Vodafone

The role of a ‘Financial Analyst’ was to be taken in order to analyse the financial report for ‘Orange Plc’. The report is to outline any areas of the financial report that shows unhelpful complexity or obscurity. The telecommunications industry will be looked at, and an analysis of improvements that could be made to a particular company’s annual report (Orange) will be given. After an analysis has been given, a comparison against the ‘Financial Reporting Standards Board’ is to be given. Historically, there have been 4 mobile phone networks operating in the UK.

Vodafone and O2 are the oldest and largest, originally operating analogue (1st generation) networks, and these were later joined by Orange and T-Mobile. All the companies now operate digital (2nd generation) networks. In addition there are now several “virtual” networks such as Virgin Mobile, Value Telecom and Fresh. These networks all have different tariffs and charges, and offer different sales incentives in order to compete with one another. Orange’s UK’s principal competitors in the United Kingdom are the three other existing operators of wirefree communications networks, Vodafone, O2 and T-Mobile.

All of them commenced their operations before Orange UK. Vodafone has also established itself in a number of other countries. At 31 December 2001, Vodafone, O2 and T-Mobile accounted for approximately 26%, 24% and 20%, respectively, of all wirefree customers in the United Kingdom, while Orange UK estimates it had approximately 28% of all wirefree customers. Orange is part of the mobile communication industry. Orange launched in April 1994 into the UK mobile communications market with a simple vision.

A vision for a brighter future, where people can communicate wherever, whenever and however they wish. Orange has mobile interests in 20 countries, covering a total population of 490 million people. The operations are mainly in Europe but also have a wider international presence. The customer base of Orange’s controlled operations was over 30 million at the end of December 2000. By the end of March 2001 this had grown to over 33 million. In 2000 Orange UK maintained its position as the UK’s fastest growing operator.

Its customer base doubled and its market share increased from 20% to 25%. Turnover also grew significantly, increasing by 76%. Orange is the second largest mobile operator in Europe, and the largest and fastest growing operator in both France and the UK. The company has now a UK customer base of over 11. 9 million putting it first over O2, Vodafone and T-Mobile. Orange advertises its brand through television, radio, press, direct mail, billboard and via the internet. Sponsorship plays a large part in creating and maintaining awareness to the public.

Orange sponsors (stating a couple), The ‘British Academy of Film and Television Arts’ (BAFTA) where television viewing from the public is enormous, and it is also appealing to all markets. The ‘Heineken Cup’ is also sponsored by Orange. This is Europe’s toughest and most exciting rugby competition, which appeals to a wide range of potential customers not only in the UK but also throughout Europe. Both sponsorships appeal to all age groups and all social categories. Throughout the report, Orange have managed to keep the presentation and enthusiasm of the reader to a maximum.

There was one exception to this, and this is at the beginning (page 6). This is the second major page, and it has no specific structure. The page consists of five important graphs but they are cluttered together. The graphs are of major importance to an investor, but may loose their interest with a disordered introduction so early in the report. The graphs show comparisons of the companies performance over the years 2000 and 1999. This is important information, as a potential investor will want to know the company’s recent performance.

For easier browsing, it would be suggested that the page be split up to having only three graphs per page with explanations besides each of them. The yellow background to the graphs also makes the page look dirty. It would be suggested that each of the graphs had a border to them showing a clearer separation. Throughout the report, Orange uses technical terms to explain its financial performance and recent history. If a potential investor or non-accounting person was to read through the report they may not understand some of the terms that are used.

Orange has provided a ‘glossary of terms’ at the end of the report that explains many terms and abbreviations to help readers through the report. It is clear to see that Orange has lacked in providing adequate information to its investors and to its potential investors. Although a good summary of all the financial information has been presented, it would be more appropriate to include full tables of these financial data sheets. A full disclosure of the information would help meet the needs of all the seven accounting groups mentioned.

