Vodafone: Out of Many, One (Extracted from Hitt et al, Case 22, pg.263) The case covers the growth of Vodafone from an early innovator in the 1980s to become the leading UK mobile service network provider and, by 2006, the No.1 international competitor with a presence in 26 countries. In the mobile telecoms industry, national regulations and high fixed costs of infrastructure are formidable barriers to entry.
As a result, early in its development Vodafone decided to gain first mover advantages by extending its global footprint through an array of alliances, joint ventures, and national subsidiary companies resulting from acquisitions. However, following a period of rapid growth, investors and management recognised the need for a period of consolidation and a reappraisal of its international strategy. What followed under Sarin was the move to One Vodafone.
Read carefully, the case study, questions and guidelines which follow. Questions
- Drawing on the value chain framework, analyse Vodafone’s capabilities and evaluate its core competencies in 2005. (35%)
- Discuss how these core competencies are deployed to support Vodafone’s generic competitive strategy choice. (10%)
- Evaluate Vodafone’s acquisition strategy through an examination of: ¢ the pre-acquisition rationale ¢ the effectiveness of its post acquisition integration efforts (use the Haspeslagh and Jemison framework) ¢ conclude on how successful you think its acquisition strategy has been over the period of the case. (30%)
- What international strategy choice is Vodafone pursuing “ global, multi-domestic, or transnational strategy? Give reasons to support your choice of strategy based on its capabilities and organisation structure. (15%) Mark allocated for the presentation of analysis, selection of appropriate tools and use of case evidence. (10%)
Your answer must be derived only from the information on Vodafone contained in the case study. You are not required to go beyond the case end date since your analysis and judgement are being assessed at this point in time, not in the light of subsequent events. As a result you should not include references on Vodafone from the internet or other sources.
Minimum Length: 4500 words. Maximum Length: 5000 words.
The word limit excludes appendices and bibliography. Where a submission exceeds the stated word limit the maximum grade awarded will be P1.
Appendices can be useful to provide additional information from your analysis provided that the key points are incorporated into the main body of the answer. Guidance Notes The assessment feedback sheet at the end of this section gives the marking criteria for the overall case analysis.
Adjust the length of your answers to reflect the % weighting allocated to each question. Remember that in writing your solution to the questions you must not describe what the case says but analyse the information and the evidence/facts in the case to support your answers.
Question 1 asks you to conduct a value chain analysis of Vodafone and derive its core competencies. Divide your analysis into 3 stages:
- Discuss each value chain activity (VC) in turn, from primary through to support activities. Some activities will have more information to discuss than others. Take into account that the primary activities should be appropriate to a mobile network operator.
- Explain what the firm does in each activity but extend your discussion to include a brief evaluation on whether each activity is a strength or a weakness.
- Identify and explain key VC linkages as an intermediary stage to identify core competencies (CCs). These linkages can be: primary to primary; support to support; and primary to support. The linkages are not only between two activities but could link 3 or 4 activities.
Based on the linkages, select those which are core competencies (CCs) and show how they meet the three tests set by Grant’s chapter on ˜The Nature and Sources of Competitive Advantage’ or Barney’s four criteria outlined in unit 4. Most organisations are likely to have only a few CCs. Firms with limited competitive advantage may only have potential CCs which are still under development but have not yet yielded the superior returns associated with competitive advantage.
The focus of your answer is on internal analysis, the S & W of a SWOT not the external analysis (O & T). To analyse Vodafone’s value chain follow the stages of analysis above and review unit 4 in your study guide. A good analysis of capabilities and core competencies will help inform your answers to the remaining questions which is why your answer receives a higher weighting in the overall grade.
In question 2 you are asked to identify Vodafone’s generic competitive strategy choice. Porter’s choices of cost leadership and differentiation are examined in unit 5 in your study guide. Also discussed is the possibility of pursuing both strategies at the same time “ a stuck-in- the-middle strategy or an integrated strategy. Examine the characteristics and key capabilities required to carry out these alternative strategies and assess which generic strategy type matches the capabilities and core competencies you identified in your answer to question 1.
Question 3 switches to methods of strategic development specifically the acquisition strategy followed by Vodafone and is covered in unit 8 in your study guide. The question requires an analysis of the pre- acquisition and post-acquisition stages in the acquisition process as discussed in your prescribed reading in Lasserre chapter 5.
In question 4, you are required to focus on Vodafone’s international strategy choice. The alternative strategies, multi-domestic, global and transnational, are covered in unit 7 in your study guide. To develop an argument to support your international choice work through the elements of the Integration-Responsiveness Grid which apply to the mobile telecoms industry and Vodafone’s capabilities and structure you will have identified in your earlier analysis.