THE INTERNAL ENVIRONMENT [pic] STRATEGIC CAPABILITIES Strategic capabilities are the resources and competencies Vodafone need to survive and prosper. (Johnson, Scholes & Whittington 2006, p. 119) Why do we need to understand Vodafone’s Capabilities…. Vodafone’s capabilities will allow Vodafone to achieve competitive advantage over others because Vodafone has something that a competitor doesn’t have, or has difficulty getting. |RESOURCES |COMPETENCES | |THRESHOLD CAPABILITIES |THRESHOLD RESOURCES |THRESHOLD COMPETENCES | | |-TANIGBLE | | | |-INTANGIBLE | | |CAPABILITIES |UNIQUE RESOURCES |CORE COMPETENCES | |FOR |-TANIGBLE | | |COMPETITIVE ADVANTAGE |-INTANGIBLE | | (Johnson, Scholes & Whittington 2006, p. 118) Threshold Resources According to Johnson, Scholes & Whittington (2006 p. 119) threshold resources are needed to meet customer’s minimum requirements.
Tangible resources are all means available to an organisation that can physically be observed (touched), such as Vodafone’s HQ in Mount View, Leopardstown, Dublin, it also comprises over 70 Vodafone retail stores and over 30 partner stores in Ireland its phones, its networking and cabling structure (www. vodafone. ie). Intangible resources on the other hand cannot be touched, but are largely carried within the people in the organisation, such as culture, knowledge and reputation (De Wit & Merger 2005, p. 113) Unique Resources Unique resources underpin competitive advantage and are difficult for competitors to imitate or obtain. (Johnson, Scholes & Whittington, 2006 p. 119) Again, they can be tangible or intangible in nature. Vodafone offers broad roaming plans to their customers. • Network coverage. Vodafone network is available to other network users in remote areas Competences Threshold competences are the activities and processes Vodafone carry out to meet customer’s minimum requirements (Johnson, Scholes & Whittington 2006, p. 119). Core competences are activities that underpin competitive advantage and are difficult for competitors to imitate or obtain (Johnson, Scholes & Whittington 2006, p. 119). We have derived from our analysis, based on the utilization of Vodafone’s resources the following core competences are: • Vodafone Ireland, as part of the Vodafone Group, aims to maximize the tilization of their resources by committing to helping communities and the environment, through their Corporate Responsibility program. ‘The Green Agenda’ is an environmental strategy combining Vodafone’s internal goals with a leadership position; to on their stakeholders the central role sustainability must play in our lives. Vodafone intended to cut CO2 emissions by 30% by 2011. • Charity initiatives: Vodafone Ireland Foundation. The aim is to provide assistance in the form of cash donations, sponsorship and staff volunteering for Irish Charities. The partnerships they acquire with various charities allow for effective use of resources such as supporting Irelands elite disability athletes in the run up to and beyond next summer’s London 2012 Paralympics Games.
Ultimately, corporate social responsibility has been handled extremely well; Vodafone is maximising the opportunities of positive Public Relations, and positive brand perceptions achieved through ‘giving back’ to the community. • Marketing Skills have enabled Vodafone to dominate the Irish telecom industry. Vodafone invests heavily on customer research in order to discover customer expectations, their needs, understand how to effectively communicate to customers. By outsourcing customer satisfaction research to third party suppliers it has enabled Vodafone to provide excellent research capabilities and customer service. • Leadership and Management Styles have a direct impact on organisational culture. Analysis revealed that the Vodafone culture can be described as young, vibrant and dynamic.
Senior management have developed Vodafone Ireland as a learning organization by creating career development opportunities for employees with respect to its daily activities. Emphasis is on developing personal capabilities. Cost Efficiency An important strategic capability in any organisation is to ensure attention is paid to achieving and continually improving cost efficiency. This will involve having both appropriate resources and the competences to manage costs. Customers can benefit from cost efficiency in terms of lower prices or more product features for the same price. (Johnson, Scholes & Whittington 2006) Delivering cost efficiency is a core Vodafone initiative. During 2011 Vodafone saw European Operating costs reduced by 4% on an organic basis, saving the organisation ? 140 million.
