Vodafone Business Values Essay

Increasingly, companies around the world have adopted formal statements of corporate values, and senior executives now routinely identify ethical behavior, honesty, integrity, and social concerns as top issues on their companies’ agendas.

The meaning of this new emphasis on values, however, is less obvious than the trend itself. So to explore how deeply these values are embedded in organizations and to examine the role that values are playing, in 2004 Booz Allen Hamilton and the Aspen Institute, a nonprofit and nonpartisan forum focused on values-based leadership and public policy, conducted a global study of corporations in 30 countries and five regions. Senior executives of 365 companies were polled, almost one-third of whom were CEOs or board members. (See “Methodology” at the end of this article.) The purpose of the survey was to examine the way companies define corporate values, to expand on research about the relationship of values to business performance, and to identify best practices for managing corporate values.

The survey’s most significant finding was that a large number of companies are making their values explicit. That’s a change — quite a significant change — from corporate practices 10 years ago. The ramifications of this shift are just beginning to be understood.

At Xerox, CEO Anne Mulcahy says that corporate values “helped save Xerox during the worst crisis in our history,” and that “living our values” has been one of Xerox’s five performance objectives for the past several years. These values — which include customer satisfaction, quality and excellence, premium return on assets, use of technology for market leadership, valuing employees, and corporate citizenship — are “far from words on a piece of paper. They are accompanied by specific objectives and hard measures,” adds Ms. Mulcahy.

According to market and social trend analyst Daniel Yankelovich, the public’s widespread cynicism toward businesses today is the third wave of public mistrust about corporations in the past 90 years. The first, set off by the Great Depression, continued until World War II; the second, caused in part by economic stagflation and the Vietnam War, lasted from the early 1960s until the early 1980s. In each of these periods, Dr. Yankelovich wrote in the May 2003 report “Making Trust a Competitive Asset: Breaking Out of Narrow Frameworks,” companies tended to be reactive, blaming “a few bad apples,” dismissing values as “not central to what we do,” or ignoring opportunities to improve because “we don’t have to make major changes.”

The current wave of disapproval began in 2001 with the bursting of the dot-com bubble, the ensuing bear market, and the financial scandals involving Enron, WorldCom, Tyco, and others. But this time, according to the survey, the response appears to be different. More and more companies are looking inward to see what has gone wrong and looking outward for answers. They are questioning the quality of their management systems and their ability to inculcate and reinforce values that benefit the firm, its various constituencies, and the wider world. Rather than wall themselves off from critics, more companies are listening to them and looking for new ideas. And more firms are taking action to turn their corporation’s values into a competitive asset.

If the new attention to values were simply a transitory reaction to the business scandals of recent years, or merely a public relations device to direct or deflect media and investor attention, it would be worth little note. But more companies are going well beyond simply displaying values statements: They are engaging in values-driven management improvement efforts. Among those efforts are training staff in values, appraising executives and staff on their adherence to values, and hiring organizational experts to help address how values affect corporate performance.

Moreover, companies are showing little patience for executives who place their businesses at risk by crossing the line from prudent to unethical behavior. A recent example was the prompt decision by Boeing’s board to oust CEO Harry Stonecipher over a sexual affair he was having with an employee. Mr. Stonecipher had been appointed to the top job 15 months earlier to help improve Boeing’s standing with the Pentagon, its largest customer, after a series of ethics breaches. The board did not specifically indicate what ethical rule Mr. Stonecipher had violated, but it was clear that in the current climate, any obvious ethical lapse would be an indiscretion that the company could not tolerate and that would affect the bottom line. (See “CEO Succession 2004: The World's Most Prominent Temp Workers,” by Chuck Lucier, Rob Schuyt, and Edward Tse, Spring 2005.)

As Pfizer CFO David Shedlarz says in CFO Thought Leaders: Advancing the Frontiers of Finance (strategy+business Books, 2005): “It is critically important to do right. It is not adequate to meet the letter of the law — the spirit and the intent are what have to be kept keenly in mind.”

For the purposes of this study, we defined values as “a corporation’s institutional standards of behavior.” Generally, companies follow the same “values cycle”: They articulate a set of corporate values and attempt to embed them in management practices, which they hope will reinforce behaviors that benefit the company and communities inside and outside the firm, and which in turn strengthen the institution’s values.

