VODAFONE

NANDHINI KANNAIYAN (13AB18)

SAMYUKTHA (13AB25)
SUKANYA (13AB35)
SWATHITYA (13AB36)
THANGARAJ (13AB37)

TABLE OF CONTENTS

PAGE NUMBER

The Vodafone Story, Vision and Mission Statement

Company Values and Strategic Objectives

The Competitive Profile Matrix (CPM)

5-7

The External Factor Evaluation (EFE) Matrix

8-10

The Internal Factor Evaluation (IFE) Matrix

11-13

SWOT Analysis

14-15

The Strategic Position And Action Evaluation (SPACE)

Matrix

16-17

Boston Consulting Group (BCG) Matrix

18-20

The Internal-External (IE) Matrix

21

The Grand Strategy Matrix

22-23

QSPM

24-25

Porters Five Force Model

26-33

Conclusion

34

THE VODAFONE STORY

We're one of the world's leading mobile communications providers, operating in more than 30
countries and in partnership with networks in over 40 more. Across the world, we have
almost 360 million customers and around 19 million in the UK. We made the first ever
mobile phone call on 1 January 1985 from London to our Newbury HQ. Still located in
Newbury, we now employ over 8,000 people across the UK.
WHO WE ARE
We're not about flashy technology or about doing things just for the sake of it. We focus on
what makes people's lives easier. Take text messaging, for example. We came up with that.
Now we deal with over 44 million texts a day.
OUR VISION
Considering how far things have come in just 20 years, predicting the future is never easy in
our business. As nice as a crystal ball would be, we're happy with everyone sharing our
ambition. That way, we're far more likely to achieve it.
We see our future in outstanding data services and products, backed up by the best customer
experience in the business. And our targets are big which means millions of customers
using our data services every day.
MISSION STATEMENT
Well enhance value of our stakeholders and contribute to society by providing customers
with innovative, affordable and customer friendly communication services.
Through excellence in our services we aspire to be the most respected and successful
telecommunications company in India
We see our customers, employees, shareholders and the community we operate in as our most
important stakeholders.

OUR VALUES

Were obsessed with giving exceptional customer service. Were hands-on, positive and
always looking for fresh ways to deliver. The essence of who we are underpins our values.
And by listening to our people, we've found that three things sum up what we're all about:

Speed were focused on bringing innovative new products and services onto the
market quickly

Simplicity we make things easy for our customers, partners and colleagues

Trust were reliable and transparent to deal with

OUR STRATEGIC OBJECTIVES

Revenue stimulation and cost reduction in Europe
Innovate and deliver on our customers total communications needs
Deliver strong growth in emerging markets
Actively manage our portfolio to maximise returns
Align capital structure and shareholder returns policy to strategy

THE COMPETITIVE PROFILE MATRIX (CPM)

4

The Competitive Profile Matrix (CPM) identifies a firms major competitors and its particular
strengths and weaknesses in relation to a firms strategic position. The weights and total
weighted scores in both a CPM and an EFE have the same meaning. However, critical
success factors in a CPM include both internal and external issues; therefore, the ratings refer
to strengths and weaknesses, where 4 = major strength, 3 = minor strength, 2 = minor
weakness, and 1 = major weakness.

Airtel

Vodafone

Critical Success Factors

Reliance

Weight

Rating

Score

Rating

Score

Rating

Score

1. Number of Subscribers

0.20

0.8

0.6

0.4

2. Market Share

0.10

0.4

0.3

0.4

3. Connectivity

0.15

0.3

0.6

0.45

4. Customer care

0.10

0.3

0.4

0.1

5. Value added services

0.10

0.3

0.3

0.2

6. Innovation in Services

0.10

0.4

0.2

0.3

7. Individualized attention

0.05

0.15

0.2

0.1

0.10

0.3

0.3

0.2

0.05

0.15

0.2

0.1

0.05

0.15

0.2

0.05

8. Advertising and
Promotion
9. Market segmentation
(Target markets and
Ages)
10. Attractiveness of
schemes (Eg: Booster
pack)
TOTAL

1.00

3.25

3.3

2.3

Remarks:
1. Subscriber base:
Airtel: As of March 2013 it has18.81 crore subscribers. The subscriber base has
increased from 867 million in April 2013 to 870 million at the end of May 2013,
registering a monthly growth of 0.37%. Rural subscriber base is at 82.16 million.
Vodafone: Market share of 23.05% As of March 2013, Vodafone India had about
15.23 crore customers with biggest rural subscriber base at 82.24 million a tad higher
than Airtels rural subscriber base.
Reliance: A subscriber base of 12.29 crore at the end of March 2013.
5

Source:http://gadgets.ndtv.com/telecom/news/telecom-subscriber-base-rises-to-8980-crorein-march-trai-373082
2.

