VODAFONE.docx

VODAFONE

NANDHINI KANNAIYAN (13AB18) SAMYUKTHA (13AB25) SUKANYA (13AB35) SWATHITYA (13AB36) THANGARAJ (13AB37)

1

TABLE OF CONTENTS

PAGE NUMBER

The Vodafone Story, Vision and Mission Statement

3

Company Values and Strategic Objectives

4

The Competitive Profile Matrix (CPM)

5-7

The External Factor Evaluation (EFE) Matrix

8-10

The Internal Factor Evaluation (IFE) Matrix

11-13

SWOT Analysis

14-15

The Strategic Position And Action Evaluation (SPACE) Matrix

16-17

Boston Consulting Group (BCG) Matrix

18-20

The Internal-External (IE) Matrix

21

The Grand Strategy Matrix

22-23

QSPM

24-25

Porter‟s Five Force Model

26-33

Conclusion

34

2

THE VODAFONE STORY We're one of the world's leading mobile communications providers, operating in more than 30 countries and in partnership with networks in over 40 more. Across the world, we have almost 360 million customers and around 19 million in the UK. We made the first ever mobile phone call on 1 January 1985 from London to our Newbury HQ. Still located in Newbury, we now employ over 8,000 people across the UK. WHO WE ARE We're not about flashy technology– or about doing things just for the sake of it. We focus on what makes people's lives easier. Take text messaging, for example. We came up with that. Now we deal with over 44 million texts a day.

OUR VISION Considering how far things have come in just 20 years, predicting the future is never easy in our business. As nice as a crystal ball would be, we're happy with everyone sharing our ambition. That way, we're far more likely to achieve it.

We see our future in outstanding data services and products, backed up by the best customer experience in the business. And our targets are big – which means millions of customers using our data services every day.

MISSION STATEMENT We‟ll enhance value of our stakeholders and contribute to society by providing customers with innovative, affordable and customer friendly communication services. Through excellence in our services we aspire to be the most respected and successful telecommunications company in India We see our customers, employees, shareholders and the community we operate in as our most important stakeholders.

OUR VALUES

3

We‟re obsessed with giving exceptional customer service. We‟re hands-on, positive and always looking for fresh ways to deliver. The essence of who we are underpins our values. And by listening to our people, we've found that three things sum up what we're all about: 

Speed – we‟re focused on bringing innovative new products and services onto the market quickly



Simplicity – we make things easy for our customers, partners and colleagues



Trust – we‟re reliable and transparent to deal with

OUR STRATEGIC OBJECTIVES • Revenue stimulation and cost reduction in Europe • Innovate and deliver on our customers‟ total communications needs • Deliver strong growth in emerging markets • Actively manage our portfolio to maximise returns • Align capital structure and shareholder returns policy to strategy

THE COMPETITIVE PROFILE MATRIX (CPM) 4

The Competitive Profile Matrix (CPM) identifies a firm‟s major competitors and its particular strengths and weaknesses in relation to a firm‟s strategic position. The weights and total weighted scores in both a CPM and an EFE have the same meaning. However, critical success factors in a CPM include both internal and external issues; therefore, the ratings refer to strengths and weaknesses, where 4 = major strength, 3 = minor strength, 2 = minor weakness, and 1 = major weakness.

Airtel

Vodafone

Critical Success Factors

Reliance

Weight

Rating

Score

Rating

Score

Rating

Score

1. Number of Subscribers

0.20

4

0.8

3

0.6

2

0.4

2. Market Share

0.10

4

0.4

3

0.3

2

0.4

3. Connectivity

0.15

2

0.3

4

0.6

3

0.45

4. Customer care

0.10

3

0.3

4

0.4

1

0.1

5. Value added services

0.10

4

0.3

3

0.3

2

0.2

6. Innovation in Services

0.10

4

0.4

2

0.2

3

0.3

7. Individualized attention

0.05

3

0.15

4

0.2

2

0.1

0.10

3

0.3

4

0.3

2

0.2

0.05

3

0.15

4

0.2

2

0.1

0.05

3

0.15

4

0.2

1

0.05

8. Advertising and Promotion 9. Market segmentation (Target markets and Ages) 10. Attractiveness of schemes (Eg: Booster pack) TOTAL

1.00

3.25

3.3

2.3

Remarks: 1. Subscriber base:  Airtel: As of March 2013 it has18.81 crore subscribers. The subscriber base has increased from 867 million in April 2013 to 870 million at the end of May 2013, registering a monthly growth of 0.37%. Rural subscriber base is at 82.16 million.  Vodafone: Market share of 23.05% As of March 2013, Vodafone India had about 15.23 crore customers with biggest rural subscriber base at 82.24 million a tad higher than Airtel‟s rural subscriber base.  Reliance: A subscriber base of 12.29 crore at the end of March 2013. 5

Source:http://gadgets.ndtv.com/telecom/news/telecom-subscriber-base-rises-to-8980-crorein-march-trai-373082

2.   

