is important to understand how the Political, Economical, Social and Technological approach governs or create impact on the opportunities and threat of Vodafone and in this management report certain points have been mentioned to this effect:
CAGE distance framework:
· The stable government is the main political strength for United Kingdom.
· The proper application of rule of law and right step taken by the government in case to control over the corruption and government effectiveness has helped the country to provide good governance to all.
· The licence regarding the telecom services are strictly controlled by the government of UK and it restricts a company to get easy access in the telecom market (Blake and Jandhyala 2016).
· Vodafone needs to follow the rules and avoid all the challenges including the competition.
· It is important to follow all the communication-based rules for the company and provide better service to customers.
· Tremendous growth in the GDP has been observed in UK that accelerates the financial condition of UK.
· The percentage regarding the consumer price has been increased at the rate of 2%.
· Following the global trend, the inflation rate in UK has also been highly raised.
· An adverse situation has been cropped up regarding the financial slowdown and the rate of unemployment has been increased since 2008 in UK.
· Vodafone has lost many customers for the recession and the level of interest has been lost to new product buying (Neokosmidis et al. 2017).
· A price war has been started between the telecom companies after the financial downsizing in domestic as well as international market.
· Vodafone has to pay high rate of expenditure for its new 3G and 4G technologies.
· The rate of tax for the company is also huge and the market competition is weakening the economical framework of the company.
· Due to inflation, Vodafone has to reduce the price of the products to attract the customers.
· In UK, a lack has been observed in case of the age distribution system and it becomes difficult to maintain proper standard of living.
· Balance in between the social welfare system becomes very difficult and it becomes necessary to make a reform.
· The level of education in UK is prosperous and it helps the people to take proper decision regarding the products and they understand the potentiality of a company.
· The life style is changing on continuous base and therefore, Vodafone needs to launch new products in the market to capture its position (Maiz, Arranz and Fdez. de Arroyabe 2016).
· Vodafone is requires to provide better service with new innovations to the customer.
· Vodafone needs to understand the trends of every market as it is different in nature. In the market of Europe, having a mobile phone is a fashion.
· It is obvious to state that the younger members of the society are used handset compared to the elders and it is important to shift the demographics from younger to elder users.
· The technologies regarding telecommunication in UK is developed in nature and it uses fibre-optic system and microwave radio relays.
· Recently, UK has started to use submarine cable for better telecommunication service.
· The market of UK is gradually increasing and therefore, it is important for Vodafone to invent new technologies to be established in market.
· Vodafone is required to upgrade its products and its system compare to other companies (Loudon 2016).
· The GPS services of Vodafone are based on high profile technology and the navigation system of the company is customer oriented.
· Technological advancement helps the company to deal with the increasing competitiveness.
· The recycling programme of Vodafone is also based on technical quality.
The term CAGE is an abbreviated form of cultural, administrative, geographic and economic differences among the different countries which is very important for a company to out frame the international strategies. The theory was propounded by Pankaj Ghemawat, a professor of the University in Spain. A company has to understand the different ethnic and social concept of international countries and should have to chalk out the strategies based on the facts (Neelakandan et al. 2015). Political hostility is also an important factor for the company (Vodafone). Economic distance is playing an important role for any business segmentation and therefore, Vodafone is required to plan in a proper manner for the international market orientation.
OLI-model or electric paradigm is an economical theory and it was published for the first time in 1979 by John H. Dunning. It provides three-tiered framework to a company to get direct access to foreign investment. Those three paradigms are ownership advantage, location advantage and internalization advantages (Cantwell 2015). It helps to determine the possible organisational strategies for expand the business in the international market. The most important factor of these advantages is their fixed nature. Further, the ownership rights are helping a company to concentrate over the issues like copyright, patent or trademark rights. These help a company to strengthen its rights in the global market.
Blue Ocean strategy:
Political Factors Affecting Vodafone
It is a well-known marketing strategy which was introduced in the year 2005 by W. Chan Kim (Strategy 2015). According to him, a company can get success in the international market by creating an uncontested market space (Kim and Mauborgne 2017). According to the supporters of the theory, the process will help the company to increase its value and assist to deal with the emerging demand. The strategy will help to understand the value of the terms of product and standard of the services. Therefore, it can be stated that all these strategies are very important for international market expansion and Vodafone needs to follow related rules regarding the same.
According to Adu Danso (2016), Vodafone has started its market orientation process by catching the attention of the customers and for the purpose, the company has started to retain a positive relationship within the market. The company has planned certain steps for the future trends in the telecommunication industry. It has been stated by Jeong Kim (2017) that Vodafone has concentrated over the sustainable environmental compatibility and about to take steps regarding green and sustainable cellular base station. Further, the power consumption model of Vodafone is the consequence of technological innovation of the company. As per Zukerman (2015), the company has taken various steps for controlling the data traffic system with the intention to meet the demand.