Market share as of March 2013:

Airtel: 21.69%
Vodafone: 17.56%
Reliance: 14.17%
Source: trai.png

3. Areas of Operation:
Airtel: All India. It operates in 20 countries across South Asia and Africa.
Vodafone: All India. Operates in 30 countries and has partner networks in over 40
additional countries
Reliance: All India (except Assam and NE)
4. VAS: They are services that allow customers to access and consume various genres
of entertainment, sports, devotional and other utility services. Revenue from VAS are
as follows.
Airtel: 9.90% (Rs. 1082.70 crore) of Total revenue as ofQ3-FY13. It provides Mhealth, M- education, M- agriculture, M-infotainment etc.
Source:http://www.medianama.com/2013/02/223-airtel-data-arpu-subscribers-q3- fy13/

Vodafone: Revenue from VAS of Vodafone India was around Rs 11.77 billion for
FY13, decreased by 10.8% from 13.19 billion in FY12.

Source:http://www.medianama.com/2013/05/223-vodafone-india-q4-fy13-earnings/

Reliance: Provides services such as M-education, M-agriculture, M-infotainmentetc.

Financial data not available.

5. Innovation in services:
Airtel and Vodafone: It provides variety of services like DTH, broadband and mobile
services. Vodafone doesnt provide DTH services. Large amount of finance is from
its broadband services. Airtels GPRS service is economical than Vodafone but
Vodafone has better range and International network when compared to Airtel. Also,
Airtel mobile internet is much more reasonable and affordable in many parts of the
country as compared to Vodafone
Reliance: Reliance Jio which has pan India spectrum will provide 4G service which
will be 10-12 times faster than 3G. RJIL is the only company in India to have
nationwide 4G spectrum.
6. Advertising and Promotion:
Airtel: Advertises heavily and has effective sales promotion. It spent 2238.9 crores in
advertising as of June 2012 and added 6.02 million subscribers as a result.
6

Vodafone: This also has effective marketing strategy called Rebranding after the
acquisition of Hutchison Essar. Most successful ad would be wacky character
Zoozoo which was a huge hit among Children and teenagers.
Reliance: It does not mention Advertisement costs in its Quarterly results.

7. Market Segmentation:
Airtel:

Demographic segment-Middle and Lower Income groups (Bottom Of Pyramid)

People of 20-28 years of age
Target marketing: People living in villages, Teenagers and Businessmen.

Vodafone:

Geographic segment- Rural India (justified by products like chota recharge)and

Urban India
Target Marketing: People living in villages, Teenagers and Businessmen.

Reliance:

It targeted internally. First set of customers were Reliance officials.

Geographic segment: Both Urban and rural India.

Interpretation:
Vodafone is slowly overtaking Airtel to reach the number one position in the telecom industry
in India. It needs to innovative its services and foray into emerging technology like cloud
computing to sustain its position in the Indian market.

INDUSTRY ANALYSIS:
THE EXTERNAL FACTOR EVALUATION (EFE) MATRIX
7

An External Factor Evaluation (EFE) Matrix allows strategists to summarize and evaluate
economic, social, cultural, demographic, environmental, political, governmental, legal,
technological, and competitive information.
Each factor has been assigned a weight that ranges from 0.0 (not important) to 1.0 (very
important)Each factor is also assigned a rating between 1 and 4 to indicate how effectively
the firms current strategies respond to the factor, where 4 = the response is superior, 3 = the
response is above average, 2 = the response is average, and 1 = the response is poor. Ratings
are thus company-based, whereas the weights are industry-based.
Threats
1. Continuously decreasing Average Revenue Per User

0.10

0.3

2. Excessive competition that leads to price wars

0.10

0.4

3. Lack of proper infrastructure

0.09

0.18

4. Non- availability of adequate 3G spectrum

0.07

0.21

5. High regulatory charges

0.08

0.16

6. Low profitability in rural areas

0.06

0.18

7. Growing multiplicity in SIM ownership

0.04

0.08

Total

1.00

Key External Factors

Weight

2.76

Rating

Weighted Score

Opportunities
1. Rapidly growing subscriber base

0.08

0.32

2. Huge market potential

0.08

0.24

3. Government policies and regulations

0.10

0.3

4. Growing revenue from Mobile Value Added Services

0.07

0.14

5. Significant revenue from Mobile Number Portability

0.04

0.08

6. Steading rising penetration rate

0.04

0.12

7. Innovation in Service and Technology

0.05

0.05

REMARKS:
OPPORTUNITIES:
1. India is the second largest telecommunication market. It has grown from 33.69
million subscribers in March 2004 to 898 million subscribers as of March 2013 and
has reached about 904.46 million at the end of July 2013.
8