The fundamental findings were:

• Ethical behavior is a core component of company activities. Of the 89 percent of companies that have a written corporate values statement, 90 percent specify ethical conduct as a principle. Further, 81 percent believe their management practices encourage ethical behavior among staff. Ethics-related language in formal statements not only sets corporate expectations for employee behavior; it also serves as a shield companies are using in an increasingly complex and global legal and regulatory environment.

• Most companies believe values influence two important strategic areas — relationships and reputation — but do not see the direct link to growth. Of the companies that value commitment to customers, 80 percent believe their principles reinforce such dedication. Substantial majorities also categorize employee retention and recruitment and corporate reputation as both important to their business strategy and strongly affected by values. However, few think that these values directly affect earnings and revenue growth.

• Most companies are not measuring their “ROV.” In a business environment increasingly dominated by attention to definable returns on specific investments, most senior executives are surprisingly lax in attempting to quantify a return on values (ROV). Fewer than half say they have the ability to measure a direct link to revenue and earnings growth.

• Top performers consciously connect values and operations. Companies that report superior financial results emphasize such values as commitment to employees, drive to succeed, and adaptability far more than their peers. They are also more successful in linking values to the way they run their companies: A significantly greater number report that their management practices are effective in fostering values that influence growth, and executives at these companies are more likely to believe that social and environmental responsibility have a positive effect on financial performance.

• Values practices vary significantly by region. Asian and European companies are more likely than North American firms to emphasize values related to the corporation’s broader role in society, such as social and environmental responsibility. The manner in which companies reinforce values and align them with company strategies also varies by region.

• The CEO’s tone really matters. Eighty-five percent of the respondents say their companies rely on explicit CEO support to reinforce values, and 77 percent say such support is one of the “most effective” practices for reinforcing the company’s ability to act on its values. It is considered the most effective practice among respondents in all regions, industries, and company sizes. (See “Leaders Make Values Visible,” below.)

Leaders Make Values Visible
by Marshall Goldsmith

The corporate credo. Companies have wasted millions of dollars and countless hours of employees’ time agonizing over the wording of statements that are inscribed on plaques and hung on walls. There is a clear assumption that people’s behavior will change because the pronouncements on plaques are “inspirational” or certain words “integrate our strategy and values.” There is an implicit hope that when people — especially managers — hear great words, they will start to exhibit great behavior.

Sometimes these words morph as people try to keep up with the latest trends in corporate-speak. A company may begin by striving for “customer satisfaction,” then advance to “total customer satisfaction,” and then finally reach the pinnacle of “customer delight.”

But this obsession with words belies one very large problem: There is almost no correlation between the words on the wall and the behavior of leaders. Every company wants “integrity,” “respect for people,” “quality,” “customer satisfaction,” “innovation,” and “return for shareholders.” Sometimes companies get creative and toss in something about “community” or “suppliers.” But since the big messages are all basically the same, the words quickly lose their real meaning to employees — if they had any in the first place.

Enron is a great example. Before the energy conglomerate’s collapse in 2001, I had the opportunity to review Enron’s values. I was shown a wonderful video on Enron’s ethics and integrity. I was greatly impressed by the company’s espoused high-minded beliefs and the care that was put into the video. Examples of Enron’s good deeds in the community and the professed character of Enron’s executives were particularly noteworthy.

It was one of the most smoothly professional presentations on ethics and values that I have ever seen. Clearly, Enron spent a fortune “packaging” these wonderful messages. It didn’t really matter. Despite the lofty words, many of Enron’s top executives either have been indicted or are in jail.

The situation couldn’t be more different at Johnson & Johnson. The pharmaceutical company is famous for its Credo, which was written many years ago and reflected the sincere values of the leaders of the company at that time. The J&J Credo could be considered rather quaint by today’s standards. It contains several old-fashioned phrases, such as “must be good citizens — support good works and charities — and bear our fair share of taxes” and “maintain in good order the property that we are privileged to use.” It lacks the slick PR packaging that I observed at Enron.

Yet, even with its less-powerful language and seemingly dated presentation, the J&J Credo works — primarily because over many years, the company’s management has taken the values that it offers seriously. J&J executives have consistently challenged themselves and employees not just to understand the values, but to live them in day-to-day behavior. When I conducted leadership training for J&J, one of its very top executives spent many hours with every class. The executive’s task was not to talk about compensation or other perks of J&J management; it was to discuss living the company’s values.