Market share as of March 2013: Airtel: 21.69% Vodafone: 17.56% Reliance: 14.17% Source: trai.png

3. Areas of Operation:  Airtel: All India. It operates in 20 countries across South Asia and Africa.  Vodafone: All India. Operates in 30 countries and has partner networks in over 40 additional countries  Reliance: All India (except Assam and NE) 4. VAS: They are services that allow customers to access and consume various genres of entertainment, sports, devotional and other utility services. Revenue from VAS are as follows.  Airtel: 9.90% (Rs. 1082.70 crore) of Total revenue as ofQ3-FY13. It provides Mhealth, M- education, M- agriculture, M-infotainment etc. Source:http://www.medianama.com/2013/02/223-airtel-data-arpu-subscribers-q3- fy13/ 

Vodafone: Revenue from VAS of Vodafone India was around Rs 11.77 billion for FY13, decreased by 10.8% from 13.19 billion in FY12.

Source:http://www.medianama.com/2013/05/223-vodafone-india-q4-fy13-earnings/ 

Reliance: Provides services such as M-education, M-agriculture, M-infotainmentetc. Financial data not available.

5. Innovation in services:  Airtel and Vodafone: It provides variety of services like DTH, broadband and mobile services. Vodafone doesn‟t provide DTH services. Large amount of finance is from its broadband services. Airtel„s GPRS service is economical than Vodafone but Vodafone has better range and International network when compared to Airtel. Also, Airtel mobile internet is much more reasonable and affordable in many parts of the country as compared to Vodafone  Reliance: Reliance Jio which has pan India spectrum will provide 4G service which will be 10-12 times faster than 3G. RJIL is the only company in India to have nationwide 4G spectrum. 6. Advertising and Promotion:

6

 



Airtel: Advertises heavily and has effective sales promotion. It spent 2238.9 crores in advertising as of June 2012 and added 6.02 million subscribers as a result. Vodafone: This also has effective marketing strategy called” Rebranding” after the acquisition of Hutchison Essar. Most successful ad would be wacky character “Zoozoo” which was a huge hit among Children and teenagers. Reliance: It does not mention Advertisement costs in its Quarterly results.

7. Market Segmentation: Airtel:   

Demographic segment-Middle and Lower Income groups (Bottom Of Pyramid) People of 20-28 years of age Target marketing: People living in villages, Teenagers and Businessmen.

Vodafone:  

Geographic segment- Rural India (justified by products like chota recharge)and Urban India Target Marketing: People living in villages, Teenagers and Businessmen.

Reliance:  

It targeted internally. First set of customers were Reliance officials. Geographic segment: Both Urban and rural India.

Interpretation: Vodafone is slowly overtaking Airtel to reach the number one position in the telecom industry in India. It needs to innovative its services and foray into emerging technology like cloud computing to sustain its position in the Indian market.

INDUSTRY ANALYSIS: 7

THE EXTERNAL FACTOR EVALUATION (EFE) MATRIX An External Factor Evaluation (EFE) Matrix allows strategists to summarize and evaluate economic, social, cultural, demographic, environmental, political, governmental, legal, technological, and competitive information. Each factor has been assigned a weight that ranges from 0.0 (not important) to 1.0 (very important)Each factor is also assigned a rating between 1 and 4 to indicate how effectively the firm‟s current strategies respond to the factor, where 4 = the response is superior, 3 = the response is above average, 2 = the response is average, and 1 = the response is poor. Ratings are thus company-based, whereas the weights are industry-based. Key External Factors