2. Though the urban market looks like it is fast reaching the saturation point, 70% of
population live in rural areas which holds huge potential to drive future growth of our
telecom companies.Tele-density in rural areas is only just about 15%. The government
has proposed to achieve a rural Tele-density of 25% by deploying 200 millionconnections at the end of the Eleventh Five Year Plan. The optimum utilisation of
USO fund and increase in mobile services might help the government attain this goal.
3. In order to encourage consolidation in this sector, an empowered group of ministers
(EGoM) has cleared the mergers and acquisitions (M&A) guidelines for the
telecommunication sector. The Telecom Commission has authorized Rs.5,000crore
(US$ 817 million) government proposal to give away 2.5 crore mobile handsets at
subsidised prices.
4. VAS constitutes 7 -10% of total telecom revenue for Indian telecom operators. VAS
includes,Digital music consisting of CRBT and ringtones alone constitutes 35% of
VAS revenue.
5. Astro, Bollywood, Cricket, and Devotional continue to be most preferred services.
Music downloads, Internet Apps, Search has seen an upsurge. Services like Mobile
banking, 3G, 4G and M-commerce will see rapid growth.
6.
7. According to a survey conducted by professors from Sardar Patel University, Gujarat,
from among a total of 107 respondents, almost half of the total respondents (57.9 %)
wanted to change their current Mobile Service Provider. Vodafone was the choice of
majority (52.3 %) of the respondents.
8. Tele-density has grown from 112 per cent in urban and 21.2per cent in rural areas in
2009 to around 147 per cent in urban and 41 per cent in rural India as of March 2013.
9. Worldwide Interoperability for Microwave Access (WiMAX) WiMAX could be used
as an alternative to cable and DSL for providing broadband access in rural areas. It
would not only enable high-speed internet services through high bandwidth spectrum
but also prove to be a useful mode of communication in inaccessible terrains.
THREATS:
1. With the easing of FDI, increase in new entrants in this space has resulted in intense
competitive pressure and cut throat pricing which has resulted in declining ARPUs.
2. The fierce price war among the telecom operators has commoditized the market
resulting in branding taken a backseat. This also puts a pressure on the profit margins.
3. The operators should have to incur high initial fixed costs to be able to provide
services in rural areas which lack even basic infrastructure such as road and power.
They also lack trained personnel necessary to operate infrastructure.
9

4. Since spectrum, the most essential resource required to provide services Spectrum is
very Limited/finite and is inversely proportional to the number of operators.
Therefore, larger the number of service providers smaller will be the amount of
spectrum available to each of them.
5. The regulatory charges in the this sector have a complicated structure. The multiple
levies prove as a hurdle to the smooth implementation of telecom projects in India.

6. Continuous supply of electricity, cash economies, operational and security risks and
availability of trained personnel are few challenges faced when going rural.
C K Prahlad said in his book, The Bottom of the Pyramid the aspirations of the
rural consumer is no different from the current consumer .The rural consumer is also
looking for better access and experience to go hand in hand with his own changing
consumption patterns.
7. From among the new additional subscribers, dual-sim contributes to about 30%-35%
for which one of the reasons may be the service of Mobile Number Portability.

THE INTERNAL FACTOR EVALUATION (IFE) MATRIX

Internal Factor Evaluation Matrix is a popular strategic management tool for auditing or
evaluating major internal strengths and internal weaknesses in functional areas of an
organisation. The IFE matrix comprises of factors (Internal strengths and weaknesses).
Each factor has been assigned a weight that ranges from 0.0 (not important) to 1.0 (very
important)Each factor is also assigned a rating between 1 and 4 to indicate how effectively
the firms current strategies respond to the factor, where 4 = the response is superior, 3 = the
response is above average, 2 = the response is average, and 1 = the response is poor. Ratings
are thus company-based, whereas the weights are industry-based.
Key Internal Factors