My partner, Howard Morgan, and I recently completed a study of more than 11,000 managers in eight major corporations. (See “Leadership Is a Contact Sport,” by Marshall Goldsmith and Howard Morgan, s+b, Fall 2004.) We looked at the impact of leadership development programs in changing executive behavior. As it turns out, each of the eight companies had different values and different words to describe ideal leadership behavior. But these differences in words made absolutely no difference in determining the way leaders behaved. One company spent thousands of hours composing just the right words to express its view of how leaders should act — in vain. I am sure that the first draft would have been just as useful.

At many companies, performance appraisal forms seem to undergo the same careful scrutiny as credos. In fact, more effort seems to be given to producing the perfect words on an appraisal form than to managing employee performance itself. I worked with one company that had used at least 15 different performance appraisal forms and was contemplating yet another change because the present sheet “wasn’t working”! If changing the words on the page could improve the performance management process, every company’s appraisal system would be perfect by now.

Companies that do the best job of living up to their values and developing ethical employees, including managers, recognize that the real cause of success — or failure — is always the people, not the words.

Rather than wasting time on reinventing words about desired leadership behavior, companies should ensure that leaders get (and act upon) feedback from employees — the people who actually observe this behavior. Rather than wasting time on changing performance appraisal forms, leaders need to learn from employees to ensure that they are providing the right coaching.

Ultimately, our actions will say much more to employees about our values and our leadership skills than our words ever can. If our actions are wise, no one will care if the words on the wall are not perfect. If our actions are foolish, the wonderful words posted on the wall will only make us look more ridiculous.

License to Operate
In recent years, Booz Allen and the Aspen Institute noticed a marked increase in discussions about the principles that govern commercial enterprises. Both organizations also realized that more research was needed to systematically identify how companies define, apply, measure, and benefit from their corporate values, and how this varies by region. Our survey was an attempt to begin to fill the gaps between a growing practice and its results.

The survey found that 89 percent of respondents globally possess written values statements, and that nearly three-quarters believe that both executives and employees are under significant pressure to demonstrate strong corporate values. The vast majority of respondents’ corporate values statements — 90 percent — emphasize ethical behavior and integrity. This holds true whether the company is public or private, whether it is large or small, and regardless of its country of origin. (See Exhibit 1.)

Ethics-related language in formal statements has long been a priority for many business executives; in 1943, Johnson & Johnson promulgated its famed one-page Credo, which articulates the company’s “first responsibility” to “the doctors, nurses and patients, to mothers and fathers and all others who use our products and services,” as well as to “the men and women who work with us throughout the world,” “the communities in which we live and work and to the world community as well,” and “our stockholders.” The prevalence of ethics-related language today appears, though, to do more than set corporate expectations for employee behavior; it is, effectively, a part of a company’s license to operate in a more complex regulatory and legal environment.

The importance of these statements of belief has grown so quickly that many companies now can’t imagine doing business without them. “We’ve developed a set of values that everyone understands and that have real meaning,” says Lisa Colnett, human resources chief at Celestica, the Canadian electronics manufacturing company. “They are prescriptive and explicit and, at the same time, cover a wide range of stakeholders, including customers, employees, and shareholders. The point is, we are a global company and we want everyone to work together by the same sets of ethics and values to achieve the company’s goals.”

After ethics, the most prominent feature of corporate values statements is the set of values relating to company functions, rather than values that relate to the company’s broader role in society. Commitment to customers, for example, is nearly as prominent in values statements as ethics, and commitment to employees and teamwork/trust are not far behind, with each articulated by more than 75 percent of companies. Social responsibility/corporate citizenship is cited by two-thirds of respondents, but environmental responsibility and commitment to diversity are articulated by fewer than half.

Interestingly, some of the values often closely associated with revenue or earnings growth — such as initiative, adaptability, and innovativeness — appear in only 30 to 60 percent of the respondents’ formal values statements.