Weight

Rating

Weighted Score

1. Rapidly growing subscriber base

0.08

4

0.32

2. Huge market potential

0.08

3

0.24

3. Government policies and regulations

0.10

3

0.3

4. Growing revenue from Mobile Value Added Services

0.07

2

0.14

5. Significant revenue from Mobile Number Portability

0.04

2

0.08

6. Steading rising penetration rate

0.04

3

0.12

7. Innovation in Service and Technology

0.05

1

0.05

1. Continuously decreasing Average Revenue Per User

0.10

3

0.3

2. Excessive competition that leads to price wars

0.10

4

0.4

3. Lack of proper infrastructure

0.09

2

0.18

4. Non- availability of adequate 3G spectrum

0.07

3

0.21

5. High regulatory charges

0.08

2

0.16

6. Low profitability in rural areas

0.06

3

0.18

7. Growing multiplicity in SIM ownership

0.04

2

0.08

Opportunities

Threats

Total

1.00

REMARKS: OPPORTUNITIES: 8

2.76

1. India is the second largest telecommunication market. It has grown from 33.69 million subscribers in March 2004 to 898 million subscribers as of March 2013 and has reached about 904.46 million at the end of July 2013. 2. Though the urban market looks like it is fast reaching the saturation point, 70% of population live in rural areas which holds huge potential to drive future growth of our telecom companies.Tele-density in rural areas is only just about 15%. The government has proposed to achieve a rural Tele-density of 25% by deploying 200 million-connections at the end of the Eleventh Five Year Plan. The optimum utilisation of USO fund and increase in mobile services might help the government attain this goal. 3. In order to encourage consolidation in this sector, an empowered group of ministers (EGoM) has cleared the mergers and acquisitions (M&A) guidelines for the telecommunication sector. The Telecom Commission has authorized Rs.5,000crore (US$ 817 million) government proposal to give away 2.5 crore mobile handsets at subsidised prices. 4. VAS constitutes 7 -10% of total telecom revenue for Indian telecom operators. VAS includes,Digital music consisting of CRBT and ringtones alone constitutes 35% of VAS revenue. Astro, Bollywood, Cricket, and Devotional continue to be most preferred services. Music downloads, Internet Apps, Search has seen an upsurge. Services like Mobile banking, 3G, 4G and M-commerce will see rapid growth.

5. According to a survey conducted by professors from Sardar Patel University, Gujarat, from among a total of 107 respondents, almost half of the total respondents (57.9 %) wanted to change their current Mobile Service Provider. Vodafone was the choice of majority (52.3 %) of the respondents. 6. Tele-density has grown from 112 per cent in urban and 21.2per cent in rural areas in 2009 to around 147 per cent in urban and 41 per cent in rural India as of March 2013. 7. Worldwide Interoperability for Microwave Access (WiMAX) WiMAX could be used as an alternative to cable and DSL for providing broadband access in rural areas. It would not only enable high-speed internet services through high bandwidth spectrum but also prove to be a useful mode of communication in inaccessible terrains. THREATS: 9

1. With the easing of FDI, increase in new entrants in this space has resulted in intense competitive pressure and cut throat pricing which has resulted in declining ARPUs. 2. The fierce price war among the telecom operators has commoditized the market resulting in branding taken a backseat. This also puts a pressure on the profit margins. 3. The operators should have to incur high initial fixed costs to be able to provide services in rural areas which lack even basic infrastructure such as road and power. They also lack trained personnel necessary to operate infrastructure. 4. Since spectrum, the most essential resource required to provide services Spectrum is very Limited/finite and is inversely proportional to the number of operators. Therefore, larger the number of service providers smaller will be the amount of spectrum available to each of them. 5. The regulatory charges in the this sector have a complicated structure. The multiple levies prove as a hurdle to the smooth implementation of telecom projects in India.

6. Continuous supply of electricity, cash economies, operational and security risks and availability of trained personnel are few challenges faced when going rural. C K Prahlad said in his book, “The Bottom of the Pyramid” the aspirations of the rural consumer is no different from the current consumer .The rural consumer is also looking for better access and experience to go hand in hand with his own changing consumption patterns. 7. From among the new additional subscribers, dual-sim contributes to about 30%-35% for which one of the reasons may be the service of Mobile Number Portability.

THE INTERNAL FACTOR EVALUATION (IFE) MATRIX

10

Internal Factor Evaluation Matrix is a popular strategic management tool for auditing or evaluating major internal strengths and internal weaknesses in functional areas of an organisation. The IFE matrix comprises of factors (Internal strengths and weaknesses). Each factor has been assigned a weight that ranges from 0.0 (not important) to 1.0 (very important)Each factor is also assigned a rating between 1 and 4 to indicate how effectively the firm‟s current strategies respond to the factor, where 4 = the response is superior, 3 = the response is above average, 2 = the response is average, and 1 = the response is poor. Ratings are thus company-based, whereas the weights are industry-based. Key Internal Factors