Weight

Strength
10

Rating

Weighted Score

1) Prominent market position

0.07

0.21

0.1

0.3

people

0.15

0.6

4) Strong customer base

0.05

0.15

5) Global brand strength

0.09

0.18

6) Wide geographical reach

0.13

0.39

1) Centralised management system

0.08

0.08

2) High level of customer churn rate

0.08

0.16

3) Servicing of client needs

0.12

0.48

4) No network coverage in rural areas

0.06

0.18

5) Low return on assets

0.07

0.14

Total

1.00

2) Global presence and diversification

revenue
3) Strong advertising strategies and impact on

Weakness

2.87

REMARKS:
STRENGTHS:
1.BhartiAirtel has a market share o 26.38% during the September 2013 quarter. Vodafone is
in the second position with 23.05%.
Source:www.telecomlead.com
2. Vodafone has expanded its business in different parts of the world like Europe, Middle
East, Africa and Asia, Pacific and Affiliates. It has partnership with mobile operators in over
40 countries and equity interest over 30 countries. It has a diversified revenue base (i.e.)
Germany contributes 18% of the revenue, Italy(13.5%), Spain(12.7%), UK(11.2%),
India(7%). Africa, Central Europe, Asia and Pacific account for 12, 8 and 7.5% respectively.
3. The Zoozoo concept was created specially to convey value added service offering. It was
a creative advertising which has captured the imaginations of millions. This advertisement
gained so much popularity all over the world. It not only helped the company to raise its
profits but also increased its brand value.
11

4. Vodafone is a company with leading market position. Vodafone India has 152.4 million
subscribers as of march 31, 2013. It has postpaid customer base of 8.6 million subscribers as
of Q4 2013. Prepaid customers account for 94.4% of its total customer base. Increased rural
penetration with 73 million rural subscribers.
Source:www.medianama.com; www.vodafone.in
5. Vodafone is present in many countries within Europe. It allows customers to enjoy the
services in their home country. In few countries though Vodafone is not physically present
(eg: Norway) it has strategic alliances which provide better services to the clients. In
Northern and Central Europe Czech Republic, Germany, Hungary, Ireland, Netherlands,
Romania, Turkey, UK.In southern Europe Albania, Greece, Italy, Malta, Portugal, Spain. In
Africa, middle east and Asia pacific Australia, Egypt, Fiji, Ghana, India, New Zealand,
Qatar
Source:www.vodafone.com

WEAKNESSES:
1. Vodafone has a centralised management system which is highly inflexible for today's
competitive market.
2. Churn rate refers to the number of individuals moving out over a specific period of time.
Vodafone has a high level of customer churn rate which is about 33.33%. postpaid churn
declined to 18.2%. prepaid churn declined to 47%. Total churn declined to 47%. This is
common in any subscriber-based service model companies.
Source:www.medianama.com
3. More than 80% of Vodafone's business is running in the Europe. (Vodafone suffered a 4.8
percent hit to organic service revenue in the last three months of 2013 after a poorer
European performance. In Europe, pricing was hit by competition between operators, as
consumers and businesses sought out cheaper phone tariffs)
Source:http://www.ukessays.com/essays/marketing/strategic-recommendations-to-thevodafone-group-plc-marketing-essay.php#ixzz2xVnT9ASW

12

SWOT ANALYSIS:
A SWOT analysis is a structured planning method used to evaluate the strengths, weaknesses,
opportunities and threats involved in a project or a business venture. A swot analysis can be
carried out for a product, place, industry or person.

Strengths: characteristics of a business or project that give it an advantage over others.

Weaknesses: characteristics that place the business or project at a disadvantage

relative to others.

Opportunities: elements that the project could exploit to its advantage.

Threats: elements in the environment that could cause trouble for the business or
project
Strength

Weakness

Prominent market position

Centralised management system

Global presence and diversification

High level of customer churn rate

revenue

low return on assets

Strong advertising strategies and impact

on people

Strong customer base

Global brand strength

Wide geographical reach

Opportunities

Threats

13

Strategic alliances with other companies.

Increasing competition

Increase in popularity of smart phones

Mobile number portability

results in increase in the revenue of

Legal risks

Vodafone.

Market saturation in developed countries

Expansion into the untapped markets.

Emergence of alternative

Introduction of newer technologies.

Revenue from mobile value added

telecommunication technology

services.

High government interference in cellular

sector

SO Strategy:

Strategic alliances and teaming up with another operator helps Vodafone to reduce its
costs.

Vodafone has developed networking system with modern technology. It helps the
company to diversify in many countries

WOStrategy:

Vodafone is customer focused and is developing new products and services with
advanced technologies. Providing more added value services to the existing customers
helps to retain them.

ST Strategy:

Innovative mobile advertising and introduction of features helps in meeting the

competition from other firms.

