Research Articles Base: Vodafone Marketing Strategy

A Case Study on Vodafone

COMPLIANCE, PROFIT-SEEKING BEHAVIOR AND USER NEEDS: THE THREE CRITERIA OF ADAPTING A NEW ACCOUNTING POLICY Introduction             As the global economy matures, there is a need to globalized and integrate accounting polices for efficient and effective cross-border trading.  However, it is still questionable that companies apply internationally-accepted principles due to profit-seeking stance.  More so, the emphasis given to situate FS structure to a wide-range of users may be undermined.  But it is assumed that when international standards are used, the usefulness of FS on general users is assured.  This paper discusses the ability of Financial Statements (FS) to reflect corporate performance and position that can be useful to a wide-range of users.  The ultimate question is that “What will be the core objective of the reporting entity?” The IAS Framework IAS 1 accounts compliance of an entity in presenting, structuring and satisfying disclosure requirements for general purpose FS (IAS Plus 2006).  Its purpose is to provide users a decision-making platform and covers guidelines in completing balance sheet, income statement, statement in changes in equity, cash flow statement, and if necessary, notes to FS.  It is suggested that fair presentation is achieved when an entity follows the provisions of International Financial Reporting Standards (IFRS) in which IAS 1 aids in reminding entities to be explicit and make no reservation on reporting (IAS Plus 2006).  On the other hand, IAS 8 largely set out disclosure requirements and possible adjustments in related FS due to changes in accounting policies which give rise to change in accounting estimates and emergence of errors (IAS Plus 2006).  Its purpose is to inform and protect users against the risks of misleading forecasts about the past, present and future financial performance of an entity due to the changes in accounting policies.  To achieve this end, the provision lays two priorities for the reporting entity to use Standards and Interpretations as references for accounting framework prior to last resort of managerial judgment or recent pronouncements from standard-setting bodies (IAS Plus 2006).          Vodafone: Analysis of Compliance             According to IAS 1, disclosure of entity’s judgments and own policy in FS as well as non-compliance of IFRS should be justified according to its nature, reasons and impact (IAS Plus 2006).  The company reflects compliance in the portion pertaining to risk factors, trends and outlook primarily due to the shift to IFRS from UK and US GAAP.  For example, there is a risk in broader and global scope of IFRS governing body as it may significantly affect business performance and operations unlike the narrower view of national and regional policies (p. 43).  It also forecasted future growth and performance of the company under new accounting framework as far as 2007.  It closed the section by stating some cautions regarding the forward-looking statements as well as admitting non-GAAP information (pp. 46-47).  This is beneficial data for non-speculative and wealth-conscious investors as they tend to have a more long-term relationship with the company than speculators/ players in the stock market.                        Vodafone used IFRS in its consolidated FS for the year ended 31 March 2005 although the European Parliament already required companies for its usage since 2002 (Vodafone 2006 p. 25).  Due to this lagged, the firm is liable for retrospective application (IAS Plus 2006) which it is complied by showing comparative amounts and substantial explanation of the former (US GAAP) and new framework used in estimation (IFRS) (pp. 26-28).  Stating that the shift resulted to major effect in future performance and activities of the company (p. 25), the report presented restatements (note 40) and reconciliations (note 38) which sufficiently follows necessary disclosures required in policy change.  As the firm also uses UK GAAP apart from its US operations, (note 40) not only shows restatements of UK GAAP to IFRS but also revised the account format and labeling (e.g. turnover to revenues).  The latter move in a coinciding compliance with IAS 1 because UK GAAP that allows “exceptional non-operating items” in the P/L account is classified (e.g. non-operating income and expense, investment income, etc.) when converted in IFRS format (p. 128).                                      The company is operating and reporting in a global scale that it uses at least two accounting policies (e.g. UK and US GAAP).  However, by shifting to IFRS, the burden of adjusting to dissimilar reporting regulations is minimized by using a generally-accepted accounting standard.  Shareholders and potential investors are the groups that primarily benefited from these methodologies reflected in FS report of the entity.  The company warned them initially about the risks associated with policy shift and elaborated them with restatements.  As an illustration, (note 40) ended a loss for year ended 31 March 2005 using UK GAAP £ (7.5B) but IFRS bottom-line showed a profit £6.4B primarily due to measurement and recognition differences.  In addition, the bottom-line format of IFRS explicitly admits that the “profit for the financial year is attributable to equity shareholders” which provide a partial marketing clause to invest in the company unlike the implicit UK GAAP format of “loss for financial year” (Note: This may be more welcomed by the company because noone would like to gain a net loss).                         The presentation of UK GAAP and IFRS reconciliation is also done following IAS 8 guidelines for errors (IAS Plus 2006).  Since the company adapted IFRS only in 31 March 2005, it is obliged by the provision to restate the opening balances for 2004 and 2005 (p. 126) because they are part of the retrospective scope.  In this regard, shareholders and potential investors will not be anxious that past FS inconsistencies might affect the application of IFRS in the current FS report for 2006.  This will solidify the FS going public scrutiny in terms of credibility and efficiency in reporting.              Perhaps, the most frequent result of managerial judgment, accounting estimates require elaborated presentations especially when accounting policies which serve as conceptual frameworks for managerial decision-making are on a change.  This endeavor will benefit creditors as well as suppliers in determining the accurate size of assets of the company for credit rating and customer contract purposes.  In addition, Vodafone belongs to telecommunications industry which is a high-tech sector.  Assets and new developments/ inventions are necessary to remain competitive.  With the depth and dominance of Vodafone in the global arena, buying rights and patents including licensing is a common strategy.  In effect, even the government hosts to the technology of Vodafone can determine the applicable licenses or taxes that can be shouldered by the latter.  Without disclosing changes in accounting estimates, creditors, suppliers (e.g. technology) and host government will not fully understand the costing of the company which can lead to lost opportunity on both sides (refer to RIM vs NTP on patent infringement cited in CNET News 2003).              The preceding admonition is illustrated in shifting US GAAP to IFRS format and its impact on critical accounting estimates which in turn serve as the basis for completing the consolidated FS.  The two policies is largely separated by impairment methodologies with tax, estimation of asset’s useful life and determination for allowance on bad debts are pegged in managerial judgment (pp. 26-28).  As IFRS requires annual test of impairment, the company resulted impairment looses of several million pounds contrary to the US GAAP comparison of carrying value to undiscounted future cash flows.  This can affect valuation from possible licensees that seek to acquire or share the assets of Vodafone.  In the contrary, the company did not elected to apply IFRS on business combinations because of the difficulty of applying the requirements to the large number of business combinations it undertook (p. 27).  Such is evidence that the FS of the firm continued to benefit from the leniency of “impracticable clause” of IAS 8 which in accordance to global operations and size of the firm.  Company employees and resources are saved from this simplicity.                                               