Weight

Rating

Weighted Score

Strength 1) Prominent market position

0.07

3

0.21

0.1

3

0.3

people

0.15

4

0.6

4) Strong customer base

0.05

3

0.15

5) Global brand strength

0.09

2

0.18

6) Wide geographical reach

0.13

3

0.39

1) Centralised management system

0.08

1

0.08

2) High level of customer churn rate

0.08

2

0.16

3) Servicing of client needs

0.12

4

0.48

4) No network coverage in rural areas

0.06

3

0.18

5) Low return on assets

0.07

2

0.14

Total

1.00

2) Global presence and diversification revenue 3) Strong advertising strategies and impact on

Weakness

REMARKS: 11

2.87

STRENGTHS: 1.BhartiAirtel has a market share o 26.38% during the September 2013 quarter. Vodafone is in the second position with 23.05%. Source:www.telecomlead.com 2. Vodafone has expanded its business in different parts of the world like Europe, Middle East, Africa and Asia, Pacific and Affiliates. It has partnership with mobile operators in over 40 countries and equity interest over 30 countries. It has a diversified revenue base (i.e.) Germany contributes 18% of the revenue, Italy(13.5%), Spain(12.7%), UK(11.2%), India(7%). Africa, Central Europe, Asia and Pacific account for 12, 8 and 7.5% respectively. 3. The “Zoozoo” concept was created specially to convey value added service offering. It was a creative advertising which has captured the imaginations of millions. This advertisement gained so much popularity all over the world. It not only helped the company to raise its profits but also increased its brand value. 4. Vodafone is a company with leading market position. Vodafone India has 152.4 million subscribers as of march 31, 2013. It has postpaid customer base of 8.6 million subscribers as of Q4 2013. Prepaid customers account for 94.4% of its total customer base. Increased rural penetration with 73 million rural subscribers. Source:www.medianama.com; www.vodafone.in 5. Vodafone is present in many countries within Europe. It allows customers to enjoy the services in their home country. In few countries though Vodafone is not physically present (eg: Norway) it has strategic alliances which provide better services to the clients. In Northern and Central Europe – Czech Republic, Germany, Hungary, Ireland, Netherlands, Romania, Turkey, UK.In southern Europe – Albania, Greece, Italy, Malta, Portugal, Spain. In Africa, middle east and Asia pacific – Australia, Egypt, Fiji, Ghana, India, New Zealand, Qatar Source:www.vodafone.com

WEAKNESSES:

12

1. Vodafone has a centralised management system which is highly inflexible for today's competitive market. 2. Churn rate refers to the number of individuals moving out over a specific period of time. Vodafone has a high level of customer churn rate which is about 33.33%. postpaid churn declined to 18.2%. prepaid churn declined to 47%. Total churn declined to 47%. This is common in any subscriber-based service model companies. Source:www.medianama.com 3. More than 80% of Vodafone's business is running in the Europe. (Vodafone suffered a 4.8 percent hit to organic service revenue in the last three months of 2013 after a poorer European performance. In Europe, pricing was hit by competition between operators, as consumers and businesses sought out cheaper phone tariffs) Source:http://www.ukessays.com/essays/marketing/strategic-recommendations-to-thevodafone-group-plc-marketing-essay.php#ixzz2xVnT9ASW

SWOT ANALYSIS: A SWOT analysis is a structured planning method used to evaluate the strengths, weaknesses, opportunities and threats involved in a project or a business venture. A swot analysis can be carried out for a product, place, industry or person.  Strengths: characteristics of a business or project that give it an advantage over others.  Weaknesses: characteristics that place the business or project at a disadvantage relative to others.  Opportunities: elements that the project could exploit to its advantage.  Threats: elements in the environment that could cause trouble for the business or project Strength

Weakness

13



Prominent market position



Centralised management system



Global presence and diversification



High level of customer churn rate

revenue



low return on assets



Strong advertising strategies and impact on people



Strong customer base



Global brand strength



Wide geographical reach Opportunities

Threats

 Strategic alliances with other companies.

 Increasing competition

 Increase in popularity of smart phones

 Mobile number portability

results in increase in the revenue of

 Legal risks

Vodafone.

 Market saturation in developed countries

 Expansion into the untapped markets.

 Emergence of alternative

 Introduction of newer technologies.

telecommunication technology

 Revenue from mobile value added

 High government interference in cellular

services.

sector

SO Strategy: 

Strategic alliances and teaming up with another operator helps Vodafone to reduce its costs.



Vodafone has developed networking system with modern technology. It helps the company to diversify in many countries

WOStrategy: 

Vodafone is customer focused and is developing new products and services with advanced technologies. Providing more added value services to the existing customers helps to retain them.