WT Strategy:

Mobile number portability can be reduced by meeting the needs and demands of local
customers

14

THE STRATEGIC POSITION AND ACTION EVALUATION (SPACE) MATRIX:

The Strategic Position and Action Evaluation (SPACE) Matrix is made of a four-quadrant
framework which helps the given enterprise to find the best suited strategy from the four
strategies, such as, aggressive, conservative, defensive or competitive strategies.
The internal dimensions (Financial Strength FS and competitive Advantage CA) and the
external dimensions (Environmental Stability ES and Industrial Strength IS) forms the axes
of the SPACE graph. The strategic positioning of an enterprise in marketplace can be
determined by the above four factors.
Competitive Analysis (CA)
-6(worst) -1(best)
Product quality
-2
Market share
-1
Customer loyalty
-2
Technological know-how
-2
Control over suppliers
-3
Product/service lifecycle
-2

Industry (IS)

Average =-2

Average =3.4

Financial Strength (FS)

Environmental (ES)

+6(worst) +1(best)
Ease of entry
+4
Growth potential
+4
Profits
+2
Capital intensity
+3
Financial stability
+3
Resource utilization
+3
Technology know-how +5

15

Working capital
Liquidity
Return on investment
Leverage
Ease of exit
Business risk

+6(worst) +1(best)
+2
+3
+4
+3
+3
+2

Average =2.8

-6(worst) -1(best)
Price of competing products -3
Barriers to entry
-4
Technological changes
-4
Competitive pressure
-2
Demand variability
-3

Average =-3.2

Total X-axis Score = IS+CA = 3.4+(-2) = 1.4

Total Y-axis Score = ES+FS = (-3.2)+2.8 = -0.4
The co-ordinate is (1.4, -0.4)

16

INTERPRETATION:
The SPACE matrix suggests Vodafone to follow competitive strategy, where, Vodafone has
high competitive advantages in a high-growth industry. Vodafone can follow,

Backward, forward, horizontal integration

Market penetration
Market development
Product development

17

BOSTON CONSULTING GROUP (BCG) MATRIX:

Boston Consulting Group invented the BCG matrix, which is a tool that helps an enterprise to
classify and evaluate its products/services.
BCG matrix is a decision making tool that helps the enterprise to balance the activities that
make profits, ensure growth, constitutes the future of the firm and heritage of the enterprise.
BCG matrix is a four-quadrant matrix where the product/service of the company is placed in
each quadrant according to the market share and market growth of the product/service.

Revenue distribution based on the types of service of Vodafone by 2013

18

CDMA, LTE - STAR:

LTE (Long Term Evolution)
CDMA (Code Division Multiple Access)
As demand for mobile services moves from voice and text to data, Vodafone have been
investing to build a superior data network
This trend is being driven by a number of factors such as increased usage of Smartphones and
an increased choice of apps for business and social use.
As a result data traffic increased by more than 53% over the last year and data now accounts
for 73% of the total traffic on our network.
Vodafone, which is operating both CDMA and GSM in 16 countries, is beginning to build 4G
(or LTE) networks, which will at least double the data speeds.
3G Services QUESTION MARK:
Vodafone spends INR 47,301 million in Financial Year 2013 with focus on future growth
areas including 3G and data.
Total data users are 37.3 million, out of which 3G customers are 3.3 million.
3G services are promising services for Vodafone. By boosting this service by appropriate
investments to monitor the growth and maintain a position of strength, Vodafone can become
market leaders in 3G services, which can contribute to the company's profitability.
They are becoming progressively cash cows with market saturation.
Wire Lines, SMS and Calling Services CASH COW:
FixedWire Lines, SMS and calling services are mature and which generate effective profits
and cash, but need to be enhanced in order to secure its future. These services should be
profitable to finance other activities (such as LTE, 3G services) in progress.

19

MMS Services DOG:

MMS is Multimedia Messaging System, which allows users to share multimedia messages
such as audio, video, text, graphs etc.
MMS services are positioned in a declining and highly competitive market. The threat of
substitution is high, with the emergence of various new apps such as WhatsApp, Viber, etc.
Vodafone have to get rid of MMS services, as they become unnecessarily expensive to
maintain. Vodafone must decide whether MMS services still inject liquidity, otherwise it is
wise to eliminate the dogs.