The treat of substitute products in the industry is low, and no direct substitute exists for making a telephone call whilst on the move. Fixed line telephones are the clearest substitutes, and the call costs are generally lower. There has been some technological development relating to satellite mobile telephones, operating on a different system to the base station networks, although this technology remains in its infancy and offers no credible threat. However, substitutes do exist for many extra features on the latest handsets.

Many of the new devices have incorporated portable music and video players, which may be substituted with other stand alone devices. The quality of cameras on phones is beginning to catch substitute standard digital cameras. T-Mobile UK makes up part of the Deutsche Telekom AG Group. The company was established in 1999 and prior to this it was known as One 2 One, which was seen as a pioneer in introducing low cost voice calls. T-Mobile now has over 109 million customers worldwide. It currently operates mobile telephone networks in the UK, USA, Germany, Austria, The Netherlands, Czech Republic, Poland and Russia.

It was one of the first operators to offer its customers new technology Wireless LAN, GPRS and 3G. (T-mobile. com) Strengths T-Mobile is one of the largest network providers in Europe, it has operations in 65 countries around the world, making it a global brand. The company successfully bid for a 3G license, meaning it has the opportunity to become a key player in this market, although it will need to counter the popularity of Vodafone Live. To do this it recently established a mobile ‘jukebox’ service for downloading music. (CapGemini, Recharging Mobile Innovation, 2004)

Like Vodafone, T-Mobile is expanding its operations into Eastern Europe and other emerging economies. This has the advantage of huge future growth potential. (T-mobile. com) T-Mobile has in excess of 99% UK coverage from its transmitters; this meaning it’s capable of reaching almost the entire UK population. (T-Mobile. com) Weaknesses Symptomatic of all of the network providers, T-Mobile has a high level of debt, which will prove to be problematic if 3G is less successful than anticipated. T-mobile’s customer’s have lower household incomes, and in general come from lower soci-economic group than Vodafone customers.

(OFCOM 2001) This may mean that the company’s customers base is reluctant to make use of more profitable data services. Opportunities T-Mobile’s continued expansion into emerging markets, especially Eastern Europe, and the USA, could prove to be a significant growth area. In terms of the UK market, the successful implementation of a 3G network will provide the greatest opportunities. Threats T-Mobile has large presence in the German market, and the current economic slowdown and associated lower consumer confidence may reduce sales growth.

The risk of future health problems and associated legislation is also a threat. Conclusion In conclusion, PESTLE has provided an analysis of the key influences present in the UK mobile phone industry. It has shown that a major area of concern is the unknown health implications of long term exposure to radiation from handsets and transmitter base stations. In addition, the Five Forces analysis has identified the high degree of competitive rivalry in this mature market, with competition based on price and the retention of existing customers.

Buyer power is shown to be high and supplier moderate to low, with a low threat of new entrants into the market. The TMobile SWOT analysis summarised the key issues in terms of internal strengths and weaknesses and external opportunities and threats for T-mobile.

Bibliography

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Porter, Michael E. (1991), Towards a Dynamic Theory of Strategy, in: Strategic Management Journal, Vol. 12, pp. 95-117 Porter, Michael E. (1998), Competitive Strategy: Techniques for Analyzing Industries and Competitors Prahalad C. K. , Hamel Gary (1990), The Core Competence of the Corporation, in: Harvard Business Review, May-June 1990, pp. 79-91 Thompson, A. , Strickland, A. J. (2001), Strategic Management: concepts and cases, Homewood: Irwin Websites BBC News January 11th 2005 http://news. bbc. co. uk/1/hi/health/4163003. stm [Accessed 14 January 2005] BBC News January 14th 2005 http://news.bbc.co.uk/2/hi/uk_news/england/bristol/somerset/4175161.stm

Policy making processes in Vodafone have been influenced greatly by changes in technology. The process should always be made in reference to the objectives and goals of the organization. Certain policies such as the human resource policies that have been developed by Vodafone have helped the company meet its current domestic and international markets. Good polices go inline with the current technology. It would be unprofessional and unethical to provide policies that will be detrimental to the company’s business development