ST Strategy: 14



Innovative mobile advertising and introduction of features helps in meeting the competition from other firms.

WT Strategy: 

Mobile number portability can be reduced by meeting the needs and demands of local customers

THE STRATEGIC POSITION AND ACTION EVALUATION (SPACE) MATRIX: The Strategic Position and Action Evaluation (SPACE) Matrix is made of a four-quadrant framework which helps the given enterprise to find the best suited strategy from the four strategies, such as, aggressive, conservative, defensive or competitive strategies. The internal dimensions (Financial Strength FS and competitive Advantage CA) and the external dimensions (Environmental Stability ES and Industrial Strength IS) forms the axes of the SPACE graph. The strategic positioning of an enterprise in marketplace can be determined by the above four factors. Competitive Analysis (CA)

Industry (IS)

15

-6(worst) -1(best) Product quality -2 Market share -1 Customer loyalty -2 Technological know-how -2 Control over suppliers -3 Product/service lifecycle -2

+6(worst) +1(best) Ease of entry +4 Growth potential +4 Profits +2 Capital intensity +3 Financial stability +3 Resource utilization +3 Technology know-how +5

Average =-2

Average =3.4

Financial Strength (FS) +6(worst) +1(best) Working capital +2 Liquidity +3 Return on investment +4 Leverage +3 Ease of exit +3 Business risk +2

Environmental (ES)

Average =2.8

Average =-3.2

-6(worst) -1(best) Price of competing products -3 Barriers to entry -4 Technological changes -4 Competitive pressure -2 Demand variability -3

Total X-axis Score = IS+CA = 3.4+(-2) = 1.4 Total Y-axis Score = ES+FS = (-3.2)+2.8 = -0.4 The co-ordinate is (1.4, -0.4)

16

INTERPRETATION: The SPACE matrix suggests Vodafone to follow competitive strategy, where, Vodafone has high competitive advantages in a high-growth industry. Vodafone can follow, 

Backward, forward, horizontal integration



Market penetration



Market development



Product development

17

BOSTON CONSULTING GROUP (BCG) MATRIX: Boston Consulting Group invented the BCG matrix, which is a tool that helps an enterprise to classify and evaluate its products/services. BCG matrix is a decision making tool that helps the enterprise to balance the activities that make profits, ensure growth, constitutes the future of the firm and heritage of the enterprise. BCG matrix is a four-quadrant matrix where the product/service of the company is placed in each quadrant according to the market share and market growth of the product/service.

Revenue distribution based on the types of service of Vodafone by 2013

18

CDMA, LTE - STAR: LTE (Long Term Evolution) CDMA (Code Division Multiple Access) As demand for mobile services moves from voice and text to data, Vodafone have been investing to build a superior data network This trend is being driven by a number of factors such as increased usage of Smartphones and an increased choice of apps for business and social use. As a result data traffic increased by more than 53% over the last year and data now accounts for 73% of the total traffic on our network. Vodafone, which is operating both CDMA and GSM in 16 countries, is beginning to build 4G (or LTE) networks, which will at least double the data speeds. 3G Services – QUESTION MARK: Vodafone spends INR 47,301 million in Financial Year 2013 with focus on future growth areas including 3G and data. Total data users are 37.3 million, out of which 3G customers are 3.3 million. 3G services are promising services for Vodafone. By boosting this service by appropriate investments to monitor the growth and maintain a position of strength, Vodafone can become market leaders in 3G services, which can contribute to the company's profitability. They are becoming progressively „cash cows‟ with market saturation. Wire Lines, SMS and Calling Services – CASH COW: FixedWire Lines, SMS and calling services are mature and which generate effective profits and cash, but need to be enhanced in order to secure its future. These services should be profitable to finance other activities (such as LTE, 3G services) in progress.

19

MMS Services – DOG: MMS is Multimedia Messaging System, which allows users to share multimedia messages such as audio, video, text, graphs etc. MMS services are positioned in a declining and highly competitive market. The threat of substitution is high, with the emergence of various new apps such as WhatsApp, Viber, etc. Vodafone have to get rid of MMS services, as they become unnecessarily expensive to maintain. Vodafone must decide whether MMS services still inject liquidity, otherwise it is wise to eliminate the „dogs‟.