20

THE INTERNAL-EXTERNAL MATRIX

The Internal-External (IE) Matrix positions an organizations various divisions in a nine cell
display. The IE Matrix is similar to the BCG Matrix in that both tools involve plotting
organization division in a schematic diagram.
Strong (3.0 to 4.0)

Average (2.0 to 2.99)

Weak (1.0 to 1.99)

High
(3.0to
4.0)
Mediu
(2.0 to
2.99)
EFE
(2.76)

Low (1.0 to 1.99)

IFE (2.87)

If cell 1, 2 and 3: Grow and Build

Backward, Forward or Horizontal Integration

Market Penetration
Market Development
Product Development

If cell 3, 5 and 7: Hold and Maintain

Market Penetration
Product Development

If cell 6, 8, and 9: Harvest or Divest

Retrenchment
Divestiture

In the above case the lines fall in cells 4 and 7 which indicates that Vodafones strategies
should concentrate on Market development, Market penetration and product development.
(Explained in detail under Grand Strategy Matrix)

21

THE GRAND STRATEGY MATRIX:

VODAFONE
Rapid Market Growth
Quadrant 2
1.
2.
3.
4.
5.
6.

Quadrant 1

Market development
Market penetration
Product development
Horizontal integration
Divestiture
Liquidation

1. Market development
2. Forward integration
3. Backward integration
4. Related diversification

Weak Competitive position

Strong Competitive position
Quadrant 3
1.
2.
3.
4.
5.

Quadrant 4

Retrenchment
Related diversification
Unrelated diversification
Divesture
Liquidation

1. Related diversification
2. Unrelated diversification
3. Joint venture

Slow Market Growth

Interpretation:
Since Vodafone lies in the second quadrant it needs to evaluate their present approach to
either sustain its position or to grow. Vodafone can continue to concentrate on the current
market which includes both urban and rural. They can focus on increasing the rate of teledensity in the rural areas.
Product development: It can foray into cloud computing or provide 4G services to
penetrate deeper into urban area. As cloud computing brings several opportunities as the
users are moving from buying products to buying services

22

Source:http://www.huawei.com/en/about-huawei/publications/communicate/hw080991.htm
Also Vodafone needs to look at horizontal integration since its main competitor Airtel has
raced it to number one position in Mumbai circle by acquiring Loop telecom
(comparatively smaller telecom which was operating only in Maharastra) Loop had a
subscriber base of around 3 million and will take Airtel's combined subscriber base to
around 7 million, compared to Vodafone's 6.9 million.
Source:http://timesofindia.indiatimes.com/tech/tech-news/Airtel-buys-Loop-to-be-No-1telcom-operator-in-Mumbai/articleshow/30642532.cms

23

THE QUANTITATIVE STRATEGIC PLANNING MATRIX- QSPM

Product development
KEY FACTORS

Horizontal
integration

Weight

AS

TAS

AS

TAS

1. Rapidly growing subscriber base

0.08

0.16

0.32

2. Huge market potential

0.08

0.24

3. Government policies and regulations

0.10

4. Growing revenue from Mobile Value

Added Services

0.07

0.28

5. Significant revenue from Mobile

Number Portability

0.04

0.12

0.12

6. Steading rising penetration rate

0.04

0.08

0.12

7. Innovation in Service and Technology

0.05

0.2

0.2

Average 0.10

0.3

0.3

2. Excessive competition that leads to 0.10

price wars

0.4

0.4

3. Lack of proper infrastructure

0.09

4. Non- availability of adequate 3G 0.07

spectrum

5. High regulatory charges

0.08

6. Low profitability in rural areas

0.06

0.18

0.18

SIM 0.04

0.08

0.16

OPPORTUNITIES

THREATS
1. Continuously decreasing
Revenue Per User

7. Growing
multiplicity
ownership

in

1.00
24

STRENGTHS
1. Prominent market position

0.07

2. Global presence and diversification

0.21

revenue
3. Strong advertising strategies and

0.1

impact on people
4. Strong customer base

0.15
0.05

0.2

5. Global brand strength

0.09

0.18

6. Wide geographical reach

0.13

0.52

1. Centralised management system

0.08

2. High level of customer churn rate

0.08

0.24

0.24

3. Servicing of client needs

0.12

0.48

0.36

4. No network coverage in rural areas

0.06

0.18

0.24

5. Low return on assets

0.07

0.28

WEAKNESS

TOTAL

1.00

VODAFONE PORTERS MODEL

TABLE 1: RIVALRY AMONG COMPETITORS
25

2.7

3.27

REMARKS

Attractiveness
LO
HIG
W
H
1 2 3 4
Availability of
closed
substitutes
Switching
Cost
Substitutes
price value
Profitability
of the
producers of
substitutes

High

High

Wors
e

There are many close

substitutes available
to this sector.
The switching cost is
comparatively high.
The price of
substitutes is
comparatively high.

Low

The profitability of
producers is
comparatively low.