But “financial leaders” are different. We asked respondents to self-identify financial leadership (exceptional business results), and then tested the results by scrutinizing financial statements for the publicly traded companies. Among these confirmed financial leaders, 98 percent include ethical behavior/integrity in their values statements, compared with 88 percent for other surveyed public companies. Far more of the financial leaders include commitment to employees (88 percent versus 68 percent), honesty/openness (85 percent versus 47 percent), and drive to succeed (68 percent versus 29 percent). Forty-two percent of the financial leaders emphasize adaptability in their values statements, compared with a mere 9 percent of other public companies.

There are also striking regional differences in the values companies emphasize, which we believe reflect differing traditions and expectations about business’s role in society. (See Exhibit 2.) Nearly three-quarters of Asia/Pacific firms include social responsibility/corporate citizenship in their values statements, followed by European firms at 69 percent. Only 58 percent of North American companies include social responsibility. Environmental responsibility also ranks significantly higher in Europe and Asia/Pacific than in North America. North American companies, however, are significantly more likely to cite ethical behavior than firms in Europe and Asia — a reflection, we believe, of both the recent attention to corporate scandals in the United States and media scrutiny of business in the U.S.

Of particular interest is the discovery that some of the values most closely linked to growth and performance and conventionally associated with American culture are more esteemed outside the U.S. For example, almost three-quarters of European companies value innovativeness and entrepreneurship; only half of U.S. companies articulate this principle — a counterintuitive finding that should prompt introspection among American executives.

Values in Action
The last three years have seen a relentless succession of stories about the harm companies and their shareholders have suffered from ethical breaches and noncompliance with regulatory standards and legal norms. Billion-dollar fines, protracted lawsuits, criminal convictions of executives, severely tarnished corporate reputations — even the evaporation of large companies — have become distressingly familiar. Given the frequency and notoriety of the scandals, it is perhaps not a surprise that a huge segment of the respondents believe that articulated values are essential to mitigating legal and regulatory risk. Ninety percent agree that a strong corporate statement addressing ethical values is critical in encouraging individual employees to take appropriate actions and to inform their managers when something seems wrong. Eighty-one percent say they have management practices in place that are “considerably effective” or “very effective” in fostering ethical behavior and integrity among individuals.

However, the benefits of corporate values transcend legal and regulatory compliance. We asked executives to specify the factors that are important to their business strategy, and also to pinpoint which of those factors can be affected positively by the active management of values. Their responses show clearly that values are deemed most critical in two strategic areas: reputation and relationships. Strong brand equity and the overall standing of the company correlate highly with a commitment to corporate values. So does the robustness of the firm’s associations across its extended enterprise, from suppliers to employees to customers. (See Exhibit 3.)

Although previous studies have shown a strong relationship between values-based management and risk management, our findings were ambiguous. The lack of awareness by companies of the relationship between values and risk management is puzzling. In recent years, companies around the world have understood and acted on risks that exist outside the traditional confines of financial risk and operating risk. Today, firms spend abundantly to protect against reputation risk; the “war for talent” among companies has made them aware of the importance of their work forces, their capabilities, and worker replacement costs — another form of risk. Recent client work by Booz Allen demonstrates that risk management is important both in protecting against potential problems and in taking advantage of opportunities. Of the top 20 enterprise risks measured on shareholder-value impact in one recent case, more than half involved corporate reputation; brand; or relationships with suppliers, customers, and employees — all elements that companies in this survey cited as being strongly affected by values. In light of the massive shareholder destruction that has taken place over the last several years, we find it troubling that more companies do not recognize the existence of the relationship between articulated values and risk management.

Financial leaders appear to be doing a better job than other companies in linking corporate values to corporate operations. For example, nearly all financial leaders (94 percent) say they have practices in place to ensure that their values are aligned with those of their suppliers, distributors, and partners, whereas only 64 percent of other public companies do. Financial leaders are also significantly more likely to report that their management practices are effective in fostering a variety of behaviors related to better business performance — including the core operating behaviors that influence growth. Seventy-five percent, for example, say their management practices are very effective in encouraging teamwork and trust, compared with fewer than half of the other public companies. About 60 percent of the financial leaders say their practices are very effective in promoting initiative, adaptability, and innovativeness/entrepreneurship, compared with about 30 percent for the other public companies.

Financial leaders also believe social responsibility and environmental responsibility have a positive financial impact. Nearly half (49 percent) believe that environmental responsibility has a positive impact on financial performance in the short run, compared with 34 percent for the other public companies. Sixty-six percent of financial leaders see a positive short-term impact from social responsibility, compared with 54 percent for other public companies.