20

THE INTERNAL-EXTERNAL MATRIX The Internal-External (IE) Matrix positions an organization‟s various divisions in a nine cell display. The IE Matrix is similar to the BCG Matrix in that both tools involve plotting organization division in a schematic diagram. Strong (3.0 to 4.0) High (3.0to 4.0) Medium (2.0 to 2.99) EFE (2.76) Low (1.0 to 1.99)

Average (2.0 to 2.99)

Weak (1.0 to 1.99)

1

2

3

4

5

6

7

8

9

IFE (2.87)

If cell 1, 2 and 3: Grow and Build    

Backward, Forward or Horizontal Integration Market Penetration Market Development Product Development

If cell 3, 5 and 7: Hold and Maintain  

Market Penetration Product Development

If cell 6, 8, and 9: Harvest or Divest  

Retrenchment Divestiture

In the above case the lines fall in cells 4 and 7 which indicates that Vodafone‟s strategies should concentrate on Market development, Market penetration and product development. (Explained in detail under Grand Strategy Matrix)

21

THE GRAND STRATEGY MATRIX:

VODAFONE Rapid Market Growth Quadrant 2 1. 2. 3. 4. 5. 6.

Market development Market penetration Product development Horizontal integration Divestiture Liquidation

Quadrant 1 1. 2. 3. 4.

Market development Forward integration Backward integration Related diversification

Weak Competitive position Quadrant 3 1. 2. 3. 4. 5.

Retrenchment Related diversification Unrelated diversification Divesture Liquidation

Strong Competitive position Quadrant 4 1. Related diversification 2. Unrelated diversification 3. Joint venture

Slow Market Growth

Interpretation: Since Vodafone lies in the second quadrant it needs to evaluate their present approach to either sustain its position or to grow. Vodafone can continue to concentrate on the current market which includes both urban and rural. They can focus on increasing the rate of teledensity in the rural areas. Product development: It can foray into cloud computing or provide 4G services to penetrate deeper into urban area. As cloud computing brings several opportunities as the users are moving from “buying products” to” buying services” Source:http://www.huawei.com/en/about-huawei/publications/communicate/hw080991.htm

22

Also Vodafone needs to look at horizontal integration since its main competitor Airtel has raced it to number one position in Mumbai circle by acquiring Loop telecom (comparatively smaller telecom which was operating only in Maharastra) Loop had a subscriber base of around 3 million and will take Airtel's combined subscriber base to around 7 million, compared to Vodafone's 6.9 million. Source:http://timesofindia.indiatimes.com/tech/tech-news/Airtel-buys-Loop-to-be-No-1telcom-operator-in-Mumbai/articleshow/30642532.cms

23

THE QUANTITATIVE STRATEGIC PLANNING MATRIX- QSPM Product development

KEY FACTORS

Horizontal integration

Weight

AS

TAS

AS

TAS

1. Rapidly growing subscriber base

0.08

2

0.16

4

0.32

2. Huge market potential

0.08

-

3

0.24

3. Government policies and regulations

0.10

-

-

4. Growing revenue from Mobile Value Added Services

0.07

4

0.28

-

5. Significant revenue from Mobile Number Portability

0.04

3

0.12

3

0.12

6. Steading rising penetration rate

0.04

2

0.08

3

0.12

7. Innovation in Service and Technology

0.05

4

0.2

4

0.2

Average 0.10

3

0.3

3

0.3

2. Excessive competition that leads to 0.10 price wars

4

0.4

4

0.4

3. Lack of proper infrastructure

0.09

-

-

4. Non- availability of adequate 3G 0.07 spectrum

-

-

5. High regulatory charges

0.08

-

-

6. Low profitability in rural areas

0.06

3

0.18

3

0.18

SIM 0.04

2

0.08

4

0.16

OPPORTUNITIES

THREATS 1. Continuously decreasing Revenue Per User

7. Growing multiplicity ownership

in

1.00

24

STRENGTHS 1. Prominent market position

0.07

2. Global presence and diversification revenue

-

3

-

-

-

-

0.21

0.1

3. Strong advertising strategies and impact on people

0.15

4. Strong customer base

0.05

-

4

0.2

5. Global brand strength

0.09

-

2

0.18

6. Wide geographical reach

0.13

-

4

0.52

1. Centralised management system

0.08

-

-

2. High level of customer churn rate

0.08

3

0.24

3

0.24

3. Servicing of client needs

0.12

4

0.48

3

0.36

4. No network coverage in rural areas

0.06

3

0.18

4

0.24

5. Low return on assets

0.07

-

4

0.28

WEAKNESS

TOTAL

1.00

2.7

25

3.27

VODAFONE PORTERS MODEL TABLE 1: RIVALRY AMONG COMPETITORS

Attractiveness LOW 1 2 3 4 Availability of closed substitutes Switching Cost Substitutes price value Profitability of the producers of substitutes

High

REMARKS

HIGH 5

x

Low

Low

x

High

Better

x

Worse

High

x

Low

There are many close substitutes available to this sector. The switching cost is comparatively high. The price of substitutes is comparatively high. The profitability of producers is comparatively low.