Low
Bett
er

High

5
Low

REFERNCE:
a) http://www.bharti-infratel.com/cps-portal/web/pdf/Infratel-WhitepaperGreenTowersP7.pdf
b) https://www.dnb.co.in/IndianTelecomIndustry/OverviewTI.asp
c) https://www.dnb.co.in/IndianTelecomIndustry/OverviewTI.asp
d) http://www.ideasmakemarket.com/2013/08/aug-entry6-analysis-of-indian.html

TABLE 2: BARRIERS TO EXIT

26

Attractive
ness
LO
W

HIG
H
1

Economies
of scale
Product
Differentiati
on
Brand
Identity
Switching
Cost

Large
Restricte
d

Remarks
The Economies of scale
is high.
There are many ways to
find out product
differentiation.
We can easily identify
the brand by seeing.
The switching cost is
high.
There are different
ways of product
differentiation
available.
The capital requirement
needed is very large
amount.
There are many ways to
access the technology.

Restricte
d
Substant
ial

Raw materials can be

procured easily
There are many laws
that being followed.

Access to
channels of
distribution
Capital
requirement
Access to
technology
Access to
raw
materials
Government
Protection

Large
x

High

High

High

Limited
x

REFERENCE:
a)
b)
c)
d)
e)
f)
g)
h)

https://www.dnb.co.in/IndianTelecomIndustry/OverviewTI.asp
https://www.dnb.co.in/IndianTelecomIndustry/OverviewTI.asp
http://www.bgr.in/news/telecom-industry-body-repositions-logo-brand-identity/
https://www.dnb.co.in/IndianTelecomIndustry/OverviewTI.asp
https://www.dnb.co.in/IndianTelecomIndustry/OverviewTI.asp
http://www.icra.in/Files/Articles/2009-March-TelecomInfra.pdf
https://www.dnb.co.in/IndianTelecomIndustry/RegulatoryFramework.asp
http://exploringgeography.wikispaces.com/Chemical+and+Automobile+indust
ies+in+India
i) https://www.dnb.co.in/IndianTelecomIndustry/RegulatoryFramework.asp

27

TABLE 3: BARRIERS TO ENTRY

LO
W

ATTRACTIVENESS
HIG
H

1
Asset
Specializat
ion

Hig
h

Cost of
exit
Governme
nt
restriction
s

Remarks

Sm
all

Hig
h

Sma
ll

Hig
h

Sma
ll

There are
many ways to
procure asset.
The cost of
exit is very
high.
There are
many
government
restrictions
which are
imposed.

REFERENCE:
a) https://www.dnb.co.in/IndianTelecomIndustry/OverviewTI.asp
b) http://www.thehindu.com/news/national/telecom-industry-cracking-underfinancial-pressure/article4902565.ece
c) https://www.dnb.co.in/IndianTelecomIndustry/RegulatoryFramework.asp

28

TABLE 4: THREAT OF SUBSTITUTES

ATTRACTIVENESS
LO
HIG
W
H
1 2 3 4
5
No of
competitors
Industry
Growth

Larg
e

Fixed Cost

High

Differentiati
on
Switching
Cost
Openness
terms of
sales
Excess
Capacity
Strategic
Stakes

High

Ope
n
Sm
all

They are normal.

They have low excess
capacity.

Low

The stake is very high.

Low
x

Low

Hig
h
Hig
h

There are large number of

competitors available.
There is a huge scope of
industry growth.
The fixed cost is usually
high.
There are many ways by
which you can differentiate
the product.
The switching cost is
relatively high.

Fast

Low

Secr
et
Larg
e

Sm
all

Slow

REMARKS

x
x
x
x

TABLE 5: BARGAINING POWER OF BUYERS

ATTRACTIVENESS
LOW
HIGH
1 2 3 4
5

Switching
Cost
Contributio
n To
Quality
Contributio
n To Cost
Buyer's

REMAR
KS

SMA
LL
MAN
Y

LAR
GE

Low
HIGH
LOW

High
LOW
HIGH

Low

High

High
Low

Low
High

FEW

29

Profitability

REFERENCE:
a) https://www.dnb.co.in/IndianTelecomIndustry/OverviewTI.asp
b) http://businesstoday.intoday.in/story/2013-flashback-transition-year-fortelecom-sector-growth/1/201770.html
c) http://www.essay.uk.com/free-finance-essays/indian-telecom-sector.php
d) https://www.dnb.co.in/IndianTelecomIndustry/OperationalPerformance.asp
e) http://www.myacme.org/ACMEProceedings09/p11.pdf
f) http://www.dot.gov.in/sites/default/files/Telecom%20Annual%20Report-201213%20(English)%20_For%20web%20(1).pdf
g) http://m.economictimes.com/news/news-by-industry/telecom/telecom-sectorstruggles-with-debt-issues-companies-eye-new-growthavenues/articleshow/msid-21060065,curpg-3.cms
h) https://www.dnb.co.in/IndianTelecomIndustry/OverviewTI.asp