As IAS 1 applies to all FS that complies with IFRS, Vodafone incorporated basic guidelines.  There are far more notes than FS per se (e.g. from pp. 75-139 against pp. 72-74 respectively) and they are cross-referenced to the account concerned.  In addition, the format of notes mimic the policy of IAS 1 like prioritizing basis of preparation and accounting policies being used. “Net” is excluded in identifying the bottom-line account or the Profit/ Loss for the financial year.  The minimum requirement for specific accounts to be reflected in the Income Statement is also accounted for (e.g. there is revenue, finance costs, share of associate’s undertakings, tax expense).  The balance sheet is also unflawed with regards to IFRS conformity.  Accounts are categorized as current and non-current and minimum items required at the face of the balance sheet (e.g. intangible assets, inventories, etc.) (IAS Plus 2006).  However, there are many “other accounts” especially on non-current assets and current liabilities.  Statement on Changes in Equity is also followed with regards to IAS 1.  This positively impacts the comparability of the company’s FS with other companies especially within the same industry.  This will aid investors in allocating their capital on a homogenous decision platform. France Telecom: Analysis of Compliance             The situation of France Telecom (FT) with regards to its adaption of IFRS is congruent to Vodafone.  Perhaps this can be associated as the two are major players in the regional and global telecommunications industry.  FT also applied IFRS during its 2005 operations and used 2004 as comparative figure.  Initially, the firm presented how it transformed historical data to comparable data particularly financial results for 2004 (FT 2005 p. 11).  This is in accordance to IAS 8 but the manner it was elaborated is more extensive than Vodafone.  Perhaps, the bigger font size of the web document of FT FS report plays significant role.  As a thoroughly explained situation can provide users substantial facts about the accounting policy shift, there is also the risk of de-motivating them to read the document due also to the substantial effort needed.             But when observed closely, Vodafone has also the tendency to elaborate extensively the cause to historical figure of policy shift but FT is more detailed from one account to the other.  This can be primarily affected by the ongoing critical project of the company called “Ambition FT 2005” which started in 2002 (p. 15).  As a result, many accounts attributable to the project are adjusted to IFRS in reference to retrospection and its practicability because the project is attended so closely that it became part of the company’s major endeavors.  In effect, it is indeed practical to be retrospective and thorough explanation of comparative figures is inevitable.             The company is implicit that there are risks associated with the accounting policy shift.  This is evidenced by merely pinpointing “outlook” immediately after the changes in historic accounts (particularly 2004) are identified.  It informed the users about its customer-oriented plans like the 2006-2008 NEXT program which aims to introduce innovations, unify customer serve and adaptation of simplified brand architecture (p. 22).  Unlike the more aggressive cautions of Vodafone, FS is more customer-oriented which implicates that customers using the products and services of FS will greatly benefit in the FS report apart from potential and current investors who have financial stake on the firm.  The future trends of FT like the “development of new DSL, use of Live Box” are an obvious opposite of “impact of new competitors, downward pressure on termination rates from regulatory action”.  In effect, IAS 8 is undermined because the company fails to account the primary users of FS which are the shareholders and investors.             The customer-oriented balance sheet of FT can positively or negatively impact shareholders.  Positive as the report embodies a strategy on how to maintain and increase market share while there is adverse effect on shareholder impression on financial stability and consistency.  However, similarities are eminent.  The opening balance sheet of FT under French GAAP is compared with IFRS version.  Adjustments such as net value of properties for IFRS figures reduced the value of assets of French GAAP-quoted accounts (p. 215).  There are notes to serve as reference for adjustments not only on computations but accounts names.  For example, deferred income taxes is changed to deferred tax assets as well as “other” accounts are specified which is a compliance with IAS 1 and 8.  In addition, most of the notes pertain to implications to FS of IFRS adaption which complied with disclosures in accounting policy changes like the cause of change, amount of adjustment and retrospective applications (IAS Plus 2006).              The company applied the carrying amounts of the IFRS that affects most of its accounts especially the properties which resulted to reduction in impairment (p. 221) looses unlike Vodafone who increased impairment losses after adapting IFRS.  This shows that there are winners and gainers within the telecommunications industry in the effort to integrate operations to the needs of a globalized economy.  In turn, this indicated that Vodafone gripped in prioritizing standards, interpretations and recent pronouncements from regulatory bodies (IAS Plus 2006) before implementing managerial judgment.  This is because the company can use the managerial leniency in making flexible arrangements in accounting policy reconciliation but seemingly opted not to do so.             Parallel with Vodafone, FT stated specific provisions not in IFRS policy but is suitable to managerial decision making.  As observed, this is in compliance with IAS 8 particularly with regards to stating the reasons of adapting a different accounting policy (IAS Plus 2006).  With this, investors will not be discouraged and distrust the credibility if the company’s FS due to their “additions” in the on-going IFRS policies.  They are justified and the governing-bodies allowed justification as a part of managerial judgment.  For example, provision for pension plans and similar benefits is not a universal method to motivate employees and as such excluded in explicit IFRS policy.  In the contrary, the company had justified its use and compatibility with its current strategy including its significant effects when not accounted for.                   Lastly, it can be proved that FT diligently follows IFRS even with a more customer focus as its report accounted for expenses incurred during stock option grants which in French GAAP are not allowed to be compensated.  However, this are not cash transactions but only “entry” transactions.  This is in accordance to disclosure regarding capital transaction with owners and reconciliation of share capital account (IAS Plus 2006).  To investors and also internal employees, this can be an eye-opener that not all IFRS adjustments to country-based GAAP lead to increase in cash and in turn their gains and incomes.  There are some transactions that cannot increase the bottom-line that closer look to the effects of IFRS shift should be taken into account.             Conclusion             It is earlier noted that when an FS is presented using the framework of IFRS, financial performance and position of an entity is assured to obtain fair representation.  An FS is useful to specific users if it embodies their concerns such as earnings per share to shareholders, cash flows for suppliers, research and development feats for customers, provision for environmental liabilities for environmentalist, tax profit/ loss for the government and provision for pension benefits for employees and retirees.  More generally, FS should be useful and understandable to a broad-range of users because IFRS is biased on general purpose financial statements.  Vodafone and FT are both compliant with IAS provisions which are a segment of IFRS and show that it can obtain general benefits to users (e.g. clearness, simplicity, thoroughness).  However, they seemingly concentrated to one primary beneficiary of FS report and two to five secondary beneficiaries.  Environmental impacts of their operations are excluded to the loss of environmentalists and other authorities.  Then, the question in the introduction is finally answered… it depends on managerial judgment, perhaps, accounting knowledge and experience.              Credit:ivythesis.typepad.com