Measuring Return
It’s possible that a majority of companies have difficulty connecting values to operational results because values such as honesty/openness, initiative, and entrepreneurship seem intangible. Even the most advanced nonfinancial measurement tools are still quite limited in their ability to show a clear connection between principles, such as trust, and business goals, such as adaptability, efficiency, and growth in revenue and earnings.

More than two-thirds of companies report that they collect some form of information for assessing the long-term financial impact of upholding values. However, there is little commonality among these companies as to the type of information collected. (See Exhibit 4.)

Measurement is most commonly used to assess how values affect employee retention and recruitment: More than half of respondents indicate that their companies address the issue by employee satisfaction surveys. However, many such surveys are limited in their scope, measuring only satisfaction, and missing the opportunity to measure the degree to which values are embedded in everyday action. As a result, such surveys may be failing to capture important information about people, performance, and strategy.

Indeed, metrics are distinguished more by what is missing than by what is present. Even activities that respond well to values-based management are infrequently measured. For example, although nearly two-thirds of respondents agree that values can strongly affect customer loyalty, far fewer actually measure their customers’ attitudes toward and perceptions of their values. Fewer than one-third of companies use consumer preference data regarding their company’s values and/or social impact. And in their strategic planning process, fewer than one-quarter use customer preference models to assess the impact of upholding corporate values.

Practice Makes Perfect
How do companies align values and strategy? In other words, which management practices reinforce values in the organization and which factors enable executives to make decisions consistent with their corporate values? Our survey shows that the behavior of the chief executive officer is critical.

Eighty-five percent of the respondents say their companies rely on explicit CEO support to reinforce values, and 77 percent say CEO support is one of the “most effective” practices for reinforcing the company’s ability to act on its values. (See Exhibit 5.) It is the leading choice across geographies and industries, regardless of company size. In contrast, although a substantial majority of the respondents say they use practices such as corporate values statements, performance appraisals, internal communications, and training to reinforce values, fewer than half call these practices the “most effective.”

Why do companies continue to employ these practices if they are not as effective as CEO support? Like any other business objective, successful management of values cannot be executed through a strong top leader alone; it also requires a “virtuous circle” of management where dispersed leadership, strategy, practice, and measurement are mutually reinforcing.

For example, although only 37 percent of companies see a values statement as one of the “most effective” practices in and of itself, 81 percent still feel the need for such a statement, in part because it is the basis for reinforcing other, sometimes more important, practices. (For a chief executive to show explicit support for the company’s values, for example, it helps to have a values statement to which the CEO can refer.) Similarly, if performance appraisals nominally include values, but there is no senior support behind them, then they are likely to be empty words on a piece of paper. And if the CEO is communicating a set of values, but performance appraisals undermine his or her message, the CEO’s communication is less effective.

Regional variations on the factors that help align practices and values are significant, although globally, two top the list: the behavior of the company’s CEO, and corporate strategy itself. In North America, it’s personal. Seventy-three percent of respondents in the U.S. and Canada say that “my personal values system” is a primary enabler for aligning values with decision making, compared with 60 percent who cite corporate strategy. Beyond these enabling factors, no factors score higher than 40 percent among North American respondents.

In Europe and Asia/Pacific, only 47 percent and 35 percent, respectively, select “my personal values system” as one of the top five factors enabling decision making consistent with corporate values. Among Asian companies, values-based decision making is driven much more by corporate strategy (78 percent) and customer demand (53 percent) than is the case at companies in North America and Europe.

As for factors that inhibit the alignment of values and management decisions, one stands out. Among financial leaders, fewer than one-third say short-term economic costs hinder alignment with values; among other public companies, however, more than half are deterred by the short-term costs.

Embracing Opportunity
Our survey shows that values are seen by the corporation as a critical component of establishing its license to operate. However, the research suggests that while the logic in relating values-based management to business performance has a strong following among executives around the world, the management practices and measurement techniques related to the values are works in progress at most companies. Specifically, there seems to be a lack of recognized “best practices” in establishing linkages between values and both long-term strategic goals and shorter-term results. There is also relatively little agreement on what works and what doesn’t work, both in aligning values with strategy and in embedding values in management processes.

