Business Strategies and Challenges in the Mobile Service Industry

Vodafone is regarded as one of the largest international communication group in the world, with an estimated 290 million client base. Currently, it has equity interest in over 27 countries around Europe as well as more than 40 partner networks across the five continents. Being one of the world’s leading telecommunication companies, Vodafone has a significant presence in the Middle East, Africa, Europe, United States and Asia. This has been achieved through the company’s subsidiary undertakings, associated undertakings, joint ventures and investments.

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According to the global chief marketing officer, Mr. Frank Rovekamp, Vodafone provides a wide range of the best internet ready mobile handsets which offer “technical superiority, sleek design and optimized services at high 3G speed” (Ashton, 2009). Customers can easily access the internet link with family members and friends in a variety of mediums. Moreover, they can access their favorite entertaining services from a various phone models, at achievable prices.

During the 2007 Christmas period, the Vodafone group unveiled a range of its products and services. These included handsets from top tier suppliers whose internet speed was high at 3G broadband access.The group increased the choice of branded Vodafone handsets with majority of the devices supporting a variety of easy to use internet services such as eBay, My Space, Google and You Tube.

Although Vodafone has somehow succeeded in its operation, the company faces thorny issues in its bid to succeed in the international market. For instance, the company was unable to control its US business and improve its underperforming shares. Similarly, there was reduced customer revenue in Europe. Shareholders on the other hand, have continually been frustrated with the company’s seemingly irrelevant strategic bids, with majority of them urging the company to sell its US investment and the returns handed back to the investors. This is seen as the only way the company can make up for its other challenge- the Vodafone share price that is languishing in a narrow trading range of around 140 pounds a share. Vodafone’s market share in the United Kingdom is increasingly becoming smaller due to several factors. Some of these include mergers between rival firms like orange and T-mobile. O2, the leading mobile company in the UK has also eaten into its market share (Ashton, 2009).

The story is the same in when it comes to its Asian operations, especially Japan, where it has failed to get a strong footing. It continues to face immense problems in the country despite changing its management team whose key objective was to increase penetration in the highly populated Asian market. To survive the economic turmoil, the chief executive officer Vittorio Colao, recently announced that the company will cut down $ 1 billion a year from the company’s $ 22 billion running cost by 2011(Peel, 2009).

At the same time, the group will cut jobs to increase cash flow so as to meet targets. He was also on record saying that he will cut Vodafone’s annual revenue target, but at the same time maintain profits. This is expected to reduce revenues to between $ 38.8 billion to $39.7 billion. After taking over in 2005, Mr. Colao admitted that the fall in prices between 12 and 13% had been as a result of stiff competition and regulatory pressure. Consequently, Vodafone was forced to reduce its prices by 50% so to attract new customers. Mr. Colao outlined new strategies for the group which have been in place since 2006. He saw the need to focus on the company’s assets rather than acquiring new ones. According to him, this will go a long way to control the running costs and that the jobs will grow up from 80,000 global work forces.

References

Ashton, J., 2009. Vodafone chief executive Vittorio Colao powers up marketing offensive. Sunday Times. Web.

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Peel, L., 2008. Vodafone chief executive Vittorio Colao reveals 1bn pounds -a year-cutbacks. The Times. Web.

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