A Case Study on Vodafone

COMPLIANCE, PROFIT-SEEKING BEHAVIOR AND USER NEEDS: THE THREE CRITERIA OF ADAPTING A NEW ACCOUNTING POLICY Introduction As th...

Strategic Analysis and Choice of Orange Mobile Company

Introduction             The mobile Industry has been evolving now and then, from the “brick-size” phone to the size of a credit card, what comes next? In the advent of high-end technology, mobile phones become a necessity at the same time a leisure gadget that most teenagers enjoy. What has these phones got into? Well, they not only serve as communication purposes but it has become an icon, a fashion statement due to its complicated high-end features yet the simplicity of its function captures the heart of its consumers. In the words of Robin Richmond (n.d.), “the mobile phone industry is certain to continue evolving, with some research suggesting that one day phones will take the place of credit cards and the remote control.” We are given the capacity to personalize our mobile phones in every aspect or features. Much more, with the growing innovation of mobile phones it has likely influenced the desires of every consumer; good news for mobile industries that they would be able to advance to next level. The current fads that the consumer has well appreciated are unlimited video clips, video phone calling, camera, photo message, downloadable ring tones, wallpapers and screen saver and most of all, the mp3 player, if this is now? What comes next? That is what we call the never-ending strategy.                       An example of a mobile industry is the Orange Mobile Company. It was launched last April 1994, Orange was the fourth entrant into an already crowded UK mobile phone market, with an ambitious aim: to become the mobile provider of choice by making communications an intuitive and easily accessible part of daily life. Orange enlisted the influential brand consultancy Wolff Olins for help in producing a brand identity, name and visual style that would create high awareness … and attract customers. The products and services they offer are: mobile phones where in they work closely with major manufacturers such as Motorola, Nokia and Samsung; the internet where one can go livebox and livemusic. Colour was used simply and confidently, complemented by simple language, short sentences and an easy to read typeface. Words spelt out the customer benefit rather than the technical specification of a product. By the time Orange was sold to Mannesmann AG in 1999 Orange had launched in Switzerland and Belgium and had licensed its brand to companies in Hong Kong, Australia, Israel and India (www.orange.com).   In particular, this paper will be concentrating on Orange Mobile Company; one of the leading mobile industries in UK, with regards to its strategic marketing analysis. This paper will be discussing the importance of understanding competitors and how this understanding may facilitate successful planning of marketing activities and analyze these activities to conceptualize a profitable plan. The purpose of this paper is to give the researcher wide knowledge over strategic analysis and apply this knowledge in assessing the strategic analysis of Orange Mobile Company in particular context with its strategic business units , (France Telecom rebranded Wanadoo, and Equant ) and in the maintenance of the brand value in competition with other mobile industries (Cellnet and Vodafone). An in-depth analysis of product portfolio strategy with the use of its method, the Boston Consulting Group Box (BCG Box) is required as to facilitate the researcher in its aims for the paper.   Strategy             Strategy as defined by Johnson and Scholes (Exploring Corporate Strategy) as the direction and scope of an organization over the long-term; which achieves advantage for the organization through of configuration of resources within a challenging environment to meet the needs of the market and fulfill the needs of stakeholder expectations. Strategies exist in any areas of an organization from a group of businesses to the individuals working with it. The different levels of a business where in strategy became one of their cornerstones. We have the corporate strategy, business unit strategy and operational strategy. Corporate strategy is concerned with the overall purpose and scope of the business to meet stakeholder’s expectation. When we say, market scope it classifies as to which market a business should compete in and what kind of activities to be involved in the business incorporating the values and expectations of those who have power in and around the business. This level often stated their strategic decision-making through their mission statement. The said mission statement would guide them as to what they should do for the betterment of the business for the years to come. Business unit strategy is concerned on how the business competes successfully in the market. This refers as to what products that shall meet the demands of the customers, necessary skills that are required in gaining advantage over the competitors to further exploit and/or create opportunities. The firm’s operational strategy concerns mainly of the assets, finances, technical competence and the people. Job performance is influenced by the employee’s knowledge, attitude and skills in handling their day-to-day activities and issues. This is by upholding work ethics within the organization and during business affairs.   Strategic Management             Strategic Management is showing strategic timing in selling a stock. The diagram shown below clearly pinpoints the corporate, business unit and the operational strategies in the simplified five tasks.   In order for the said tasks to be realized there must be a thorough coordination with other departments so that strategic decisions answer the mission statement of the organization. It is an on-going process that challenges the organization to convert their mission statement into organizational objectives that pushes the firm to be inventive intentional and focused. In this way they could keep track of the company’s performance thus, error would be prevented and they would be able to dispose parts of their business that cannot generate adequate returns or that does not generate with their business strategy.   Strategic Analysis In thorough strategic management process, it has three main components shown in the figure below:   Strategic analysis by the term itself means it is by using strategic tools in order to methodically assess and analyze the firm’s strength in order to propel company’s ambition to its zenith considering their position or their standing in the competitive market and the influencing environment that might alter or improve their status. The strategic choice would involve the stakeholder’s expectation as their basis in making strategic choices and these choices are screened very well in order to implement these options. Strategic implementation is the crucial and most difficult of the three since; it has to be implemented into an action, and that the organization would act as a whole.   Business Portfolio             The Business Portfolio is the collection of business and products that make up the company. The best business portfolio is one that fits the company’s strengths and helps exploit the most attractive opportunities. The company must (1) analyze its current business portfolio and decide which business should receive more or less investment, and (2) develop growth strategies for adding new products and businesses to the portfolio, whilst at the same time deciding when products and businesses should no longer be retained.   Methods of Portfolio Planning             The two best-known portfolio planning methods are from the Boston Consulting Group and by General Electricity/Shell. In each method, the first method is to identify various Strategic Business Units (“SBU’s”) in a company portfolio. An SBU is a unit of the company that has a separate mission and objectives and objectives and that can be planned independently from the other businesses. An SBU can be a company division, a product line or individual brands – it all depends on how the company is organized.   The Boston Consulting Group Box (“BCG Box”)             It is a means of analysing and categorizing the performance of business units in large diversified firms by reference to market share and growth rates. Four main categories are displayed in a two-dimensional matrix, which seeks to identify those business units that generate cash and those that use it, and then to relate the position of the business units to the formulation of an overall business strategy (A Dictionary of Business; 2002). Resources are allocated to business units according to where they are situated on the grid as follows:   Using the BCG Box, a company classifies all its SBU’s according to two dimensions: on the horizontal axis: relative market share – this serves as a measure of SBU in the strength market; on the vertical axis: market growth share rate – this provides a measure of market attractiveness.   By dividing the matrix into four areas, four types of SBU can be distinguished:   · Stars – a business unit that has a large market share in a fast growing industry. Stars may generate cash, but because the market is growing rapidly they require investment to maintain their lead. If successful, they become cash cows (www.quickmba.com).               In relation, Orange mobile company has made strategic partnerships and alliances with some of the world’s leading suppliers and operators. They established the FreeMove alliance in 2003.  In 2006 they were joined by leading Nordic operator, Telia Sonera. This alliance ensures that customers have access to the same familiar services, like voicemail or customer service, abroad as well as at home. You can now even see who is calling when you roam on member networks. The services they offered are classifies into two: business and individual services. In the business sector – roaming services for international businesses, each with a consistent call rate for calls made and received when users are roaming abroad, and for international calls made from their home countries; also offered, data services including both GPRS and BlackBerry™. In this sector, they have an International customer service with International Business Care group, a multi-lingual team dedicated to providing great service to multi-national organizations. In the individual sector, they have the FreeMove answer, wherein they just have to dial their usual short codes to access voicemail and see whose calling; there is no need to re-programme the saved numbers for them to work internationally (www.freemovealliance.com). Aside from it, they join with Cingular Wireless combining okay strengths of coverage, network performance and business support services. These functionalities are the STARS of the Orange mobile company; the joint services offered will attract future customers as well as prospect businesses who would like to venture business with them. Thus, an increase demand of services also increases their sales.   · Cash Cow – a business unit that has a large market share in a mature, slow growing industry. Cash cows require little investment and generate cash that can be used to invest in other business units (www.quickmba.com).   France telecom acquired the Orange brand last August 2000 in effort to acquire the power of the Orange brand. Most of France Telecom’s mobile businesses were rebranded to Orange. France Telecom’s ambition is to be the first integrated telecoms operator in Europe and leader for convergence, delivering a ‘New Experience of Telecoms’ for its customers. This includes the rebranding of Equant and Wanadoo on 1 June 2006 – forming part of an international strategy to use the Orange brand commercially for mobile, fixed-line, broadband, multi-play and business offerings. This means a simple, single-company experience for customers as well as an exciting new generation of enhanced communications and converged services. The rebranding of the said business added brand value to the Orange brand. Knowing this, those individuals who use the previous brand now use the power name of Orange. This is an example of Cash cow since, the Equant and Wanadoo are already legitimate brands that are already recognized by the mobile market. The effect of rebranding escalated the number of prospect customers thus, Orange Company can generate fund from this to support other businesses that is still fresh in the competitive mobile market or other projects that has promoted the brand value of Orange. For an instance, the collaboration of Orange with PalmSource in the Palm Powered Mobile World Program, the joint forces of the two will bring a cutting – edge Palm Powered smartphones to the market.   ·                    Question Marks (or Problem Children) are businesses or products with low market share but which operate in higher growth market share at the expense of more powerful competitors. Management have to think about “question marks” – which one should they invest in? Which ones should they allow to fail or shrink?   In this category, these are the probable business units that might not continue to share in the market that will lead to product failure due to poor promotion and advertisement and the price is just costly that people wouldn’t spend a cent; or it might become the Stars and in the long run the Cash cows. The business units I’m referring are of those newly integrated services and products since; it is new there will always be questions that will arise and strategic planning must continue on and on in order, to finalize what particular procedure should be implemented. In addition, it is necessary that management of the marketing function be built upon purposively defined and analytically based marketing strategies. The strategic marketing planning, according to Allen (2006), involves basically three stages: (1) segmenting the market; (2) profiling the market segments; and (3) developing the market segment marketing strategy. Pease refer to Figure 4 for the outline. Considering that globally, it is a competitive market, it is a must that strategic planning must be done before making unnecessary unfit choices. After such strategic choices, strategic analysis is done to further enhance the chance of making it big.    In strategic analysis, the company must also learn to comprehend the competitors of a business in a given industry and developing methods as to distinguish it from them is a very relevant and critical aspect which influences the development of the competitive strategy of the firm. In addition, it is also an important aspect of the strategic planning process as it (1) facilitates the management to understand their competitive advantage or disadvantages associated to their competitors; (2) creates understanding of the competitors past, present, and future strategies; (3) offer an informed basis to develop strategies to gain and maintain competitive advantage in the future; and (4) to facilitate the firm in forecasting the returns that may be made from future investments (Tutor2u Limited 2005).               Proctor (2000) notes that understanding competitors is the core to making marketing plans and strategy. A firm has to compare its products, prices, channels of distribution and promotional methods with those of its competitors on a regular basis to make sure that it is not at a disadvantage. The process of the competitor analysis basically constitutes three steps. The first step is to identify the firm’s competitors. As for Orange Mobile Company, it has several competitors such as Vodafone and Cellnet.   The second step of the competitor analysis is the assessment of its competitors. This may be done through benchmarking as the firms will first have to determine the objectives of its competitors as well as their objectives, then later on assessing the strengths and weaknesses of its competitors. Lloyd, Elmuti and Kathawala (1997) notes that benchmarking sustains organizational growth as well as facilitates world-class competitive status.               Finally, the third step in the competitor analysis is the selection of competitors to avoid or to attack. After the assessment of the firm’s competitors, the firm will have to formulate the specific strategies that will give them the competitive advantage against its competitors.               It must be noted that during the process of competitor analysis and the implementations of its strategies, the firm will have to assess which of the competitors’ strategies that they will have to follow or not. The second stage which allows the company to compare their operations with others will necessitate some degree of change within the organization. Thus it should be very well noted that the company only as to follow the strategies that will apply to their business as every business is unique in their own nature. These strategies will have to be in lined with the company’s philosophies as well.   ·                    Dogs are the combination of low growth rate and market share is typical of these businesses and products, which operate in mature markets. Firms frequently face strategic decision regarding whether to continue to support dogs or to implement a divestment strategy. Barriers to exit (factors that make it difficult for a company to leave a make a market that is no longer profitable or that has ceased to provide an acceptable return on capital) would also need to be considered (A Dictionary of Business, 2002).   Using the BCG Box to determine the strategy is a way of maximizing the long-run interests of every group. Another is that by balancing properly the interests of major stakeholders, the long-range interests of all will be maximized. However, conventional strategic thinking suggests there are four possible strategies for each SBU: (1) build share: here the company can invest to increase market share like turning the Question mark into a Star (2) hold: the company invest just enough to keep the SBU in its present position (3) harvest: the company reduces the amount of investment in order to maximize the short term cash flows and profits from the SBU. This could be shown by turning the Stars into Cash cows (4) divest: the company can divest the SBU by phasing it out or selling it – on order to use resources elsewhere by investing into more promising Question marks.   Conclusion: The mobile industry has already extended throughout the world. Firms that operate within the mobile industry are categorized as a market structure that is highly competitive. Orange Mobile Company and its strategic marketing planning has been the focus of this research is that the Orange mobile Company as a market leader in the mobile industry.   The Strategic Management is the process of specifying an organization’s objectives, developing policies and plans to achieve these objectives, and allocating resources so as to implement the plans. There is a need to have a strategy that is concerned with the most important decisions made in an enterprise. The central thrust of these decisions is the future of the organization. In here, strategic planning must be done to “create” more desirable future results by (a) influencing the outside world or (b) adapting current programs and actions so as to have more favorable outcomes in the external environment.   This paper has strongly recognized the importance of understanding competitors in strategic marketing planning for the benefits that it gives to the successful planning of marketing activities. These benefits and advantages include the following. First, understanding competitors will facilitate the firm’s management to understand their competitive advantage and disadvantages in relation to their competitors. Second, understanding competitors will also generate understanding of the past, present and future strategies of the firm. Third, it offers the firm an informed basis to develop strategies in order to gain or maintain competitive advantage against their competitors in the future. Lastly, understanding competitors will also facilitate the firm in forecasting or predicting the financial returns that they made from future investments.   To further influence the strategic analysis of the Orange mobile Company, we use the BCG – share matrix. The experience curve represents a volume-cost relationship. It is argued that, as the cumulative historical volume of output increases, unit costs will fall at a geometric rate. This relationship is said to result from specialization, standardization, learning, and scale effects. The firm with the largest cumulative output will have lower costs, suggesting a strategy of early and price policies to develop volume. Credit:ivythesis.typepad.com