Executives generally see the impact of values on important strategic objectives relating to corporate reputation and relationships, as well as to product quality. However, most have a harder time seeing how values directly affect the top and bottom lines. This is not surprising, because business has always had a hard time dealing with intangibles. Consider, for instance, the decades’ worth of discussion, academic debate, and trial and error that have gone into defining and measuring the returns on investment in brand, research and development, and training. In the same way that techniques have been developed to measure the returns on these intangibles, leading companies are beginning to develop ways to measure the return on values.

The study does show that companies that can be called financial leaders have come further in understanding the relationships between values and performance, that they are doing a better job of exploiting them, and that their more comprehensive approach to values is associated with superior financial performance. This suggests that, although all companies may be convinced that values are important for avoiding risks, many have yet to discover how to use them to grasp opportunities. It also suggests that there is substantial scope for identifying a set of best practices that may some day enable all companies to better measure and align their values with their strategies.

So the next set of imperatives is for business leaders to move from talking about values and viewing them defensively to embracing them in order to drive corporate performance and change — and for executives at companies that have figured out the linkages to do a better job of demonstrating their success. Consumers, investors, and other constituencies become leery of corporate imperatives that don’t deliver demonstrable results, and corporate values are no exception. A commitment to corporate values may be in vogue, but the public will remain suspicious until corporations both understand and can demonstrate that they are committed to using values to create value.

“By making values fundamental to your organization...you can reduce risks in most situations.”

The British mobile telecommunications company Vodafone views its commitment to values as a first line of defense against risk. The company believes in four primary values: “passion for customers,” “passion for our people,” “passion for results,” and “passion for the world around us,” underpinned by acommitment to six primary business principles. More than any set of systems or processes, these rules of behavior can protect a company from harmful incidents that could potentially damage performance or reputation, says Vodafone director Devin Brougham. “By making values fundamental to your organization... you can reduce risks in most situations,” Mr. Brougham says. “If you don’t have a culture of ethical decision making to begin with, all the controls and compliance regulations you care to deploy won’t necessarily prevent ethical misconduct.”

The challenge is to ensure that these values take hold. “Training, senior management advocacy, and values-focused performance evaluation are all part of our approach,” says Mr. Brougham. “And importantly, our employees have a clear understanding of working in this expected framework.”

 

Environmental Analysis-Vodafone

Introduction

Marketing environment could be treated as periphery in which an organization operates its business and the business situations which could be suitable or adverse for the organization. The elements of the marketing environment are external, internal and industrial environment (Mead and Andrews, 2009). Here in this report the special consideration has been paid to understand the impact of various environmental factors on the business operations. For the same purpose PEST and SWOT analysis has been done so that the information about external as well as internal environment could be gained. The selected organization for current scenario is Vodafone one of the world’s largest telecommunication sector organization.

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2.1 Explain how economic systems attempt to allocate resources effectively

Vodafone is UK based organization and has built its reputation into the telecommunication sector. It is world’s 2nd largest mobile telecommunication company and was established in the year 1991. Vodafone provides its services in more than 60 countries and due to worldwide operations, the level of profit is also high. The number of employees for the cited organization is approx 90000. The major objective of Vodafone is to improve their telecommunication services and to deliver the excellent network facilities to the customers. Ahead company is dedicated to maintaining their market leadership position.

The company deals in both product and service sector but mainly their categorization are more suitable in the service sector. The company deals in the area of internet services, mobile network, and digital television. The pricing strategy for the company is very competitive and on place mix they have their operations more than 60 countries. In some areas Vodafone works in partnership and regions, they have their operations without any partnerships. As Vodafone has its operations all over the world, so they have access to all kind of promotional channels. They use internet platform, social media, traditional channels to disseminate the product offers and most importantly the advertisement launched by Vodafone could be considered as most innovative and informative. Thus, it is a very small description about company’s marketing mix elements.

Task 2 PEST analysis

Definition of PEST analysis)

PEST analysis is an analysis that consist the study of external factors with relevancy to any business. The suitability or the unfavorable situations could be identified with the help of PEST analysis. It involves the political, economical, social and technological factors. The description of PEST analysis, with the context of Vodafone, is given below:

Political environment- The definition of political environment state that in which the role of political factors and legal aspects is huge could be called as political environment. It includes the political system, government legal policies, political stability, interventions, and entry and exit policies, distribution of resources to any industry and tax structure (Chen and Mohamed, 2008). In next five years the political environment could be in favor for the Vodafone.