Vodafone has since adopted very many polices in a bid to meet the challenges of competition. Its famous policy of 2003-Market Outreach Policy- gave it additional achievements as it ensured that the company reached oversees markets without any hindrances. the policy helped the company to acquire more companies and take part in joint ventures with other players and businesses in the industry which have better technology, machinery or human resources than Vodafone e. g.

when the company for example got a stake of 15% in the Hambros Technology trust, it benefited from the company’s minority stakeholders and technology. This is an example of policy making processes that have helped Vodafone expand in its technology. These policies will act as a legal tool to be used by the organization. The organization can seek the services from other firms to ensure that these policies conform to what is required locally and internationally. These policies will also act as a guide to the company to successfully monitor the progress of the connectivity (Aulakh, Kotabe and Teegen, 2000).

Change in technology also influences the way decision making procedures are undertaken just like in policy making in Vodafone Company. Decision making in the company always conforms to the strategic planning of the company. When it comes to mobile network services, Vodafone bases most of its decision making process on the current or future technology that will be applicable. Decisions regarding the way the industry will behave in future should be predictive in nature and that it will lead to attainment of desired long-run goals (Vodafone, 2008).

In international trade such as the one conducted by Vodafone, the principle of comparative advantage plays a very critical role. Comparative advantage is said to be one of the most straightforward and simple economic concepts Lee (2008). The principle of comparative advantage is highly regarded not only in business circles but also in the world of academia. It is said that when mathematician Stanislaw Ulam challenged Nobel Laureate Paul Samuelson in 1969 to state a preposition in all of the social sciences that was both true and non-trivial he gave his answer as the principle of comparative advantage.

This is why a better understanding of this theory needs to be established first before we proceed with finding out how Vodafone applied it. The theory of comparative advantage simply deals with the benefits of specialization and trade Suranovic (1997). The theory states that trade can benefit all countries/companies/individuals so long as they produce goods with relative costs. The theory is also known as the Ricardian model after the 19th-century classical economist David Ricardo who is credited with creating better awareness of this concept.

Others who had earlier tried to explicate the benefit of this concept included Adam Smith and Robert Torrens Suranovic (1997) Adam Smith wrote in The Wealth of the Nations that “If a foreign country can supply us with a commodity cheaper than we ourselves can make it, better buy it of them with some part of the produce of our own industry, employed in a way in which we have some advantage. ”  But it is David Ricardo who is viewed as having brought the theory into prominence by using a gripping and simple numerical example in his magnum opus, On the Principles of Political Economy and Taxation.

According Ricardo the benefits of trade come about if in an economy where specialization thrives. A clear example is offered by P. A. Samuelson in his paper ‘The Way of an Economist’ when he writes: If a country is relatively better at making wine than wool, it makes sense to put more resources into wine, and to export some of the wine to pay for imports of wool. This is even true if that country is the world’s best wool producer, since the country will have more of both wool and wine than it would have without trade.

A country does not have to be best at anything to gain from trade. The gains follow from specializing in those activities which, at world prices, the country is relatively better at, even though it may not have an absolute advantage in them. Because it is relative advantage that matters, it is meaningless to say a country has a comparative advantage in nothing (WTO, 2008). However comparative advantage is many times incorrectly taken to mean to have absolute advantage over other countries that do not hold the same advantage Lee (2006).

So how did Vodafone use the principle of comparative advantage to gain a foothold in global mobile telephony market? The management of Vodafone seemed to have realized early the importance spreading your wings and expanding your operations to countries outside the country of origin. The first strategy involved making acquisitions. Vodafone is a company has almost become synonymous with the word acquisition. Starting from the earl 1990s the UK Company embarked on a worldwide acquisition spree, buying stakes in other mobile telephone companies.

It acquired stakes in European, American and Asian companies and in no time it had established itself as the world’s biggest mobile phone company with footprints in almost every nook and cranny of the world. Vodafone’s operating slogan ‘bigger is better’, saw the company go for one acquisition after another, pouring billions upon billions to this end allowing them make inroads into far-flung markets. (BNET. com, 2008) Once acquisitions had been made the thing that came next was establishing the market compositions in the different countries the acquisitions were based.