Strategic Analysis and Choice of Orange Mobile Company

Introduction The mobile Industry has been evolving now and then, from the “brick-size” phone to the size of a credit card...

Vodafone Marketing Strategy

Introduction Marketing is the process by which a product or service originates and is then priced, promoted, and distributed to consumers. In large corporations the principal marketing functions precede the manufacture of a product. Marketing involves different things like market research and product development, design, and testing. Marketing concentrates primarily on the buyers, or consumers. After determining the customers’ needs and desires, marketers develop strategies that are designed to educate customers about a product’s most important features, persuade them to buy it, and then to enhance their satisfaction with the purchase. Where marketing once stopped with the sale, today businesses believe that it is more profitable to sell to existing customers than to new ones. As a result, marketing now also involves finding ways to turn one-time purchasers into lifelong customers (Beckman & Davidson 1967).    Marketing includes planning, organizing, directing, and controlling the decision-making regarding product lines, pricing, promotion, and servicing. In most of these areas marketing has overall authority and it affects the decisions that concern the abovementioned different areas; in others, as in product-line development, its function is primarily advisory. In addition, the marketing department of a business firm is responsible for the physical distribution of the products, determining the channels of distribution that will be used, and supervising the profitable flow of goods from the factory or warehouse (Beckman & Davidson 1967). Marketing is about satisfying customer wants and needs and in the course of doing so facilitating the achievement of an organization’s objectives. By paying attention to customer wants and needs, organizations are more likely to achieve their objectives in the marketplace. Of course, organizations have to compete with each other and so also have to satisfy customers’ wants and needs at least as well as their competitors. Fortunately, organizations can do this in different ways (Proctor 2000). Of all the forces affecting modern marketing, perhaps none is more important than globalization. Local companies that never even considered international competition now find foreign competitors stocked on shelves right alongside their own products. Some economists argue that local companies should be protected from such competition through legislation that regulates the flow of goods through trade barriers and other measures.   Others oppose such regulation, arguing that it only raises prices for consumers. Globalization, however, is only one force changing the way companies market their products or services. Another involves changes in the very interests and desires of consumers themselves. Consumers today are more sophisticated than those of past generations. Competition also has sharply intensified, as the number of firms engaged in producing similar products has increased. Another force affecting modern marketing is the influence of the consumer rights or consumer protection movement. Environmental concerns have also affected product design and marketing, especially as the expense of product modification has increased the retail cost. Even the way a firm handles itself in public life has become significant. No longer may a corporation cloak its internal decisions as private affairs (Proctor 2000). The paper will discuss about the telecommunications industry. The paper will also discuss about a background of Vodafone group PLC. The paper will discuss what is meant of John Kay claims that Marketing capabilities are sometimes distinctive, sometimes reproducible and that the importance of the distinction for strategy is this; only distinctive capabilities can be the basis of sustainable competitive advantage. Lastly the paper will distinguish the sources of sustainable competitive advantage for Vodafone.   Background of the company One company belonging to the Telecommunications industry is Vodafone. This is one of the companies that people come to for their communication needs. Although it is futile to try to describe the state of affairs in telecommunications alliances because they change on a regular basis, examining some of the major attempts and events provides insight into this industry’s dynamics and future. There had been three primary global alliances that include Concert, Global One, and World Partners. These alliances illustrate different approaches to globalization. A close examination of strategic alliances in the telecommunications industry reveals that most of such alliances are pure play alliances; that is, ventures in which partners offered unlike  products, technologies, and markets. These markets are usually in the same market segments, such as content, communications, and applications. Verizon Wireless is an example of such a pure play alliance between Bell Atlantic/GTE and Vodafone Air Touch, a joint venture established to compete head-on with AT&T in the U.S. wireless market. Another type of alliance is converging alliances which means two companies from different industries collaborating because of converging technologies, enabling innovative services (Culpan 2002). Telecommunication companies also seek to overcome entry barriers by completing cross-border mergers and acquisitions. Founded in the United Kingdom in 1984, Vodafone Air Touch is the world’s largest mobile phone group (Harrison, Hitt & Ireland 2001).   By giving Vodafone immediate access to over 360,000 customers in nine western US states, this acquisition allowed the firm to overcome entry barriers quickly. The deal is further evidence that Vodafone Air Touch is anxious to achieve national coverage in the U.S. Late in 1999, Vodafone made a 5.3 billion hostile takeover bid for Mannesmann AG, an old-line industrial company that reinvented itself as a telecommunications powerhouse. At the time, this was the largest hostile takeover bid on record. After its completion, this transaction dramatically extended Vodafone’s global reach (Harrison, Hitt & Ireland 2001). Vodafone provides a service that gives business information based on a user’s location, such as the nearest restaurant. The wireless device a phone can even provide directions to a business that has been selected by the customer. Vodafone recently announced a million user trial for m-payments in the United Kingdom, Germany, and Italy. Customers will be able to make credit or debit payments on a mobile platform, authorizing them with a PIN code (Luftman 2003).     The payment system itself is an open standard and the cost of the call is the only fee charged by Vodafone. The Vodafone example represents an important change in the financial payments industry that impacts the consumer and the merchant, the mobile operator, the content provider, and anybody else along the value chain. An even more disruptive change can soon follow.   Such a concept could replace existing payment tools and move the society closer to the notion of a cashless society (Luftman 2003). The Middle East magazine (December 2003, p.46) states that despite the sustained downturn in the global telecoms sector, a host of new tenders for mobile licenses are in the process of being launched in the Middle East. Iran, Algeria, and Jordan all plan to issue their second or third GSM licenses, introducing more competition into the industry and generating much needed revenues for the respective governments. However, the governments involved will certainly be aware that they are unlikely to recoup any thing like the same level of license fees that accompanied the first tranche of GSM licenses. The new licenses may be attractive to private companies both inside and outside the region, but the optimism and available capital, which buoyed the sector a few years ago, are gilt a memory. While greater competition is being injected into national markers, relatively little effort had been put into integrating services in the Middle East until recently. In September, however, Fastlink of Jordan and MTC Vodafone of Kuwait struck a deal whereby multimedia messages (MMS) can now be sent between the two networks. It is the first cross-border facility of its type in the region. Bashar Arafeh, Fastlink’s marketing and mobile data services director, thinks the deal could be a prelude to connecting all cellular networks across the region ensuring that swapping multimedia messages becomes an easy part of everyday life, similar to the way most people consider sending an SMS without a thought. In addition, Motorola has signed a m contract with MTC Vodafone to expand network capacity and coverage within Kuwait.   The first table will show the annual income statements of the company. Amounts are in millions of dollars. Year Revenue Gross Profit Operating Income Total Net Income Mar 2006 41, 319 (7,601) (15,153) (23,081) Mar 2005 78, 018 17,136.5 (15,729.1) (25,896.4) Mar 2004 61,285.4 25,745.8 (21,605.8) (14,841.5) *Taken from www.hoovers.com   The table shows that the company is not doing well financially. It can be due to the rise of competition and the emergence of new players in the telecommunications industry. It can also be due to the financial problems experienced in the country. Although it is not doing well financially it is competing well and enjoying success in the different markets it has through the different groups belonging to Vodafone.   Comparison of Batelco and MTC Vodafone For such a relatively small state, Bahrain enjoys a modern telecommunication system that supports the service industry and promotes its growth. In 1968, Bahrain became the site for the first satellite earth station of Intelsat’s satellite network in the Middle East (Kamalipour & Mowlana 1994). Bahrain has historically been in the centre of regional trade, benefiting from its geographical situation and its natural resources. Today the emirate has turned its attentions to the trade in money and tourists in order to be ahead of the game in the 21st century. Batelco, was established in 1981 and was the first telecommunications company in the Middle East to be awarded the International Standards Organization (ISO) certification, for the quality of its services. Batelco began installing the million Gulf Submarine Fiber Optic Cable in 1996 which will link Bahrain to Kuwait, Qatar and the United Arab Emirates, providing high-grade digital transmission links between the four Gulf states and the world (Nugent 1997).   