Vodafone Strategic Plan

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External Environmental Analysis:PEST ANALYSIS

Political factors
Vodafone is generally subject to regulations governing the operation of its business activities. Such as industry specific laws and regulations covering telecommunications services and general competition (antitrust) laws applicable to all activities. Most member states of the EU have now implemented the EU Regulatory

Framework for the communications sector, adopted in 2002. It aims to encourage competition in the electronic communications markets, to improve the functioning of the single market and to guarantee basic user interests that would not be guaranteed by market forces6. The impact of EU Framework on Vodafone was significant. After member states of the EU enacted national laws implementing the EU Framework, Vodafone had to reduce its mobile phone termination rates considerably

Spectrum liberalization has been one of the key issues in mobile regulation for a number of years. At its heart is the simple proposition that markets, rather than regulators, are better placed to decide the most efficient use of the spectrum. In September 2005, the European Commission published proposals for spectrum reform across the EU, including proposals to allow holders of spectrum greater flexibility on the use to which it is put, to allow holders to trade spectrum within a spectrum market and to improve harmonization of certain bands.

Regulation, which seeks to reduce by up to 70% of the charges consumers have to pay for using their mobile phone abroad9. These proposals came into force on 30 June 2007. The regulation requires mobile operators to offer a ‘Euro‐tariff’ under which the cost of making calls within the EU is capped at 49 eurocents and the cost of receiving calls within the EU is capped at 24 eurocents.

Economic factors
The most common indicator for measuring a nation’s economic activity is gross domestic product (GDP). This indicator covers the production activity of resident producers, calculated as the sum of gross value added from all activities/industries within an economy.

Social factors
The EU and other regions are facing unprecedented demographic changes that will have a major impact on many areas of society such as social systems, consumption patterns, education, and job markets in the coming decades. People are living much longer and in better health, while fertility rates have dropped.

Technological factors
The Mobile Industry faces a stiff competition among key players in the aspect of Technological innovation. Various innovations like iPhone and smart phones have made the industry more competitive. 2.2 Analysis of telecommunications industry

Porter’s five forces model


The main factor that have marked recent developments in the mobile services market is the enlargement of subscriber bases in the developing economies, particularly in the major emerging markets but also in the industrialized countries, despite already high penetration rates.

Regional mobile density, 2003/2007 number of mobile subscribers per 100 inhabitants’ at year end [pic]

In the mature markets operators face fierce competition and consumer demand for more features, minutes and texts, for less money. This leads to companies trying to cut costs and transfer these benefits in the form of price cuts to consumers. Buyers are becoming increasingly sophisticated and make use of the wider range of services that mobile operators have to offer.

As the European telecommunications market is highly saturated and regulated, it is characterized by high levels of competition, whereas the situation in the emerging market is more favourable for Vodafone. Telefónica O2, T‐Mobile, Orange and “3” are the main competitors of Vodafone in the telecommunications market.

1. Telefónica O2:
Telefónica is originally a Spanish company with affiliates in 19 countries and operates with both fixed and mobile...
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