Vodafone Group - Case Study Example

Analyze a Company Vodafone Group Introduction: Vodafone Group Plc is the world largest telecommunications company, with a significant presence in Continental Europe, the United Kingdom, the United States and the Far East through the Company's subsidiary undertakings and investments. It provides an extensive range of mobile telecommunications services, including voice and data communications. The Group's mobile subsidiaries operate under the brand name 'Vodafone'. In the United States the Group's associated undertaking operates as Verizon Wireless. During the last two financial years, the Group has also entered into arrangements with network operators in countries where the Group does not hold an equity stake. Under the terms of these Partner Network Agreements, the Group and its partner networks co-operate in the development and marketing of global services under dual brand logos. Aims & Objectives: -> Vodafone's vision is to be the world's communication leader - enriching customer's life, helping individuals, businesses and communities be more connected in a mobile world. -> Enhance the customer services being provided. -> Enhance the relationships with the stakeholders and deliver value. -> Increase the net profit - expansion of international business. Business level strategy of the organization: A business strategy describes how a particular business intends to succeed in its chosen market place against its competitors. It therefore represents the best attempt that the management can make at defining and securing the future of that business. A good business strategy will meet six tests of quality: - It will be correctly scoped - It will be appropriately documented - It will address real customer needs - It will exploit genuine competencies - It will contribute to competitive advantage - It will lay the ground for implementation. As on 31 January 2007 Vodafone had 200 million proportionate customers in 27 markets across 5 continents. ("Proportionate customers" means, for example, that if Vodafone has a 30% stake in a business with a million customers, that is counted as 300,000). On this measure it is the second largest mobile telecom group in the world behind China Mobile. The eight markets where it has more than ten million proportionate customers are the United Kingdom, Germany,India,Italy, Spain, Turkey, Egypt and the United States. In the U.S., these customers come via its minority stake in Verizon Wireless, and in the other seven markets Vodafone has majority-controlled subsidiaries. Organization structure of Vodafone Group The type of structure adopted by an organization depends on several factors including: the size and complexity of the organization the diversity of the products and services produced or provided the geographical spread of the organization the activities performed by the organization and the objectives and goals which are set out by the organization. Vodafone follows the hierarchical structure model. The communication flow takes the form of top-bottom approach. Every unit or department works as an entity and have its own significance and importance. Given below is a critical approach to the Finance, Marketing and HRM departments of Vodafone Group. Finance: The year 2007 had been so far a successful year for Vodafone, a comparative approach reveals an excellent progress in reducing costs across the business, and clear signs of sustainable revenue growth was also indicated. The year indicated an increase in the market share of new business. A comparative approach taken on the financial condition of the group for the last three years clearly indicates that there had been a significant increase in the finance sector of the firm. This is reflected in the figure below: The key highlights of the profit performance for the six months - Sep 2007 are - - Group revenue of 17.0 billion, an increase of 9.0%, with organic growth of 4.4% - Group adjusted operating profit increased 1.6% to 5.2 billion, with organic growth of 6.1% - Free cash flow from continuing operations of 2.7 billion, reflecting 8.1% mobile capital intensity for Europe. - Adjusted basic earnings per share increased by 7.4% to 6.42 pence. Basic earnings per share of 6.22 pence - Proportionate mobile customer base of 241 million at 30 September - Results reflect rigorous execution against the Group's five strategic objectives - Interim dividend per share increased by 6.0% to 2.49 pence, giving a payout of over 1.3 billion - Increased outlook for revenue, adjusted operating profit and free cash flow for the 2008 financial year In order to achieve a similar or more profitable outcome this year, it is highly important for Vodafone to utilize their resources optimally and make full use of the opportunities - i.e. work on increasing the market share of their new products in new geographical areas or locations... A detailed description of the product related activities - such as brand share, sales, target market, market share etc is required in order to view the current situation and also to define measures and strategies to gain fruitful outcome. Performance evaluation: Vodafone Group uses different models to measure the organizational performance. Two of the mostly used ones are BSC (Balanced Score Card) and CMM (Capability Maturity Model). These models provide a tool for measuring performance and evaluating Vodafone's performance and guide it to focus its improvement efforts on the right areas. To a large extent, these models are based on theories of TQM but they differ in scope and approach. An in-depth analysis in the finances of the firm and the results projected by the firm makes us conclude that these models utilized by Vodafone are more research oriented that result oriented. It is advisable for the firm to take a more linear and numeric approach in evaluating its performances. Marketing Strategies of the firm: Vodafone is a leading global brand and in some markets the sole brand. Brand strategy includes local branding, appearing to follow the mantra 'think global act local'. Vodafone has grown through geographic expansion, the acquisition of new customers, retention of customers and through increasing usage via technological innovations, including wireless application protocol (WAP). It is estimated that by 2008 there will be 2 billion global users and two-thirds will be WAP enabled which will go beyond the current photo-messaging and allow all sorts of activities including video conferencing. The global strategy employed classically provides cost savings from standardization in many areas of operation. Vodafone's aim is to be market leader and this is product led, the brand often being ahead of customer thinking. Part