Vodafone forces/ challenges and opportunities


Despite having a vast portfolio and strategically located subsidiaries, the organisation faces immense challenges that severely impact its capacity to expand its market footprint. The company exhibits main restrictive forces, including rivalry among current market players, an abundance of substitute products, increasing bargaining power of the customers due to expanding variety, enlarging bargaining capabilities of the suppliers, the threat of new entrants.

The company must identify effective solutions to the challenges posed by the five Porter forces to increase and sustain its competitive advantage.

Threats of new entrants

The wireless communications industry’s rapidly changing innovation continues to attract new players who leverage the existing technology to solve emerging problems in the consumer market. Innovative products tailored to the needs of consumers are being launched on a frequent basis, threatening Vodafone’s market dominance. New entrants have prompted the customer’s company to consider lower pricing strategies and reduce operational costs to ensure financial sustainability. The organisation has been challenged to provide new value propositions to continue appealing to the marketplace. Vodafone must confront the developments to safeguard its position in the local and international market, which is increasingly threatened by emerging players who offer their services at competitive prices. The corporation can consider increasing its spending on research and development to identify the needs of the contemporary customer. Developing new innovative products is likely to significantly minimise incentives of new players to venture into the industry due to the prospect of minimal profitability.

Bargaining power of suppliers

Suppliers are one of the most critical aspects of the supply chain as they allow the company to acquire the prerequisites raw materials at competitive prices. The entities invaluable in the value creation cycle and determine the rate of availability of the end product. Suppliers in the wireless communication industry are often established companies with a capacity to utilise their dominant positions to decrease the margins of the Vodafone at will and without any notable justification. The organisations often utilise their negotiating power to demand higher prices especially in light of the increasing wireless communication market players. The net impact of this development is reduced overall profitability. Vodafone can tackle the challenge by establishing an efficient supply chain through cooperative agreements with multiple suppliers. The organisation can also experiment with numerous product designs and market them effectively so that when the price of one raw material goes up, the entity can shift to others. Vodafone should consider developing dedicated suppliers who rely solely on the company for their sustenance. The third-party manufacturers will develop products for use entirely by the telecommunications corporation.

Bargaining power of buyers

Prospective buyers are one of the most challenging stakeholders to satisfied due to their vastly different and rapidly changing needs. The individuals who seek to purchase the best offerings by the company at the lowest possible prices. Customers demand high-quality products at minimal costs. Smaller consumer bases have larger bargaining power due to their ability to agitate for increased discounts and offers. Vodafone can address the problem by significantly expanding its market through product differentiation. A large number of consumer segments diffuses the bargaining power of the buyers. Additionally, the process will markedly minimise the prospect of defection by existing customers to competitors. Vodafone can also tackle the bargaining power of buyers by innovating new products. The loyal customers who seek discounts and offerings may be granted the request on established products allowing the company to maximize their profitability on the more recent commodities.

Threats of substitute products or services

Whenever a new service or product is lunch that satisfies a similar customer need, competitors in the market segment often suffer reduced profitability. The threat posed by a substitute often depends on its uniqueness and convenience. Vodafone will address the problem by integrating a service effective as opposed to just being product-oriented to maintain its competitive edge. The organisations should also endeavour to increases the switching costs for customers. Consumers will be provided with an opportunity to change the provider and retain their user information, albeit at prohibitive prices. An intimate understanding of the needs of the client also significantly minimises the impact of competition due to the company’s ability to satisfy them.

Rivalry among existing competitors

Business rivalry is the foundation of the concept of capitalism and is a primary reason for sustained process improvement. The wireless communication industry is immensely competitive due to the presence of other established firms within the same market. Rivalry is a chief determinant of the long-term profitability of the company and plays a major role in organisational discourse assumed by the corporation. Vodafone can overcome intense competition by revising its short, medium and long-term objectives to reflect emerging consumer needs. The corporation can also establish sustainable differentiation to increase its revenue streams. Additionally, the firm can collaborate with other players to expand the size of the market and make it available for everyone.


Figure 1:Vodafone organization structure

Vodafone organisation structure and Core value proposition

An analysis of a business’s organisational structure is critical to developing an intimate understanding of the opportunities available to expand its market foothold. Vodafone’s endeavours to restate its key commercial and financial priorities, which include minimising levels of administration, simplifying managerial governance in a market leader in shareholder returns, brand advocacy and realizing cost-efficiency. The company’s structure is headed by the group chief executive officer, the administrative figurehead of the unit, as indicated by figure 1. The individual is deputised by the numerous executives, including group corporate affairs, legal secretary, strategy, human resource, and finance directors.

Figure 2: Core Value Propositions

Vodafone’s business model features three main value propositions and clusters, including optimal resource used to improve customer experience, improving product specification meet specific consumer needs, and increased focus in understanding target segment as highlighted in figure 2. The organisation also endeavours to drive growth by improving trust, simplicity, and speed of its services.





Acquisition policy

Since its inception in 1998, Vodafone has utilised acquisition as its primary means of expansion. The organisation identified and merged with prospective competitors, significantly expanding its market foothold. The entity has partnered with numerous other service providers to exhibit similar business interests or products. The organisation has a set of core principles that define the perceived success of every venture. Key considerations for the mergers include the need to expand into new channels and customer bases in promising or adjacent markets to increase its original invisibility and to create value addition for its current commodities. Vodafone is also driven by the urge to realise the most optimum financial benefit from the market on new products by leveraging on its current reputation. Adding quality control and security protocols to its existing value chain is a key motivation of Vodafone’s acquisition due to the evolving threat of cybercrime. The organisation also engages in the practice to balance its product portfolio and diversify risk. A majority of Vodafone’s acquisitions are motivated by the desire to strengthen economies of scale minimise overhead and operating costs. New companies joining its portfolio often represents an inherent need that ought to be satisfied to increase overall productivity and to add value to existing offerings. The acquisition approach has been flexible due to the widening of the marketplace. The acquisition policy is founded on leveraging the strengths of current assets to improve gross performance. However, the most prominent motivation of the market expansion endeavour is to develop a strong regional and global presence, a major mega-trendsetter in wired and wireless telecommunications systems.

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