Vodafone’s Vision Statement Our vision is to be the world’s mobile communication leader – enriching customers’ lives, helping individuals, business and communities be more connected in a mobile world. Executive Summary Vodafone Group, PLC is the world’s largest cell phone provider with 150 million customers and operations in 16 countries and minority stakes in companies in 10 other countries. Its first mover advantage and acquisition strategy along with its ability to continuously transform and adapt to a changing market has fostered its industry leading growth.The firm is headquartered in Newbury, England and employs 67,000 people around the world.
In 2005, it was the eleventh most valuable company in the world with a market capitalization of $165. 7 billion. The company has a large free cash flow, consistently pays dividends and recently announced a ? 3 billion share repurchase program (Hitt, 2009, p.
335). First mover advantage in the cell phone market was realized when the original firm, Racal Telecom Limited, successfully bid on a private sector U. K. ellular license in 1982 and by 1987 was managing the world’s largest mobile network. Through the early years, they continued to transform the industry by signing the first international roaming agreement with Telecom Finland and later offering the first pre-paid packages precluding the need for a long-term contract. With a change of CEO in 1997, Vodafone’s growth strategy was shifted from organic to aggressive external continuing its globalization by signing more roaming agreements and merging with AirTouch Communications Inc. f the United States more than doubling its customer base to 31 million customers across the globe.
In the late 1990s and early 2000s, the firm continued its aggressive merger and acquisition strategy with the integration of Vodafone’s North American branch into a new entity branded Verizon Wireless together with Bell Atlantic’s mobile business, with Vodafone keeping 45 percent ownership of the new company. Vodafone then launched a successful takeover bid for Mannesmann, the private market leader in Germany, that resulted in its customer base once again being doubled (Hitt, 2009, p. 338).Vodafone’s Global Supply Chain Management System is a comprehensive performance management system wherein all stakeholders in the supply chain have visibility in the process and we can find, analyze and counteract performance degradation immediately (Sekiguchi, 2010). Balanced Scorecard and Key Performance Indicators A balanced scorecard has at its center a definition of a company’s vision and strategy.
Surrounding this, are four boxes each containing objectives, measures, targets and initiatives from financial, customer, internal business process and learning and growth perspectives.The financial section should answer the question of how we should appear to our stakeholders to succeed financially? The customer section should answer how we should appear to our customers to achieve our vision? The internal business processes section should answer what business processes we must excel at to satisfy our shareholders and customers. Learning and growth should answer how will we sustain our ability to change and improve to achieve our vision? (Balancedscorecard. org, 2011) Vision and StrategyAs has previously been stated, Vodafone’s vision is to be the communications leader in an increasingly connected world. To meet the challenges of the highly competitive mobile phone market we will develop four strategies as the basis, along with the vision of the firm, of our balanced scorecard (Sekiguchi, 2010, p. 6): •Drive operational performance by launching new value added services to increase the average revenue per user and attract new and retain existing customers.
Leverage the competitive advantage of our employees performance and customer engagement. Pursue growth opportunities in total communications by targeting mobile data use, broadband and enterprise services. •Execute in emerging markets by focusing on expansion within markets and mergers and acquisitions in key emerging markets such as India, Africa and the Middle East. •Strengthen capital discipline to drive shareholder returns by focusing on free cash flow generation maintain the growth strategy of investing in new and existing businesses and markets. This includes divestitures of loss-making units, a working capital reduction program and a cost reduction program.
These four strategies can now be broken down into strategic objectives while performance measures are developed for each. Using the balanced scorecard, we can link strategic objectives with shareholder value maximization. This is balanced between short and long term financial and non-financial measures and internal and external performance perspectives. We can see how our business strategy provides a coordinated set of actions that are based upon the company’s core competencies, will guide behavior toward achieving performance goals, and fit existing external environmental conditions.A Balanced Scorecard for Vodafone Group PerspectiveStrategic ObjectivesMeasures Customer Drive operational performance through customer value enhancement Customer satisfaction index Maximize the value of existing customer relationships Churn Rate Maintain its strong success in key emerging markets Revenues from emerging markets FinancialFocus on differentiation by offering new offers and services worldwide and instead of cost leadership EBITDA margin Maintain M&A strategy in new and existing marketsFree cash flowDrive shareholder return by growth, divestitures and cost reductionROE Learning and GrowthWorldwide creation of new value-added servicesARPU Focus on growth in mobile data useData revenue Focus on growth in broadband serviceFixed revenue Focus on growth in enterprise servicesEnterprise cell phones Business ProcessesMaintain high employee engagement as a core competencyEmployee turnover rate Two-year working capital reduction program Working capital Cost reduction and efficiency programsOperational efficiency ratio (Sekiguchi, 2010, p. 7) Conclusion As can be seen by its history, the growth of Vodafone has been mainly by an acquisition strategy that followed a pattern of identifying the main players within a national market and buying the competitor to the incumbent mobile operator that was linked to the state-owned telecom monopoly. The newly acquired company is then rebranded at a pace that is least offensive to customers in the local market (Hitt, 2009, p.
340).The combination of setting up the acquired company to be an underdog in the market and tailored rebranding spawns and sustains strategic entrepreneurship throughout the organization by ensuring a certain level of independence for individual country subsidiaries to take into account differing business models and customer expectations. Recently, faced with slowing growth in our core market, the threat of new technologies compromising the current business model, and the need for divestitures in unprofitable markets a review of the corporate strategy has become necessary.
By refocusing on our core competencies of superior skills in acquiring companies, best-of-class business integration and operational capabilities and a high level of employee engagement with customers we can enjoy a sustainable competitive advantage. We can look to the future by keeping Vodafone a wireless company to the core while being technologically innovative by continuing to offer new services (Hitt, 2009, p. 348). References Balancedscorecard. org (2011).
Balanced scorecard basics [Image of graph]. Retrieved from http://www. balancedscorecard. org/BSCResources/AbouttheBalancedScorecard/tabid