30

TABLE 6: BARGAINING POWER OF SUPPLERS

ATTRACTIVENESS
LO
HIG
W
H
1 2 3 4
5

REMARKS

Number of
suppliers

SMA
LL

LAR
GE

Availability
of
substitutes

FEW

MAN
Y

Switching
cost
Supplier's
threat of
forward
integration
Industry's
threat of
backward
integration
Contributio
n to quality
Contributio
n to cost
Industry's
importance
to supplier

HIG
H

LOW

HIG
H

LOW

there are large

no of suppliers.
thesubstitutesa
available are
very much
high.
the switching
cost is very
high.
they threat for
forward
INTEGRATION
IS VERY HIGH.

LOW
HIG
H
HIG
H

HIG
H

LOW

LOW

this threat has

very high
integration.
thequlity is
high.
the cost is
high.

LOW

HIG
H

the importance
given is high.

REFERENCE:
a)
b)
c)
d)
e)

https://www.dnb.co.in/IndianTelecomIndustry/OverviewTI.asp
http://www.myacme.org/ACMEProceedings09/p11.pdf
https://www.dnb.co.in/IndianTelecomIndustry/OverviewTI.asp
http://www.myacme.org/ACMEProceedings09/p11.pdf
http://www.scribd.com/doc/85095034/Industry-Analysis-Telecom-MidTermReport-2
f) http://pib.nic.in/feature/feyr2000/ffeb2000/f220220001.html
g) http://www.equitymaster.com/research-it/sector-info/telecom/Telecom-SectorAnalysis-Report.asp
31

h) http://www.ficci.com/sector/39/Project_docs/FICCI_Website_contentTelecom.pdf

TABLE 7: GOVERNMENT ACTIONS

ATTRACTIVENESS
LOW

HIGH

1 2 3 4
Industry
protection

LO
W

Industry
regulation(pollutio
n,etc.,)

HIG
H

Customs and tarif

restrictions
abroad

HIG
H

REMARKS

HIG
H

LO
W
LO
W

the
protection is
very high
the
regulation
given is very
higg.
theu have
very high
tariff
restrictions.

REFERNCE:
a) https://www.dnb.co.in/IndianTelecomIndustry/OverviewTI.asp
b) http://cis-india.org/telecom/resources/trai-act-1997
c) https://www.gov.uk/importing-and-exporting-electronic-goods

32

TABLE 8: OVERALL ASSESSMENT

ATTRACTIVENESS
HIG
LOW
H
1 2 3 4
Barriers
to entry
Rivalry
among
competito
rs
Barriers
to exit
Power of
buyers
Power of
suppliers
Threat of
substitute
s
Governme
nt action
Overall
attractive
ness

REMAR
KS

x
x
x
x
x
x
x

REFERNCE:
a) http://www.thehindubusinessline.com/opinion/now-a-high-entry-barrier-intelecom/article3349867.ece
b) http://www.cci.in/pdfs/surveys-reports/Telecom-Sector-in-India.pdf
c) http://www.itu.int/ITU-D/asp/CMS/Events/2012/pacific-bb/S4_PiRRC_Aslam.pdf
d) http://www.essay.uk.com/free-finance-essays/indian-telecom-sector.php

33

e) http://www.equitymaster.com/research-it/sector-info/telecom/Telecom-SectorAnalysis-Report.asp
f) http://www.ideasmakemarket.com/2013/08/aug-entry6-analysis-of-indian.html
g) http://www.livemint.com/Industry/9JEh45TZDJ1HU1xae9YRTJ/What-lies-aheadfor-Indias-telecom-industry.html
h) https://www.dnb.co.in/IndianTelecomIndustry/OverviewTI.asp

CONCLUSION
In the Mobile Telecommunication Industry, Vodafone is a leading player and has
grown quickly, despite high competition. This success is because of prominently positioning
itself in the global market with diversified services such as 3G, 4G, call and SMS schemes
and strong advertisement strategies which widened the customer base. Increase in popularity
of the smartphones was a tremendous opportunity for Vodafone to increase the revenue
contribution by data usage. As high competition is a threat for Vodafone, it focuses on
retaining the customers by developing new products and services with advanced technologies
and exclusive value added services (VAS) to retain existing customers. From this report, the
SPACE matrix recommends Vodafone to follow competitive strategy, because by utilizing the
internal strength, adopting product development and market development strategies Vodafone
can be successful in the young, highly growing telecommunication industry.

34