A number of factors may impact the prices Vodafone charge and revenue Vodafone receive such as completion, regulatory decisions and legislation on mobile termination rates, international roaming charges and the availability and cost of spectrum. For example in Ireland, the national regulator has proposed auctioning all spectrum in the 900 MHz and 1800 MHz spectrum bands at the same time as an auction of 800 MHz spectrum in 2011, with spectrum available in 2013. In the meantime, Vodafone’s 900 MHz licences will be renewed until the commencement of the new licences in 2013. Also changes in macroeconomic conditions will affect Vodafone. Vodafone’s VALUE CHAIN
Value chain analysis describes activities within and around an organisation, and relates them to an analysis of the competitive strength of the organisation. Johnson and Scholes (1999) outline that one of the key aspects of value chain analysis is the recognition that organisations are much more than a random collection of machines, money and people. These resources are of no value unless deployed into activities and organised routines and systems, which ensure that services are produced which are valued by the final consumer, in other words it is Vodafone’s competences to perform particular activities and its ability to manage linkages between activities which are the source of competitive advantage for the organisation. Infrastructure | | | | | | |HRM |Training and |Development | | | | |Technology |Group Technologies | | | | | |Procurement | | | | | | |Inbound Logistics |Operations |Outbound Logistics |Marketing & Sales |Services | | |One Supply Chain |Better understanding of |Multiple Customer |Focus its resources on |Locate a great number of | | |Management to manage most |the Strategic Values of IT|Interfaces to deliver its |local customer |own & branded stores to | | |of Vodafone’s |to perform its business |products and services |relationship management- |accommodate customer | | |relationships with |operations more |(web, mail, telephone, and|micro segmentation, |service | | |Suppliers |efficiently and |self service portal) |real-time marketing & | | | |Supplier Performance |effectively | |direct distribution plus | | | |management process in | | |aligned partners, such as | | | |place in order to monitor | | |Carphone Warehouse | | | |and review | | | | | | Generic categories of the value chain | |FIRM INFRASTRUCTURE CONSISTS OF ALL GENERAL ACTIVITIES THAT SUPPORT| | | |THE ENTIRE VALUE CHAIN INCLUDING GENERAL | | | |MANAGEMENT, PLANNING, FINANCE, LEGAL AND | | | |QUALITY MANAGEMENT | | | | | | | | | |SUPPORT ACTIVITIES | | | | |HUMAN RESOURCE MANAGEMENT |ACTIVITIES ASSOCIATED WITH THE MANAGEMENT OF | | | |PERSONNEL THROUGHOUT THE ORGANISATION | | |TECHNOLOGY DEVELOPMENT |ACTIVITIIES ASSOCIATED WITH THE IMPROVEMENT OF | | | |TECHNOLOGIES THROUGHOUT THE FIRM | | |PROCRUREMENT |ACTIVITIES ASSOCIATED WITH THE PURCHASING OF | | | |INPUTS TO FACILITATE ALL OTHER ACTIVITIES | | |INBOUND LOGISTICS |ACTIVITIES ASSOCIATED WITH RECEIVING, STORING | | | |AND DISSEMINATING INPUTS, INCLUDING WAREHOUSING| | | |AND VECHILE SHEDULING | | | | | | | | | | | | | |PRIMARY ACTIVITIES | | | | |OPERATIONS |ACTIVITIES ASSOCIATED WITH TRANSFORMING INPUTS | | | INTO FINAL PRODUCTS | | |OUTBOUND LOGISTICS |ACTIVITIES ASSOCIATED WITH DISTRIBUTING | | | |PRODUCTS AND SERVICES TO BUYERS | | |MARKETING AND SALES |ACTIVITIES ASSOCIATED WITH PROVIDING A MEANS BY| | | |WHICH BUYERS CAN PURCHASE THE PRODUCT AND | | | |INDUSING THEM TO DO SO (ADVERTISING, SALES | | | |PROMOTION AND PRICING) | | |SERVICES |ACTIVITIES ASSOCIATED WITH PROVIDING SERVICE TO| | | |ENHANCE OR MAINTAIN THE VALUE OF PRODUCTS. | (De Wit & Ron Meyer, 2005) Vodafone’s VALUE CHAIN NETWORK
Organisations are part of a wider system of adding value involving supply and distribution value chains and the value chains of customers (Lynch 2000). SUPPLIERS VALUE CHAIN CHANNEL VALUE CHAIN CUSTOMER VALUE CHAIN Analysis of the value chain and value system will provide information on value added in the company. Linkages are important to strategic development because they are often unique to that organisation. These linkages may therefore provide advantages over competitors who do not have such linkages, or who are unable to easily develop them (Lynch 2000, p270). (xxxxx) According to Porter, “fit is a far more central component of competitive advantage than most realise”. BENCHMARKING
Benching has quickly come to be a tool not only for comparing a company against rivals on cost but also for comparing itself to others on most any relevant activity or competitively important measure (Thompson & Strickland 2001). There are a number of different types of benchmarking, some more useful than others such as Historical benchmarking-which is common for organisations to consider their performance in relation to previous years. Industry/sector benchmarking- which involves looking at the comparative performance of other organisations in the same industry sector or between similar public service providers. Best-in-class benchmarking- compares an organisations performance against ‘best in class’ performance –wherever that is found.