Bahrain went online in November 1995 through Batelco’s network at a time when many other Middle Eastern countries were reticent about the consequences of being connected to the unregulated worldwide Internet system. Within a year there were around 3,000 local subscribers and several Bahrain-based World Wide Web page design companies. Like many companies worldwide Bahraini firms are using the Internet to publicize and market their products and services: banks, insurances companies, even Bahrain International Airport, have web pages. Batelco also provides an online directory of information about Bahrain and its tourist attractions (Nugent 1997). MTC Vodafone has a worldwide reach and it reaches more places while Batelco is currently serving only the market in Bahrain. Batelco started earlier than MTC Vodafone thus Batelco has more experience in the telecommunications industry and it has a higher understanding of how the industry works.   Marketing capabilities as being distinctive and reproducible Competitive advantage should be built on the basis of core competencies. Through the identification of its distinctive competencies and the relating of them to its core products, a firm can develop purposeful plans utilizing those capabilities. New capabilities can be acquired if required to achieve the greatest sustainable advantage. If a firm identifies its core competencies incorrectly this will result in the firm overlooking attractive opportunities and lead it to pursuing poor ones. In searching for a competitive advantage, businesses often develop capabilities in key functional areas. To be sustainable, these capabilities must be difficult to imitate and should support the organization’s business strategy. Organizations that stress the development of key capabilities are better able to achieve and maintain a position of advantage despite turbulent environmental impacts on the business. The development of key marketing capabilities has been identified as one of the primary ways firms can achieve a competitive advantage (Proctor 2000). In this context, firms must develop processes that allow them to collect information about market opportunities, develop goods and services to meet the needs of targeted customers in selected markets, price these products according to market information, communicate product advantages to potential customers and distribute products to customers. Organizational capabilities play an important part in achieving a competitive advantage marketing capabilities are the integrative processes designed to apply the collective knowledge, skills and resources of the firm to the market-related needs of the business, enabling the business to add value to its goods and services, adapt to market conditions, take advantage of market opportunities and meet competitive threats (Proctor 2000).   Risk is part and parcel of business life and risk sharing with other organizations is one way of dealing with problems that risk brings. Risk arises in different ways. For example, the disappearance of market boundaries in the information industry illustrates this. Telecommunications, consumer electronics, entertainment media, publishing and office equipment industries have all come together so that the industry is an amalgam of other industries. Individual firms trying to compete for the attention of customers encounter problems where there is a widening of the range of customer requirements and technologies available to satisfy customer requirements. The kind of products required often exceeds the design, manufacturing and marketing capabilities of a single company. It is often not cost effective for an individual firm to develop internally the full range of skills and capabilities required to compete effectively. Indeed, such skills and resources are more cheaply available through alliances with other firms which can contribute their own core competencies (Proctor 2000).   Marketing capabilities are distinctive among companies and people in the different companies. Some companies have evident marketing capabilities while others have a little capability.  Vodafone has an evident and unique marketing capability this is shown thru their success in the foreign markets. People recognize the company and know the company’s different products and services. Marketing capabilities are reproducible among companies. Even if one company lacks marketing capabilities it can be reproduced through it gaining marketing knowledge and ideas. Marketing capabilities can also be enhanced through learning new marketing techniques and practices.   Sources of sustainable competitive advantage The basic logic of the resource-based view (RBV) is relatively simple. It starts with the assumption that the desired outcome of managerial effort within the firm is a sustainable competitive advantage (SCA). Achieving an SCA allows the firm to earn economic rents or above-average returns. In turn, this focuses attention on how firms achieve and sustain advantages. The resource-based view contends that the answer to this question lies in the possession of certain key resources, that is, resources having the characteristics of value, appropriability and barriers to duplication. An SCA can be obtained if the firm effectively deploys these key resources in its product markets. Therefore, the RBV emphasizes strategic choice, charging the firm’s management with the important tasks of identifying, developing and deploying key resources to maximize returns. The list of resources in any given firm is likely to be a long one (Fahy 2001).   One of the principal insights of the resource-based view of the firm is that not all resources are of equal importance or possess the potential to be a source of sustainable competitive advantage. Much attention has focused, therefore, on the characteristics of advantage-creating resources. The inability of competitors to duplicate a given firm’s bundle of resources or their deployment is one of the defining issues within the resource-based view of the firm and one that has been the subject of much attention. Resource heterogeneity is a fundamental assumption within models of imperfect competition and the RBV is concerned with understanding the persistence of this heterogeneity. Rareness can be considered as one of the key characteristics necessary before a resource has the potential to generate sustainable competitive advantage (Fahy 2001).   A firm’s resources are a source of sustainable competitive advantage if they possess the three key characteristics of market value, appropriability and barriers to duplication. A further trait gaining some attention in the literature recently has been durability of the resource. For example, the life span of technological resources is getting much shorter due to the pace of innovation, though resources such as corporate and brand reputation appear to be much more durable. However, as long as a resource is valuable, appropriable and resists duplication it enables the firm to attain a sustainable competitive advantage. Should the resource be durable, the advantage may last for a longer period subject to the efforts of competitors to duplicate it. A sustainable competitive advantage arising from resource heterogeneity can be expected to lead to superior performance levels or rent. However, to ensure that the level of such returns is not overstated it is also necessary to take account of the cost of resource deployment (Fahy 2001).   The resource-based view assumes the existence of firm heterogeneity and resource heterogeneity within firms as well as the possibility of sustained superior performance or economic rent. It provides a set of insights into the relationships between key resources available to the firm, managerial choices with respect to those resources and the levels of competitive advantage and performance attained by the firm in the marketplace. One of its key insights is that not all resources are of equal importance in terms of achieving a sustainable competitive advantage. Rather, it is only those resources that possess the characteristics of value, appropriability and barriers to their duplication by competitor (Fahy 2001).   The company’s source of competitive advantage includes it being an innovator and pioneer in the telecommunications industry.  It was one of the pioneers of the industry that is why it has competitive advantage. Another source of competitive advantage for the company is its notoriety and reputation. The company is known even in US markets. People buy its products because they believe that the company offers the best products and their products are tried and tested. Lastly a source of sustainable competitive advantage is its distinct marketing strategy. It forges alliances with different companies and telecommunication industries all over the globe for it not to have difficulty in entering new markets.   Summary and Conclusion Telecommunications enables people to send and receive personal messages across town, between countries, and to and from outer space. One company belonging to the Telecommunications industry is Vodafone. This is one of the companies that people come to for their communication needs. Vodafone is one of the world’s largest mobile phone groups. It is one of the 10 largest companies in the United Kingdom. Vodafone provides a service that gives business information based on a user’s location, such as the nearest restaurant. The wireless device a phone can even provide directions to a business that has been selected by the customer. The company’s source of competitive advantage includes it being an innovator and pioneer in the telecommunications industry. Another source of competitive advantage for the company is its notoriety and reputation. Lastly a source of sustainable competitive advantage is its distinct marketing strategy. With proper marketing management and proper use of the different competitive advantage it has, the company can gain success. Credit:ivythesis.typepad.com

Vodafone Marketing Strategy

Introduction Marketing is the process by which a product or service originates and is then priced, promoted, and distributed to cons...