REFERNCE: a) b) c) d)

http://www.bharti-infratel.com/cps-portal/web/pdf/Infratel-Whitepaper-GreenTowersP7.pdf https://www.dnb.co.in/IndianTelecomIndustry/OverviewTI.asp https://www.dnb.co.in/IndianTelecomIndustry/OverviewTI.asp http://www.ideasmakemarket.com/2013/08/aug-entry6-analysis-of-indian.html

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TABLE 2: BARRIERS TO EXIT

Attractivenes s LO W

HIG H 1

2

3

Economies of scale Product Differentiation

4 x

Brand Identity Switching Cost Access to channels of distribution Capital requirement Access to technology Access to raw materials Government Protection

5

Remarks Large

x

High

x

High

x

High

x

Limited

The Economies of scale is high. There are many ways to find out product differentiation. We can easily identify the brand by seeing. The switching cost is high.

x

Restricted

There are different ways of product differentiation available. The capital requirement needed is very large amount. There are many ways to access the technology.

x

Restricted Substanti al

Raw materials can be procured easily There are many laws that being followed.

x

x

Large

REFERENCE: a) b) c) d) e) f) g) h) i)

https://www.dnb.co.in/IndianTelecomIndustry/OverviewTI.asp https://www.dnb.co.in/IndianTelecomIndustry/OverviewTI.asp http://www.bgr.in/news/telecom-industry-body-repositions-logo-brand-identity/ https://www.dnb.co.in/IndianTelecomIndustry/OverviewTI.asp https://www.dnb.co.in/IndianTelecomIndustry/OverviewTI.asp http://www.icra.in/Files/Articles/2009-March-TelecomInfra.pdf https://www.dnb.co.in/IndianTelecomIndustry/RegulatoryFramework.asp http://exploringgeography.wikispaces.com/Chemical+and+Automobile+industies+in+India https://www.dnb.co.in/IndianTelecomIndustry/RegulatoryFramework.asp

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TABLE 3: BARRIERS TO ENTRY

ATTRACTIVENESS LOW 1

Asset Specialization High Cost of exit

Government restrictions

High

High

Remarks

HIGH 2

3

4

5

x x

x

Small

There are many ways to procure asset.

Small

The cost of exit is very high.

Small

There are many government restrictions which are imposed.

REFERENCE: a) https://www.dnb.co.in/IndianTelecomIndustry/OverviewTI.asp b) http://www.thehindu.com/news/national/telecom-industry-cracking-under-financialpressure/article4902565.ece c) https://www.dnb.co.in/IndianTelecomIndustry/RegulatoryFramework.asp

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TABLE 4: THREAT OF SUBSTITUTES

ATTRACTIVENESS LOW HIGH 1 2 3 4 5 No of competitors Industry Growth Fixed Cost

REMARKS

Differentiation

Low

Switching Cost Openness terms of sales Excess Capacity Strategic Stakes

Low

x

High

There are large number of competitors available. There is a huge scope of industry growth. The fixed cost is usually high. There are many ways by which you can differentiate the product. The switching cost is relatively high.

Secret

x

Open

They are normal.

Small

They have low excess capacity.

Low

The stake is very high.

Large

x

Slow High

Small

x

Fast Low

x

High

x

Large

x

High

x

TABLE 5: BARGAINING POWER OF BUYERS

LOW

Switching Cost

Contribution To Quality Contribution To Cost Buyer's Profitability

ATTRACTIVENESS HIGH 1 2 3 4

REMARKS 5

SMALL MANY Low HIGH LOW

LARGE FEW High LOW HIGH

Low

High

High

Low

Low

High

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REFERENCE: a) https://www.dnb.co.in/IndianTelecomIndustry/OverviewTI.asp b) http://businesstoday.intoday.in/story/2013-flashback-transition-year-for-telecom-sectorgrowth/1/201770.html c) http://www.essay.uk.com/free-finance-essays/indian-telecom-sector.php d) https://www.dnb.co.in/IndianTelecomIndustry/OperationalPerformance.asp e) http://www.myacme.org/ACMEProceedings09/p11.pdf f) http://www.dot.gov.in/sites/default/files/Telecom%20Annual%20Report-201213%20(English)%20_For%20web%20(1).pdf g) http://m.economictimes.com/news/news-by-industry/telecom/telecom-sector-struggles-withdebt-issues-companies-eye-new-growth-avenues/articleshow/msid-21060065,curpg-3.cms h) https://www.dnb.co.in/IndianTelecomIndustry/OverviewTI.asp