This important as without market insight Vodafone would not have been able to best utilize the conditions on the ground that would have otherwise made the provision of mobile telephone services relatively cheap. The trick with acquisitions is that the company has to make sensible ones, not making acquisitions for its sake. This is one area that Vodafone did not seem to pay close attention to and in the end some countries like Japan, the United States and in some Nordic countries did not turn out to be particularly good hunting grounds for Vodafone. (ICFAI) Another big strategy that Vodafone came up with was the decision to make forays into markets where technology was relatively underdeveloped. This strategy went hand in hand with another strategy that involved going into regions where mobile penetration was low. It is for this reason that Vodafone bought stakes in Romania and Czech with the buying of Mobifon and Oskar Mobil respectively. Vodafone was also quick to notice the Indian potential and was quick to find partners there.

Such entry into the untapped markets with enormous potential is the very essence of the principle of comparative advantage. In November 2007 Vodafone announced plans to acquire a stake in Telekom Malaysia a company whose fixed line operations p nine Asian countries. (TIMES ONLINE, 2008) Operations in far-flung places showed Vodafone that it was easier for them to establish themselves in places telecommunications infrastructure were underdeveloped because then they would have to supply these equipment themselves and establish a market of their.

This was in contrast to moving to countries were technology had taken off like Japan and the United States where the consumers were spoilt for choice and therefore were in the habit of switching to what they viewed as companies that provided up-to-date mobile telephony technology. It is for this reason that Vodafone experienced immense difficulties in Japan where people user their mobile phones not only for calling but for many other services like the accessing the internet, photo-messaging and video-calling. The problems in Japan proved too huge for Vodafone to handle and they finally sold off its stake in J-Phone.

(The Economist, 2001) Having been the first company to acquire a cellular license in the United Kingdom, the company also felt that they should also lead the way in the 3G technology. By becoming amongst the first mobile phone companies to offer this technology, Vodafone thought it could it to as many countries where its subsidiaries were based and a make a kill, so to speak. However the 3G experienced some teething problems and it took long time to roll out and by the time Vodafone was able to get it on the market there were other new problems contend with as is the norm in the capricious mobile telephony market.

No matter Vodafone did finally launch this service with promises to keep improving this service every other time. (ZDNet, 2008) Vodafone realized it could no longer rely on the voice-based operations only as its competitors were offering more than that. At the same time it also realized that there needed to be restructuring the running of its operations as far as its far-flung operations were concerned. Operations of these subsidiaries started becoming a matter of concern because it was proving difficult to follow their progress and so it was decided that they needed to be consolidated.

Therefore Vodafone under its new CEO, Arun Sarin, launched its ‘One Vodafone’ program with the aim of ensuring that all the company’s subsidiaries could be reconciled together to represent the objectives of Vodafone. This is one of the reasons why Vodafone decided to buy controlling stake in South Africa’s Vodacom. (TIMES ONLINE, 2008) On a more positive note Vodafone through its Kenyan subsidiary Safaricom was able to come with a very innovative product for its Kenyan subscribers that allowed them to transfer money through their mobile phones. The service called M-PESA registered so much success and so far over 1.

6 million people have registered. After observing the success in Kenya, Vodafone decided to launch the same service in Afghanistan called M-paisa with its partner Roshan. (Cellular-News, 2008) In conclusion it must be said that despite all of Vodafone’s concerted efforts to tap into the advantages that come with setting up oprations in other countries it has not necessarily been smooth sailing. Its shareholders have argued that these problems were caused by a lack of proper planning and the failure to identify the workings of the different markets. Many have accused the management for going for growth at all costs and they strongly believe this is the reason their company has continued to make staggering losses despite the fact that it has built partnership with many mobile phone companies than they can care to catalog. (BBC News, 2003)