Vodafone has been ranked at second in telecommunication sectors on global basis and it has been observed that the company taken many steps to retain its position in the domestic as well as in the international market. The strong network services and the inventory capabilities of the company have helped him to hold a position in the competitive market. The company has followed up all the legal provisions and pay the taxes on regular basis. However, from the report, certain loopholes have been come in to the light that is needed to be avoided for maintaining a proper management system in the company. The opportunities and threats have been mentioned in this report thoroughly and the impact of the political, economical, social and technological factors on the company has also been pointed out. There are certain models that can be proved fruitful for the international expansion of the company which has also been pointed out here. However, the report can be concluded with the facts that Vodafone is required to maintain all the relevant rules to avoid its threats and retain its position in the global telecom industry.
Economic Factors Affecting Vodafone
Ahmadi, H.B., Petrudi, S.H.H. and Wang, X., 2017. Integrating sustainability into supplier selection with analytical hierarchy process and improved grey relational analysis: a case of telecom industry. The International Journal of Advanced Manufacturing Technology, 90(9-12), pp.2413-2427.
Alsharif, M.H., Kim, J. and Kim, J.H., 2017. Green and sustainable cellular base stations: an overview and future research directions. Energies, 10(5), p.587.
Blake, D.J. and Jandhyala, S., 2016. How does Political Risk affect Firm Performance? Evidence from Telecommunications License Cancellations in India1.
Cantwell, J., 2015. An introduction to the eclectic paradigm as a meta-framework for the cross-disciplinary analysis of international business. In The Eclectic Paradigm (pp. 1-22). Palgrave Macmillan, London.
Danso, A., 2016. The effects of market orientation on business performance: the mediating role of internal communication. Case study of Vodafone Ghana (Doctoral dissertation).
Entee, S., 2015. Information and Communications Technology (ICT) Working Group Strategy Workshop Report. The USAID/Ghana Sustainable Fisheries Management Project (SFMP). Narragansett, RI: Coastal Resources Center, Graduate School of Oceanography, University of Rhode Island and SSG Advisors. GH2014_PPP006_SSG.
Kim, W.C. and Mauborgne, R.A., 2017. Blue Ocean Leadership (Harvard Business Review Classics). Harvard Business Review Press.
Klauer, T., 2015. Valuation of Vodafone Group.
Linge, N. and Sutton, A., 2016. The heritage of 30 years of mobile communications in the UK. Industrial Archaeology Review, 38(1), pp.2-18.
Loudon, M., 2016. A platform studies approach to the role of technology in the ICTD ecosystem: The SMS in m4d interventions. Information Technology for Development, 22(sup1), pp.7-25.
Lu, N., Lin, H., Lu, J. and Zhang, G., 2014. A customer churn prediction model in telecom industry using boosting. IEEE Transactions on Industrial Informatics, 10(2), pp.1659-1665.
Maiz, A., Arranz, N. and Fdez. de Arroyabe, J.C., 2016. Factors affecting social interaction on social network sites: the Facebook case. Journal of Enterprise Information Management, 29(5), pp.630-649.
Neelakandan, P.P., Jiménez, A., Thoburn, J.D. and Nitschke, J.R., 2015. An Autocatalytic System of Photooxidation?Driven Substitution Reactions on a FeII4L6 Cage Framework. Angewandte Chemie International Edition, 54(48), pp.14378-14382.
Neokosmidis, I., Rokkas, T., Parker, M.C., Koczian, G., Walker, S.D., Siddiqui, M.S. and Escalona, E., 2017. Assessment of socio-techno-economic factors affecting the market adoption and evolution of 5G networks: Evidence from the 5G-PPP CHARISMA project. Telematics and Informatics, 34(5), pp.572-589.
Rowe, M. and King, R., 2015. An investigation into the performance of UK internet providers’ web filters.
Sammut?Bonnici, T. and Galea, D., 2015. SWOT Analysis. Wiley Encyclopedia of Management.
Singh, D., Kimbahune, S. and Singh, V.V., 2017. Strategy for Deep Sea Communication for Safe Fisheries–mKRISHI® Fisheries, a Case Study. Journal of ICT Standardization, 4(3), pp.199-212.
Strategy, B.O., 2015. Blue Ocean Strategy.
Vodafone.co.uk. (2018). Cite a Website - Cite This For Me. [online] Available at: https://www.vodafone.co.uk/ [Accessed 24 Feb. 2018].