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TABLE 6: BARGAINING POWER OF SUPPLERS

ATTRACTIVENESS LOW HIGH 1 2 3 4 5 Number of suppliers

SMALL

x

Availability of substitutes

FEW

x

Switching cost

HIGH

x

HIGH

x

Supplier's threat of forward integration Industry's threat of backward integration Contribution to quality Contribution to cost Industry's importance to supplier

REMARKS there are large no of LARGE suppliers. thesubstitutesa available are very MANY much high. the switching cost is LOW very high. they threat for forward INTEGRATION IS VERY LOW HIGH.

LOW

x

HIGH

this threat has very high integration.

HIGH

x

LOW

thequlity is high.

HIGH

x

LOW

the cost is high.

HIGH

the importance given is high.

LOW

x

REFERENCE: a) b) c) d) e) f) g)

https://www.dnb.co.in/IndianTelecomIndustry/OverviewTI.asp http://www.myacme.org/ACMEProceedings09/p11.pdf https://www.dnb.co.in/IndianTelecomIndustry/OverviewTI.asp http://www.myacme.org/ACMEProceedings09/p11.pdf http://www.scribd.com/doc/85095034/Industry-Analysis-Telecom-MidTerm-Report-2 http://pib.nic.in/feature/feyr2000/ffeb2000/f220220001.html http://www.equitymaster.com/research-it/sector-info/telecom/Telecom-Sector-AnalysisReport.asp h) http://www.ficci.com/sector/39/Project_docs/FICCI_Website_content-Telecom.pdf

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TABLE 7: GOVERNMENT ACTIONS

ATTRACTIVENESS LOW 1 2 3 4 Industry protection

LOW

x

HIGH

x

REFERNCE: a) https://www.dnb.co.in/IndianTelecomIndustry/OverviewTI.asp b) http://cis-india.org/telecom/resources/trai-act-1997 c) https://www.gov.uk/importing-and-exporting-electronic-goods

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5 the protection is HIGH very high

x

Industry regulation(pollution,etc.,) HIGH Customs and tariff restrictions abroad

REMARKS

HIGH

LOW

LOW

the regulation given is very higg. theu have very high tariff restrictions.

TABLE 8: OVERALL ASSESSMENT

ATTRACTIVENESS LOW 1 2 3 4 Barriers to entry Rivalry among competitors Barriers to exit Power of buyers Power of suppliers Threat of substitutes Government action Overall attractiveness

REMARKS

HIGH 5

x x x x x x x x

REFERNCE: a) http://www.thehindubusinessline.com/opinion/now-a-high-entry-barrier-intelecom/article3349867.ece b) http://www.cci.in/pdfs/surveys-reports/Telecom-Sector-in-India.pdf c) http://www.itu.int/ITU-D/asp/CMS/Events/2012/pacific-bb/S4_PiRRC_Aslam.pdf d) http://www.essay.uk.com/free-finance-essays/indian-telecom-sector.php e) http://www.equitymaster.com/research-it/sector-info/telecom/Telecom-Sector-AnalysisReport.asp f) http://www.ideasmakemarket.com/2013/08/aug-entry6-analysis-of-indian.html g) http://www.livemint.com/Industry/9JEh45TZDJ1HU1xae9YRTJ/What-lies-ahead-for-Indiastelecom-industry.html h) https://www.dnb.co.in/IndianTelecomIndustry/OverviewTI.asp

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CONCLUSION In the Mobile Telecommunication Industry, Vodafone is a leading player and has grown quickly, despite high competition. This success is because of prominently positioning itself in the global market with diversified services such as 3G, 4G, call and SMS schemes and strong advertisement strategies which widened the customer base. Increase in popularity of the smartphones was a tremendous opportunity for Vodafone to increase the revenue contribution by data usage. As high competition is a threat for Vodafone, it focuses on retaining the customers by developing new products and services with advanced technologies and exclusive value added services (VAS) to retain existing customers. From this report, the SPACE matrix recommends Vodafone to follow competitive strategy, because by utilizing the internal strength, adopting product development and market development strategies Vodafone can be successful in the young, highly growing telecommunication industry.

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