References

1. BBC News, (2003). “Q;A: The Secrets of Vodafone’s Success”. Available from http://news. bbc. co. uk/1/hi/business/1357172. stm (accessed on April 23, 2008) BNET, (2008). Copyright © 2008 CNET Networks, Inc. All Rights Reserved.
2. ‘Research and Markets: Vodafone, success secrets of the Global Operator’. Available from http://findarticles. com/p/articles/mi_m0EIN/is_2005_Jan_19/ai_n8700389 (accessed on April 23, 2008) Cellular-news, (2008). ‘Vodafone Launches Mobile Payments in Afghanistan’. Available from http://www. cellular-news. com/story/29186. php (accessed on April 23, 2008) Econmist. com, (2004). Vodafone and Japan. Available from http://www. economist. com/displaystory. cfm? story_id=3252464 (accessed on April 21, 2008) Lee, D. , (1999).
3. ©2008 Foundation for Economic Education. ‘Comparative Advantage’. Available from http://www. fee. org/Publications/the-Freeman/article. asp? aid=4962 (accessed on April 22, 2008) Lee, Dwight R. (2006). ‘Comparative Advantage Continued’ – the Freeaman Ideas on Liberty. Available from http://www. fee. org/publications/the-freeman/article. asp? aid=4962 (accessed on April 22, 2008) Suranovic, M (2007). ‘International Trade Theory and Policy’. Available from http://internationalecon. com/Trade/Tch40/T40-0. php (accessed on April 21, 2008)
4. The library of Economics and Liberty, (2004). ‘Comparative Advantage’. Available from http://www. econlib. org/Library/Topics/Details/comparativeadvantage. html (accessed on April 21, 2008) TIMES ONLINE, (2007). ‘Malysia opens up to Vodafone’. Available from http://business. timesonline. co. uk/tol/business/industry_sectors/telecoms/article2799361. ecem (accessed on April 23, 2008) WTO, (2008). ‘Comparative Advantage’.

This assessment is part of Corporate Finance module in phase 1 in MSc Finance and Investment at University of Brighton 2008-2009. The main emphases of this assessment is to make written report that comments on a specific company’s financial performance and future prospects. The company I chose to report about is Vodafone Group Plc, which is listed on the London Stock Exchange and part of the FTSE 100 index.

The reason for I chose Vodafone Group Plc is because I think the market that the company operates on is very interesting, i. e. the fact that the company relies heavily on technology and the competition on the market is enormous. In this assessment I’m gonna try to recognise the company’s strengths and its weaknesses by using accounting statements and ratio analysis. Try to estimate how well the company is doing compared to its competitiors and the market as a whole. Get to know how the company is financed long term and how its gearing is. I’m gonna try to estimate if the company is priced fairly, get to know the company’s dividend policy and find out the stragedy the comany follows in mergers, acquisitions and corporate restrucuturing.

To cover all these things I’m going to use theories and principal that has been taught in the course and use other sources like library and internet to find references. In the analysis I will use Reuters to support my calculation of ratios and other things. 2. About the company Like I mentioned above I chose to make a report about Vodafone Group Plc, which I will hereafter most often refer to as Vodafone. Vodafone was formed in 1984 as a subsidiary of Racal Electronics Plc.

Then known as Racal Telecom Limited, approximately 20% of the company’s capital was offered to the public in October 1988. It was fully demerged from Racal Electronics Plc and became an independent company in September 1991, at which time it changed its name to Vodafone Group plc. Following it s merger with AirTouch Communications, Inc. (Air Touch’), the company changed its name to Vodafone AirTouch Plc on 29 June 1999 and, following approval by the shareholders in General Meeting reverted to its former name, Vodafone Group Plc, on 28 july 2000.

