Understanding the SWOT Analysis of Vodafone

Let’s just start with some background:

The name Vodafone comes from “voice”, “data”, and “telephone“, chosen by the company to “reflect the provision of voice and data services over mobile phones.

Ranked 4th (behind China Mobile, Bharti Airtel, and Vodafone Idea) in terms of a number of mobile customers (313 million) as of 2018, Vodafone is a British multinational telecommunications conglomerate that operates in around 25+ countries.

SWOT Analysis of Vodafone

SWOT analysis is a strategic planning tool that can be used by the Vodafone managers to do a situational analysis of the company by measuring Strengths, Weakness, Opportunities, and Threats, the company is facing in its current business environment.

Its the detailed analysis of internal and external factors that Vodafone had been caring out that has helped it maintain its position in the telecom industry and also enabled it to maneuver its business strategy depending on the situation it is in.

VODAFONE STRENGTHS

Strong Brand Recognition and Brand Awareness:

Many will say Brand Recognition and Brand Awareness are one and the same thing, newsflash, they are not. In the past 28 years, Vodafone has been able to create a strong brand presence in the market. Its the out of the box marketing strategies that have helped the brand in creating a Strong Brand Recognition and Awareness, which are Vodafone’s biggest strengths.

Diverse Service Offerings:

“Don’t place all your eggs in a single bowl” – HeartofCodes. This is the philosophy that Vodafone lives by. Apart from its telecommunications service, Vodafone launched M-Pesa, a mobile money transfer services in Kenya, 2008. After the success of M-Pesa in Kenya, Vodafone expanded this service in Afganistan, Tanzania, South-Africa, and India.

m-health Services:
In November 2009, Vodafone announced the creation of a new business unit focused on the emerging market (the application of mobile communications and network technologies to healthcare). “SMS for Life” project was one of the early successes for the company in Tanzania. Vodafone developed and deployed a text-message based system that enabled the country’s 4,600 public health facilities to report the stock level of their anti-malarial medications, enabling timely re-supply of stock.

Word-wide presence:

The group has a global presence in over 30 countries and partner presence in over 40 countries. Europe, Africa and Central Europe, Asia Pacific and Middle East are the three main geographical regions that Vodafone operates in. Talking about the revenue – Europe region contributes about 67% to the total revenue and Africa and Central Europe & Asia Pacific and Middle East contributes 18% and 15% respectively.

Large Subscriber Base:

Vodafone enjoys a large subscriber base and is ranked at no. 4th with 318 million subscribers, behind China Mobile ( subscriber base of 908 million ), Bharti Airtel ( subscriber base of 418 million ) and Vodafone Idea (subscriber base of 418 million)

Strong advertising background:

Sure you must have heard of “ZooZoo Ads” by Vodafone! If you haven’t then you surely have missed a marketing gem (go to youtube and search for ZooZoo ads). Created by the world’s top advertising agency “Ogilvy & Mather”- ZooZoo ads were the talk of the town and an instant hit.

Each of the ZooZoo ad was short, humorous and promoted a feature of the services that Vodafone provides to its customers.

WEAKNESSES OF VODAFONE:

Limited presence in rural areas:

Despite having a presence in over 30 countries, the company has failed to get strong foothold in rural areas. The pricing of its services and brand image are two factors that fails Vodafone to have a connection with rural customers and for this reason it is one of the main weaknesses of Vodafone.

Limited success outside core business:

Unlike its competitors, Vodafone has failed to make its product/service portfolio a success. Apart from the core mobile services business, Airtel has DTH and Broadband service which are a success and aids in the company growth. But the same is not the case with the Vodafone, the company relies heavily on its core business only for growth and revenue generation.

Dropping Brand Valuation:

Once ranked as one of the top 10 valuable brands in the world, Vodafone’s brand valuation has dropped significantly. Sluggish economic growth, high competition, and market saturation have led to a major drop in the brand valuation of Vodafone in the past 3-4 years.

Huge Debt:

Vodafone Idea’s net debt is over 25 times its earnings before interest, tax, depreciation & amortization. Low mobile tariffs of the competitors have forced Vodafone to drop the prices of its mobile plans as well. This has made a huge dent in the company’s revenue and profit.

OPPORTUNITIES OF VODAFONE:

Better Rural Market Penetrability:

One of the major weaknesses of Vodafone is its biggest opportunity as well.
Vodafone seems to be operating more only in urban markets whereas its top competitor such as Airtel and Reliance Jio have penetrated rural markets successfully.

Emerging Markets:

Its not just the rural markets that Vodafone needs to target, expanding to developing countries is also one of the biggest opportunities for Vodafone to grow. Africa has seen the fastest growth rates, with the number of internet users across the continent increasing by more than 20 percent year-on-year. Increasing disposable income and the growing need for better technology are making these developing countries hot favorite for telecom providers.

Growing Mobile and Internet users:

There are more than 4 billion people around the world using the internet and the number is growing in double digits year-on-year.

• The number of internet users in 2018 is 4.021 billion, up 7 percent year-on-year
• The number of social media users in 2018 is 3.196 billion, up 13 percent year-on-year
• The number of mobile phone users in 2018 is 5.135 billion, up 4 percent year-on-year
• Total number of mobile connections in 2018 is 8.04 billion.

Affordable smartphones and mobile data plans are the main factors that are aiding this growth. There is a huge opportunity for Vodafone to grow, the need to the hour is to just go out all guns blazing and be a leader and not a follower.

Better Network Coverage:

One major issue that mobile users face is a call drop or bad/spotty network coverage and its one issue that none of the telecom providers have been able to solve. And this becomes a good opportunity for the company to outdo its competitors and provide customers with a better and seamless network.

THREATS OF VODAFONE:

High competition:

Competition from Airtel, Reliance Jio, AT&T, China Mobile, etc is the main threat to Vodafone. Low tariffs of the competitors like Reliance Jio has made Vodafone take a big hit in terms of revenue as well as mobile subscribers.

This concludes the SWOT analysis of Vodafone, if there are other factors that you think affect the company , do mention them in the comment box.