of this is achieved by listening to the customer and feeding back into the strategy. The five major tasks in developing a strategic marketing plan are: (1) analyzing the strategic situation; (2) setting objectives; (3) market targeting; (4) marketing program positioning; and (5) tracking performance. The marketing strategies adopted by Vodafone group have proved to be very effective so far. They implements effective positioning strategies. Human Resource Management of the firm: The 'soft' version of HRM emphasizes the importance of high commitment, workplace learning and enlightened leadership. Most normative HRM models assert that the organization's 'human resources' are valued assets, not a variable cost, and emphasize the commitment of employees as a source of competitive advantage (Robert, 1993). Strategic HRM has been defined as: All those activities affecting the behavior of individuals in their efforts to formulate and implement the strategic needs of the business. (Ackoff, 1994). Strategic HRM is an approach to making decisions on the intentions and plans of the organization concerning the employment relationship and its recruitment, training, development, performance management, reward, and employee relations policies and practices. It is an essential component of the organization's corporate or business strategy. Strategic HRM is concerned with the relationship between human resources management and strategic management in the firm. It refers to the overall direction the organization wishes to pursue in achieving its objectives through people. It is argued that, because human capital is a major source of competitive advantage, and in the last analysis it is people who implement the strategic plan, top management must take these key considerations fully into account in developing corporate strategies. Strategic HRM is an integral part of those strategies. Irrespective of personnel management, Strategic HRM addresses broad organization concerns relating to changes in structure and culture, organizational effectiveness and performance, matching resources to future requirements, the development of distinctive capabilities, and the management of change. It is concerned with both human capital requirements and the development of process capabilities, i.e. the ability to get things done effectively. Overall, it will consider any major people issues that will affect or are affected by the strategic plan of the organization. As Boxall (1996) remarks: "The critical concerns of HRM such as choice of executive leadership and formation of positive patterns of labor relations, are strategic in any firm'. Models for Strategic HRM: There are a number of models that prescribe approaches for strategic HRM and there is an element of choice in which model or combination of models to adopt when developing HR strategies. (However, it should be remembered that the extent to which there is real choice will be contingent upon factor such as the business strategy, the resources available and the environment in which it operates). The main models described below are: the high-commitment management model; the high-performance management model; the high-involvement model. The high-commitment management model One of the defining characteristics of HRM is its emphasis on the importance of enhancing mutual commitment. The approaches to achieving high commitment as described by Stephen (1995) are: the development of career ladders and emphasis on trainability and commitment as highly valued characteristics of employees at all levels in the organization; a high level of functional flexibility with the abandonment of potentially rigid job descriptions; the reduction of hierarchies and the ending of status differentials; a heavy reliance on team structure for disseminating information (team briefing), structuring work (team working) and problem solving (quality circles). The high-performance management model High-performance management aims to make an impact on the performance of the firm through its people in such areas as productivity, quality, levels of customer service, growth, profits and, ultimately, the delivery of increased shareholder value. High performance management practices include rigorous recruitment and selection procedures, extensive and relevant training and management development activities, incentive pay systems and performance management processes. The high-involvement management model This approach involves treating employees as partners in the enterprise, whose interests are respected and who have a voice in matters that concern them. It is concerned with communication and involvement. The aim is to create a climate in which a continuing dialogue between managers and the members of their team takes place in order to define expectations and share information on the organizations mission, values and objectives. This establishes mutual understanding of what is to be achieved and a framework for managing and developing people to ensure that it will be achieved. It has been observed Vodafone Group does not refrain itself to one of the above types of model. Rather, the firm had adopted the best practices involved in every model and all the strategies are formulated and implemented based on analyzing what suits best both to the employer and employee. Conclusion: It is highly essential for the success of any organization to have efficiency in its entire operations departments - finance, marketing, procurement, human resource management and so on. It is evident from the growth of Vodafone Group that there has been a smooth functioning of operational activities in all its departments. However, to further increase its growth it had to adapt new models and technologies. References: ->Adrian B. Ryans (Editor), Roger More, Don Barclay, 2000: Winning Market Leadership: Strategic Market Planning for Technology-Driven Businesses. -> Arthur Thompson, Jr., and A. J. Strickland III. Irwin. 1996: Strategic Management: Concepts and Cases -> Carl W. Stern and George Stalk, Jr. (Eds). 1998: Perspectives on Strategy -> Girden, E.R. (1996).Evaluating Research Articles: From start to finish. -> James.E.Finch, 1996: The Essentials of Marketing Principles. -> Lawrence G. Hrebiniak and William F. Joyce, 1984: Implementing Strategy. -> Michel Robert, 1993: Strategy Pure & Simple. -> Roy Arya, 2005: Planning and Control Systems: A Framework for Analysis. -> Robert S. Kaplan and David P. Norton, 1996: The Balanced Scorecard: Translating Strategy into Action. -> Russell Ackoff, 1994: Redesigning the Future -> Stephenson Roy, 2005: Marketing Planning for Financial Services -> Stephen J. Wall and Shannon Rye Wall, 1995: The New Strategists. www.vodafone.com Read More