Vodafone Group Plc, hereafter called Vodafone, is the world’s leading mobile telecommunications company, with a significant presence in Europe, the Middle East, Africa, Asia Pacific and the United States through the Company’s subsidiary undertakings, joint ventures, associated undertakings and investments. Vodafone has categorized its main services and products in four different categories:

The services that Vodafone provides are accessed on a wide range of handsets, i. e. mobile phones, equipment to connect to the internet and so on. (Vodafone, 2008c) At 30 June 2008, based on the registered customers of mobile telecommunications ventures in which it had ownership interests at that date, the Group had 269 million customers. In almost every civilized country in the world people are aware of the brand Vodafone and in 2007 Vodafone was ranked as 22nd biggest brand in the world by one of the world’s leading research companies, Millward Brown. The brand was estimated to be worth 21,107,000,000 dollars.

Vodafone topped the list of brands from UK beating of competition from the likes of HSBC, Tesco and Marks ; Spencer. (Millward Brown, 2007) The Company’s ordinary shares are listed on the London Stock Exchange and the Company’s American Depositary Shares (‘ADSs’) are listed on the New York Stock Exchange. The Company had a total market capitalisation of approximately i?? 79 billion at 30 June 2008. (Vodafone, 2008b) 3. Analysis of company performance In this chapter Vodafone’s performance will be analyzed using accounting statements and ratio analysis.

The analysis is supposed to bring forward the company’s strengths and weaknesses, compare its performance with that of other companies in the same industry and evulating what has been happening in the company over the period. First of all I’m gonna look at profitability ratios. Profitability is the net result of a number of policies and decisions by the company and probably the best measure how the company is performing. Looking at figures from the profit and loss account we see that it has been operating proft for last four years around i?? 10,000m.

Revenue and operating costs have been increasing a bit in proportion to each other. According to this graph the business seems to be in a stable condition and is growing litle year by year. The only interesting fact from the graph is that how dramatically the depreciation increases from 31 March 2005 to 31 March 2006. According to the company’s annual report in 2006 an impairment charge was recorded to the carrying value of goodwill in the company’s operations in Germany and Italy reflecting a revision of the Group’s view of the prospects for these businesses, particularly in the medium to long term.

These actions affect the the balance sheet and I will not analyze these actions further and will use data from Reuters to calculate ratios. Like can be seen on the graph, and on the consolidated profit and loss account in Appendix B the depreciation are higher than operating costs. Figures from the profit and loss accounts in recent years. Like I said last four years the business seems to be in stable phase and growing little by little year by year. To see if that’s really what is happening in the company I’m gonna analyze it further by take a look at some ratios and interpret it.

A weakness in this point of view can be defined as any element of Vodafone Company that probably will prevent the success of laid down goals by the company and more often than not regarded to encompass the businesses assets, capabilities and resources which are not fully applied in attainment of the said objectives Since the year 2002, Vodafone has shown large statutory losses and this has resulted in goodwill ‘being written off’ by the UK GAAP.

The company has reported a huge loss that is why it requires the ‘goodwill’ as it plans to accommodate technology change in its sectors. The loss has been attributed to the heavy investments applied on technology in the sector such as the GSM technology. Despite this reality, Vodafone is a highly profitable company and it is only having challenges in terms of providing high quality services and products that go in line with today’s technology. The company in 2006 announced a loss before tax of ? 14.

9 billion which was the biggest in UK’s corporate history since 1992. The main cause of the loss was impairment charges pushed to the company through acquisition of Mannesmann (Blaszejewski. and Dorow, 2003). Despite its numerous strengths, Vodafone could leave it weak in some areas due to huge p control in terms of changes in the way services and products are developed. The company fails to meet the international challenge of penetrating new markets apart from what it has acquired so far because of the strict trade tariffs.

Some countries are developing very faster in terms of technology and are now capable of rolling out their own mobile network operation abilities which will mean that Vodafone should improve further internally and prepare its technical team for better technology-related improvements (Lovelock, 2006). Critics in terms of leadership management suggest that the move by Vodafone to retrench majority of its employees in industry and services has lead to increased amount of poor provision of services within the company.