  • Less political interventions: The communication and internet services have become reason for the growth and development of any country. Thus the Vodafone may get support from government of various countries rather than much political interventions.
  • Current positive liaising: Currently the position of Vodafone is excellent at international platform. They have good liaising with the local governments and it could create positive political environment for Vodafone in next five years. But to avail the benefit of such positive element the political stability is required.
  • Tax burden: With respect to tax structure the Vodafone could face certain problems. The tax structure could increase and it could be treated as extra burden over the company.
  • Strict entry policies: The entry policies within the telecommunication sector are strict so in next five years the level of competition could remain low (Hamilton and Webster, 2012).

Economic environment: The economic environment is the environment in which money or finance related factors affect the whole economy. It includes the currency fluctuations, unemployment, earning and spending capacity of local residents, exchange rates, inflation etc.

  • Less unemployment: Every government is making huge efforts to improve the level of employment within their country so more number of people can afford the internet services and mobile connections.
  • Problems in Euro zone: Due to economic crisis in Euro zone the Vodafone can face problems in ensuring the higher profits and increment in sales revenue. In the situation of economic turbulence Vodafone may need to bring some changes in their current strategies (De Giovanni, 2012).
  • Earning and spending capacity: Currently the people have excellent earning and spending capacity, due to high disposable income, which is highly favorable for Vodafone and they could ensure their sustainability in various regions and areas.

Social environment: The social environment is the environment in which the social and cultural factors are responsible for the company’s effective decision making process. It includes the language, local residents and their values, habits of people, religion, family trend, population etc.

  • Social acceptance: The Vodafone is active into the business that has a high level of social acceptance. A number of people wants to get connected with each another, so they accept the internet and mobile communication services.
  • Communication become habit: Another positive feature of social environment is that the communication has become essential for the people. Without mobile and internet the life could not be imagined. Thus Vodafone can increase their market share easily (Yaprak and Sheldon, 2000).
  • Demand increment: As the population is increasing so the demand for the mobile communication technology is increasing however internet yet to remain developed largely as compare to mobile services.

Technological environment: The technological environment deals with the technical elements that have potential to increase the competitiveness of the company. It includes the technological advancement, innovation, up gradation of technology, setting up the mobile operators and towers, improving internet services, improving communication pattern, applications and software etc.

  • Technological advancement: It is one of the most crucial areas where the predictions could never be done. Currently, Vodafone is highly advanced and has its access to new kind of technology within the industry. It improves their services and allows them to get privileges of technological environment.
  • Frequent changes: It could be a problematic technological factor that the change within the technology is very frequent. There is need of aligning with most innovative technology so that the customer experience could be improved (Campbell and Craig, 2008).
  • Internet speed and mobile network are another area of concern in a technological environment which must be considered by Vodafone in next five years.

Task 3 SWOT analysis

The definition of SWOT analysis state it as the analysis that has potential to make company aware about its strength and weak aspects along with the identification of various opportunities and threats. The SWOT analysis is also known as internal environment audit. The description of SWOT analysis, with relevance to Vodafone, has been given below:

Strength:

  • The major strength for the cited organization is that they have international expansion that allows them to improve their profitability in future.
  • Huge market share is also strength for Vodafone that lead towards the market leadership.
  • Brand value and reputation is something that allows them to increase the appealing factor of their brand within the market.
  • The list of strength includes the financial stability for the company and they are able to focus on the development of research and development department (Paul, 2008).
  • Vodafone is second largest mobile communication organization that corroborate towards the high customer loyalty and satisfaction which is one of the most significant strengthening elements for the mentioned business entity.

Weakness

  • The major weakness for Vodafone is that price is comparatively high so they are not able to attract lower level customers.
  • They don’t have their presence into the US market that could have raised their profitability and market share immensely.

Opportunity

  • The major opportunity is that they can focus on technological advancement on the regular basis (Hamilton and Webster, 2012).
  • The market or regions which are still untapped could easily be targeted in upcoming years.
  • The diversification into the various areas of telecommunication industry could be treated as one of the major opportunities for Vodafone.

