Summary
Strategic management is a function of top management, which requires them to chart the direction the entire organization will take. It also follows up to confirm its implementation. These managers have to consider internal aspects, which give the organization leverage against its competitors. Also, an organization has to consider external aspects, which may prevent achievement of the set objectives. This requires them to conduct an environmental analysis before the strategic implementation and finally engage in strategic control. There are various tools of management that aid this process. This paper will analyze Vodafone’s performance using some of these management tools.
Corporate Strategy
The corporate strategy concerns all parts of the business. Vodafone Group has adopted two major corporate strategies. These are market development and product development. This is according to the Ansoff product-markets growth matrix. The company has expanded into the African market which has a huge potential market for telecommunication products1. This market development has been accomplished by establishing subsidiaries and joint ventures across the continent. However, this strategy has not been successful in the Asian market since Airtel controls the largest market share, and its low cost strategy is unbeatable. Vodafone first entered the African market in 1998. The company first purchased 45% of the shares in Telecom Egypt. This was the beginning of many more deals to follow in Lesotho, Ghana, South Africa, Congo and Kenya.
This strategy has been a success so far as the company has continued to report increased profits in all these countries. Their product development strategy has been more successful than the market development. In Kenya, Safaricom, a subsidiary of Vodafone has introduced mobile money transfer which has caused a great stir in the industry. This product was a great hit, so much that the World Bank has contracted the former CEO, Michael Josephs to introduce similar programs in other African countries. Vodafone is pursuing a product development strategy in Africa because the market is unique and there are many opportunities for growth.
Business Strategy
The business strategy is the basis upon which a company chooses to compete. This is what makes the difference between successful and unsuccessful companies in an industry. Porter describes four Generic Competitive Strategies. Vodafone is pursuing a differentiation strategy. The company seeks to distinguish itself from other industry players by focusing on sustainability and environment-friendly initiatives.
This strategy is appropriate especially because consumers are becoming more environmentally- friendly and are demanding accountability from companies. Vodafone has elaborated its chosen business strategy on its website. The company has also incorporated this into its mission and vision statements. Vodafone seeks to establish itself as an environmentally friendly telecommunication solutions provider. The company has succeeded in creating this image, especially in Africa where it is involved in various charitable projects.
Problems Vodafone May Encounter
The product development strategy chosen as their business strategy requires massive investment in research. The company needs to conduct customer surveys frequently and come up with innovative solutions to their problems. Failure to do this would jeopardize the entire strategy. Competitors may also steal some of Vodafone’s ideas before they get to the market2. This would erode the company’s competitive edge. The differentiation strategy requires the company to invest in advertisement to ensure they stand out. Shareholders may not understand why this expense is justifiable. Eventually, the success of the company’s strategies can only be measured by their ability to achieve the major goal of making profit.
Bibliography
Johnson, G., Scholes, K., Whittington, K. The Environment In Exploring Corporate Strategy, 10th edn, Pearson Education, London, 2010, p.86.
McGee, J., Thomas, H., and Wilson, D. Strategy Analysis & Practice, McGraw‐Hill Maidenhead, New York, 2005, p556.
Footnotes
- Johnson, G., Scholes, K., Whittington, R, The Environment In Exploring Corporate Strategy,10th edn, Pearson Education, London, 2010, p.86.
- McGee, J., Thomas, H., and Wilson, D, Strategy Analysis & Practice, McGraw‐Hill Maidenhead, New York, 2005, p556.