Performance management control is seen as to be reinvigorated by transferring the dimension of disciplinary management among the employees themselves especially those working in various companies not within the UK. Employees mostly focus on themselves rather than the group work because they are not actively involved in the actual planning of the goals and objectives of the company and this has resulted in mistrust for the company. These and other different issues need to be addressed at length before deciding to adopt them as a way of improving productivity.

In the long run it will lead to the breakdown of individual relationships which affect their productivity in general at the company. The leadership of this company should be in apposition to promote employee participation, innovation and new product development (Minbaeva, Pedersen, Bjorkman, Fey, and Park, 2003). It is also very difficult for the employees to easily adopt the technological changes that go along with the requirements of the company.

The company ha been forced to retrench its employees to accommodate new individuals who are aware of the new technology the company is adopting year by year. Vodafone has also been forced to train its employees to make use of new computer software, hardware and methodologies for the new generation technology (Vodafone, 2008). Opportunities An opportunity in this perspective is anything that provides Vodafone Company with distinctive advantage over its rivals in the market.

As technologies become more complex and accessible, the mobile infrastructure market will increasingly change with technology and this will negatively and positively affect Vodafone. Today, customers would like to have devices and services that match with the technology of the day. Introduction of mobile TV, General Packet Radio Service (GPRS), and Global System for Mobile Communications (GSM), Smart Phone, and Future Mobile Networks Etc poses a challenge and equally an opportunity for the Vodafone Company to critically use the already available financial advantage to beat their competitors.

The growth and advancement of mobile networks will sway for the Vodafone depending on forces such as; market driven factors-some products are developed without a clear market demand or its need derived from the customers; continued sophistication of services as well as increased divergence in the use of the devices/ services such internet use, video recording, music playing and other multimedia features that are available in a computer (Peng, 2003).

Vodafone in the past has taken over, formed strategic alliances and merged with other companies in the sector top form strong competitive companies and it still ha opportunities to further these opportunities.. The main opportunities lie greatly in Asia and South America where tremendous opportunities for future business especially in expanding consumer markets in countries such as India and China are located. New locations offer Vodafone huge chances for excellence as the different technologies apply to the different countries (Keith, 2008).

Threats A threat is looked upon as any happening which if not handled well might probably prevent the success of Vodafone Company purposes e. g. consumers waning real income and rivalry along with other proceedings believed to cause risk to the procedures of the business undertaking. Since Vodafone is the biggest company in the world, it is subject to harsh competition as almost all companies will be trying to adopt and outweigh it financially, technology-wise etc.

Being a global leader in this field, Vodafone is exposed to political problems and other issues such as those policies by GATT. As a mobile network provider and mobile technologies/ handsets are becoming environmental hazards, the company is facing huge challenges. Mobile manufacturers such as Nokia are intensifying their products to become environmentally disposable, this will mean that price deflation for services will occur leading to price competition for players in this industry as well (Vodafone, 2008).

The competitors for Vodafone are varied depending on the local partners in the country where the company has invested or has subsidiary with. Throughout the countries, the following are some of the competitors for this company; Telstra, Optus, China Unicom , China Mobile, PCCW ,Bharat Sanchar Nigam Limited, Reliance Communications, Idea, Spice, Aircel, Telkomsel, Indosat, Maxis Communications, Telecom Samoa Digicel, SingTel, StarHub, Mobitel, Hutch, among others.

Competitors for Vodafone keep pace with new technology to improve their services. Some companies have shifted from old computer based technologies to newly agitated technologies making them more competitive (Fortune. com 2003). . Other form of threats that may hit the company’s performance at the moment is modernization in the telecommunication sector. The effects of mobile network technologies for any company in this industry will be social, political and economical in nature.

The social effects that have just been noticed are misuse of mobile email, messages and other things. This will in future become a source of contention for the service provisions in this field. When telephone lines will be phased out throughout the world especially in African countries where they still being used, Vodafone will be having problems with its old fashioned technology, as it will need to obtain new machines at the higher costs (Cronje, Du Toit and Motlatla, M. , (2004)