Threats

  • Economic crisis could be major threat for Vodafone. It can put its impact at their pricing strategy and buying behavior of customers could also be affected.
  • Intense competition within the industry is also a threat for mentioned business entity.
  • Frequent changes in technology could be problematic if company is not able to align with new technology and technical solutions.
  • The introduction of applications like whatsapp, imessage etc. is reducing the dependancy of customers on cellular networks. Their usage of SMS facility has already got diminished among the customers (Hunger and Wheelen, 2000).

Thus these are certain major outcomes of SWOT analysis with the context of Vodafone.

Task 4 Recommendations

The major recommendations in order to improve market positioning are given below

Technological advancement: The first and foremost recommendation is that the Vodafone should do investment on their research and development department at very large scale. It could enable them to improve their service quality and new technological features could ensure the satisfactory and amazing customer experience. Here the internet speed and mobile networks must be improved at very large scale. By developing their technological capacity they can justify their presence into the telecommunication sector. Thus it is recommended that the technological factors must gain priority by the company.

Political support: Another recommendation to ensure the sustainability of company is related to gaining the political support (Cole, 2003). For the same purpose the Vodafone should follow all the legal aspects and need to understand their responsibilities. It could enable them to get the trust of government and the ethical values of the company could be considered as benchmark for other organizations. Tax must be paid without any fault and at local level Vodafone should generate more employment.

Stakeholder mapping: It is another very significant recommendation that could not be neglected by Vodafone under any circumstances. In order to build relationship with various stakeholders there is huge requirement of focusing upon meeting out the expectations of stakeholders. Transparency, CSR, quality, following legal factors, pleasant working environment etc. these are certain factors which could put its positive impact at the mindset of various stakeholders (Werbach, 2009).

Align with Social environment: It is another very significant recommendation that Vodafone is required to understand the market scenario and then the business strategies could be constructed. Without assessing the perception and mindset of customers the Vodafone should not frame their marketing mix elements. The objective of customer acquisition could be attained easily. Thus in the recommendations it is clear that all the external factors must be analyzed properly.

Utilize the resources: Here in this recommendation the major focus has been laid down on utilizing the strength in such a way so that the core competencies could be utilized in an effective manner. Most importantly the Vodafone is required to maximize their strengthening elements so that the opportunities could be availed. Further in order to deal with the threats the thorough market research should be conducted so that the resources could be utilized in effective way to suppress the negative impact of threats and weak elements (Hunger and Wheelen, 2000). Overall the alignment between the external and internal environment is recommended to the Vodafone.

Conclusion

Thus on the basis of above study and thorough research it could be stated that the external and internal environment affect the business and its operations at very large scale. Current situation definitely affect the future course of action. Here in this study with the help of external factors analysis the suitable or adverse elements of business environment could be identified in an appropriate manner. Ahead the report has helped in understating the strength and weak aspects for the Vodafone. Further the opportunities which they can avail and the threats for which the strategies are required have also become clear. Moreover the major learning of the study is related to certain recommendations which have potential to increase the competitiveness of the company in next five years.

References

Campbell, C. and Craig, T. 2008. Organisation and the Business Environment. UK: Butterworth-Heinemann.

Chen, L. Mohamed, S., 2008.Impact of the internal business environment on knowledge management within construction organizations. Construction Innovation: Information, Process, Management. 8(1). pp.61 – 81.

Cole, A. G. 2003. Strategic Management. Cengage Learning EMEA

De Giovanni, P., 2012. Do internal and external environmental management contribute to the triple bottom line?. International Journal of Operations & Production Management. 32(3). pp.265 – 290.

Hamilton, L and Webster, P., 2012. The International Business Environment. Oxford University Press.

Hunger, J. and Wheelen, T., 2000. Strategic management. Prentice Hall.

Mead, R. and Andrews, T. G. 2009. International management culture and beyond. John Wiley and Sons.

Paul, J., 2008. Business Environment. 2nd ed. Tata McGraw-Hill Education.

Werbach, A., 2009. Strategy for Sustainability: A Business Manifesto. Harvard Business Press.

Yaprak, A. and Sheldon, K., 2000. Political Risk Management in Multinational Firms: An Integrative Approach. Management Decision. 22 (6). pp.53 – 67.

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