One of Vodafone’s key objectives is to deliver value and efficiency from scale, the organisation is continually seeking to improve its cost efficiency against a background of continual price pressures due to competition in the market and regulations. Vodafone uses the Hackett Group, an external independent benchmarking company to gain a better insight into its competitive position in the market place. The Hackett Group, using best practice business benchmarking helps propel clients to sustainable improvements in operational efficiency and effectiveness. Looking at Vodafone from a Cost perspective the company has favourable comparative cost positions in many markets; [pic] (http://www. vodafone. com/content/annualreport/annual_report11/business-review/strategy-in-action/deliver-value-and-efficiency-from-scale. html) SWOT ANALYSIS- STRENGTHS AND WEAKNESSES Strengths |Weaknesses | |Well defined cost reduction initiative. |1. High customers churn rates. | |Ethical company and in ranking top 20 in Europe. |2. Hard to prevent internal information leakage from | |Close relationships with suppliers and cost efficiency. |Vodafone to competitors. | |Strong market leading position. |3. Outsourcing-Lack of control over service quality. | |Pure cash provisions. |4. Lack of communication between head office and retail | |Excellent brand reputation. |outlets. As a result retail staff may not be receiving | | |adequate training on Vodafone products/services. | |5. Staff forced to be flexible in job design | | |(doubling/tripling work load) which causes quality | | |deficiency. | Appendix 5: SWOT analysis- Key points highlighted THE TOWS MATRIX The TOWS matrix builds directly on the information about the strategic position that is summarised in a SWOT analysis. Each box of the TOWS matrix is used to identify options that address a different combination of the internal factors and external factors. (Johnson, Scholes and Whittington 2006, 347) |STRENGTHS (S) |WEAKNESSES (W) | |OPPORTUNITIES (O) |SO STRATEGIC OPTIONS |WO STRATEGIC OPTIONS | | |USE THE FIRMS INTERNAL STRENGTHS TO TAKE |IMPROVING INTERNAL WEAKNESSES BY TAKING | | |AVDVANTAGE OF EXTERNAL OPPORTUNITIES |ADVANTAGE OF EXTERNAL OPPORTUNITIES | |THREATS (T) |ST STRATEGIC OPTIONS |WT STRATEGIC OPTIONS | | |USING FIRMS STRENGTHS TO AVOID OR REDUCE |DEFENSIVE TACTICS AIMED AT REDUCING | | |THE IMPACT OF EXTERNAL THREATS |INTERNAL WEAKNESSES AND AVOIDING | | | |ENVIRNONMENTAL THREATS | (Johnson, Scholes and Whittington 2006, p. 347) Vodafone’s TOWS MATRIX INTERNAL FACTORS |STRENGTHS (S) |WEAKNESSES (W) | |OPPORTUNITIES (O) |SO STRATEGIC OPTIONS |WO STRATEGIC OPTIONS | |THREATS (T) |ST STRATEGIC OPTIONS |WT STRATEGIC OPTIONS | ———————– Software Suppliers Hardware Suppliers Third Party Service Providers Vodafone Indirect Channels Direct Channel Online Sales Broadband Customer Personal Customer PROFIT MARGINS SUPPORT ACTIVITIES | | Business Customer PROFIT MARGINS PRIMARY ACTIVITIES INTERNAL FACTORS EXTERNAL FACTORS EXTERNAL FACTORS
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