COMPLIANCE, PROFIT-SEEKING BEHAVIOR AND USER NEEDS

Introduction             As the global economy matures, there is a need to globalize and integrate accounting polices for efficient and effective cross-border trading.  However, it is still questionable that companies apply internationally-accepted principles due to profit-seeking stance.  More so, the emphasis given to situate FS structure to a wide-range of users may be undermined.  But it is assumed that when international standards are used, the usefulness of FS on general users is assured.  This paper discusses the ability of Financial Statements (FS) to reflect corporate performance and position that can be useful to a wide-range of users.  The ultimate question is that “What will be the core objective of the reporting entity?”   The IAS Framework IAS 1 accounts compliance of an entity in presenting, structuring and satisfying disclosure requirements for general purpose FS (IAS Plus 2006).  Its purpose is to provide users a decision-making platform and covers guidelines in completing balance sheet, income statement, statement in changes in equity, cash flow statement, and if necessary, notes to FS.  It is suggested that fair presentation is achieved when an entity follows the provisions of International Financial Reporting Standards (IFRS) in which IAS 1 aids in reminding entities to be explicit and make no reservation on reporting (IAS Plus 2006).  On the other hand, IAS 8 largely set out disclosure requirements and possible adjustments in related FS due to changes in accounting policies which give rise to change in accounting estimates and emergence of errors (IAS Plus 2006).  Its purpose is to inform and protect users against the risks of misleading forecasts about the past, present and future financial performance of an entity due to the changes in accounting policies.  To achieve this end, the provision lays two priorities for the reporting entity to use Standards and Interpretations as references for accounting framework prior to last resort of managerial judgment or recent pronouncements from standard-setting bodies (IAS Plus 2006).           Vodafone: Analysis of Compliance             According to IAS 1, disclosure of entity’s judgments and own policy in FS as well as non-compliance of IFRS should be justified according to its nature, reasons and impact (IAS Plus 2006).  The company reflects compliance in the portion pertaining to risk factors, trends and outlook primarily due to the shift to IFRS from UK and US GAAP.  For example, there is a risk in broader and global scope of IFRS governing body as it may significantly affect business performance and operations unlike the narrower view of national and regional policies (p. 43).  It also forecasted future growth and performance of the company under new accounting framework as far as 2007.  It closed the section by stating some cautions regarding the forward-looking statements as well as admitting non-GAAP information (pp. 46-47).  This is beneficial data for non-speculative and wealth-conscious investors as they tend to have a more long-term relationship with the company than speculators/ players in the stock market.                        Vodafone used IFRS in its consolidated FS for the year ended 31 March 2005 although the European Parliament already required companies for its usage since 2002 (Vodafone 2006 p. 25).  Due to this lagged, the firm is liable for retrospective application (IAS Plus 2006) which it complied by showing comparative amounts and substantial explanation of the former (US GAAP) and new framework used in estimation (IFRS) (pp. 26-28).  Stating that the shift resulted to major effect in future performance and activities of the company (p. 25), the report presented restatements (note 40) and reconciliations (note 38) which sufficiently follows necessary disclosures required in policy change.  As the firm also uses UK GAAP apart from its US operations, note 40 not only shows restatements of UK GAAP to IFRS but also revised the account format and labeling (e.g. turnover to revenues).  The latter move is a coinciding compliance with IAS 1 because UK GAAP that allows “exceptional non-operating items” in the P/L account is classified (e.g. non-operating income and expense, investment income, etc.) when converted in IFRS format (p. 128).                                        The company is operating and reporting in a global scale that it uses at least two accounting policies (e.g. UK and US GAAP).  However, by shifting to IFRS, the burden of adjusting to dissimilar reporting regulations is minimized by using a generally-accepted accounting standard.  Shareholders and potential investors are the groups that primarily benefited these methodologies reflected in FS report of the entity.  The company warned them initially about the risks associated with policy shift and elaborated them with restatements.  As an illustration, note 40 ended a loss for year ended 31 March 2005 using UK GAAP £(7.5B) but IFRS bottom-line showed a profit £6.4B primarily due to measurement and recognition differences.  In addition, the bottom-line format of IFRS explicitly admits that the “profit for the financial year is attributable to equity shareholders” which provide a partial marketing clause to invest in the company unlike the implicit UK GAAP format of “loss for financial year” (Note: This may be more welcomed by the company because no one would like to gain a net loss).                           The presentation of UK GAAP and IFRS reconciliation is also done following IAS 8 guidelines for errors (IAS Plus 2006).  Since the company adopted IFRS only in 31 March 2005, it is obliged by the provision to restate the opening balances for 2004 and 2005 (p. 126) because they are part of the retrospective scope.  In this regard, shareholders and potential investors will not be anxious that past FS inconsistencies might affect the application of IFRS in the current FS report for 2006.  This will solidify the FS going public scrutiny in terms of credibility and efficiency in reporting.                Perhaps the most frequent result of managerial judgment, accounting estimates require elaborated presentations especially when accounting policies which serve as conceptual frameworks for managerial decision-making are on a change.  This endeavor will benefit creditors as well as suppliers in determining the accurate size of assets of the company for credit rating and customer contract purposes.  In addition, Vodafone belongs to telecommunications industry which is a high-tech sector.  Assets and new developments/ inventions are necessary to remain competitive.  With the depth and dominance of Vodafone in the global arena, buying rights and patents including licensing is a common strategy.  In effect, even the government hosts to the technology of Vodafone can determine the applicable licenses or taxes that can be shouldered by the latter.  Without disclosing changes in accounting estimates, creditors, suppliers (e.g. technology) and host government will not fully understand the costing of the company which can lead to lost opportunity on both sides (refer to RIM vs NTP on patent infringement cited in CNET News 2003).                The preceding admonition is illustrated in shifting US GAAP to IFRS format and its impact on critical accounting estimates which in turn serve as the basis for completing the consolidated FS.  The two policies is largely separated by impairment methodologies with tax, estimation of asset’s useful life and determination for allowance on bad debts are pegged in managerial judgment (pp. 26-28).  As IFRS requires annual test of impairment, the company resulted impairment looses of several million pounds contrary to the US GAAP comparison of carrying value to undiscounted future cash flows.  This can affect valuation from possible licensees that seek to acquire or share the assets of Vodafone.  In the contrary, the company did not elected to apply IFRS on business combinations because of the difficulty of applying the requirements to the large number of business combinations it undertook (p. 27).  Such is evidence that the FS of the firm continued to benefit from the leniency of “impracticable clause” of IAS 8 which in accordance to global operations and size of the firm.  Company employees and resources are saved from this simplicity.                                              As IAS 1 applies to all FS that complies with IFRS, Vodafone incorporated basic guidelines.  There are far more notes than FS per se (e.g. from pp. 75-139 against pp. 72-74 respectively) and they are cross-referenced to the account concerned.  In addition, the format of notes mimics the policy of IAS 1 like prioritizing basis of preparation and accounting policies being used. “Net” is excluded in identifying the bottom-line account or the Profit/ Loss for the financial year.  The minimum requirement for specific accounts to be reflected in the Income Statement is also accounted for (e.g. there is revenue, finance costs, share of associate’s undertakings, tax expense).  The balance sheet is also unflawed with regards to IFRS conformity.  Accounts are categorized as current and non-current and minimum items required at the face of the balance sheet (e.g. intangible assets, inventories, etc.) (IAS Plus 2006).  However, there are many “other accounts” especially on non-current assets and current liabilities.  Statement on Changes in Equity is also followed with regards to IAS 1.  This positively impacts the comparability of the company’s FS with other companies especially within the same industry.  This will aid investors in allocating their capital on a homogenous decision platform. Credit:ivythesis.typepad.com

COMPLIANCE, PROFIT-SEEKING BEHAVIOR AND USER NEEDS

Introduction As the global economy matures, there is a need to globalize and integrate accounting polices for efficient an...

This Report aims to discuss the strategic practices of Vodafone

Context 1.1) Aims and Scope             This report aims to discuss the strategic practices of Vodafone. Basically, this study will illustrate the understanding of how the competitive environment and internal capabilities of Vodafone have combined to influence their IS strategies and development. This paper is also capable of demonstrating how the use of technology has related at least in part to the development of competitive advantage. Moreover, this paper will also provide a clear focus on specific strategic IT/IS issues e.g. competition, changes in customer preferences, increased use of technology in processes to increase competitiveness, technological innovations, threat of new entrants to market, outsourcing of activities to improve cost efficiencies, etc. Apparently, this will also provide significant discussion pertaining to the external IT/IS environment impacts on the internal workings of Vodafone.   1.2) Introduction             IS implementation to Vodafone is very vital since most of their products are most likely about technology and communication.  However, before we start on analysis, let us consider the types of evaluation method that we can possibly use in Vodafone. Accordingly, a system is known as a set of elements which are connected or interrelated with each other. In analyzing the element of a system, such as Information System, the modes of enquiry are used. Basically, modes of Enquiry is divided into three categories, the simple (inductive-consensual and analytic deductive), complex (dialectic and multiple realities) and innovative (unbounded systems thinking).  These modes enable us to break a certain system down into smaller sub-system and focus on how each of these sub-systems became an important factor for achieving the goal of the system. Base on a real world scenario each modes of enquiry system will be analyzed in terms of their strengths and weaknesses.  As mentioned, modes of enquiry includes inductive consensual, analytic deductive, dialectic, multiple realities and unbounded systems thinking.   1.3) A critique of different modes of enquiry 1.3.1) Inductive-Consensual Inductive-Consensual mode of enquiry is an approach that enables us to have an outcome based on a limited set of observations. With these formulated observations, only one conclusion must be considered.  In this method, there are three kinds of analysis that may be used: analogous, historical or multiple independently sourced.  Herein, the decision maker must first formulate a problem, after which, a set of observations or plausible solutions can be provided.    1.3.2) Analytic-Deductive Analytic-Deductive is one a mode of enquiry which views the world as formula. This enquiry often highlights logical consistency. This method believed that everything leads only to one answer, i.e. the truth. The main attribute of this method is its ability to break down the issues into different part through reductionism, which is helpful in identifying a plausible solution. This enquiry attempts to analyse the issue base on the categories part, to be able to get some insightful details and solution parts by parts.   1.3.3) Multiple Realities Multiple Realities is another mode of enquiry used in decision-making process. This mode of enquiry is somewhat similar to inductive consensual and analytic-deductive inquiry system.  However, in this mode of enquiry, the information or data used are more complex and needs more strategic ways to arrived at a certain solution. In addition, the multiple realties approach does not only adhere to the determination of a specific solution or outcome.  This is because, multiple realities, focuses on representing problems in a broader and wider perspectives. In this manner, the management or the decision maker, will become more involved to the decision-making process and may have more factors to choose from.   1.3.4) Dialectic As mentioned above, another mode of enquiry used in decision-making process is the dialectic approach. This enquiry system is used not for setting data, observations or issues but is used to give emphasis on the differences traditional and typical assumptions. In addition, this system may also provide different perspective for a common data which can be useful for having a smooth and progressive decision making process. For example, in terms of using the internet in banking industries, with the use of dialectic approach, the decision-maker may use some conflict factors in order to have a new truth for the issue.  By determining two contradicting, polarized standpoints and about internet banking (Tan, Yen & Fang, 2002) the management can efficiently select the best options.  In addition, this can help the management to anticipate plausible outcome or impact caused by the application of this information system to business.   1.4 Conclusions             As seen in the previous discussion, there are modes of enquiry that we can use in order to evaluate the current stance of Vodafone in consideration to IS implementation. In the fast-paced world of business, managers and entrepreneurs alike often lose sight of their ultimate objectives because they are preoccupied with more immediate concerns of the business venture. This has, in one way or the other, fatally caused their failure to anticipate future scenarios, proving damaging to the enterprise. Therefore, the sacred duty of those in authority to think of strategies that the business will undertake remains vital to the organization’s achievement of their previously set objectives. Formulating sound business strategies may not be the only key to success, but without it, there is a greater chance that the business will fail. Strategy is used by businesses to describe a variety of planning activities with a generally agreed upon purpose of directing the organization to a successful course of action over an extended time frame. However, before one proceeds to the hustle and bustle of the actual strategy formulation and later incorporating it in the overall strategic plan, there is an initial need to clarify the two basic concepts involved in the process, namely strategy and strategic planning. It is easy to dismiss the concepts as one and the same, but Professor  stated otherwise. With this regard, strategic practices essential to Vodafone should be carefully analyzed.    External Environment 2.1) Introduction Vodafone is one of the top companies if mobile phones and communications technology is being discussed.  The company offers top products and services with regards to the said category thus, it is very vital for them to evaluate the external environment and stance of the company.  The external environment of Vodafone plays an important role in thier IT strategic decision-making. External environment has impact on the IT strategies of Vodafone since they are parts of the system called macro-environment. Unlike the microenvironment (internal environment), macro-environment includes factors that are uncontrollable by the company such as the political trends, demographics, economics or business conditions, social and technological trends. Since Vodafone moves in a macro-environment, its strategic planning must involve the use of quality sources of reference to determine the interconnectedness and impact of the factors mentioned in the IT strategies of the company.   2.2) External Factors 2.2.1) Political Factors With regards to the political factors of Vodafone, observers will see a continuing progression in the ruinous steps which have forced the industry into a socio-politico-economic corner. Whether this is related to flat demand or to the industry’s creation of an ever-wider range of vehicles that many buyers seem to care little about, there is a problem. The industry is likewise linked closely to the policies of governments, the earnings of communication business. Little wonder then that so many emerging countries are keen to develop a communication sector or that there is such a political pressure to protect it in the developed countries. The world’s communication industry is currently dominated by little more than a handful of firms, each wielding colossal financial, emotional and political power. The industry’s approach to dealing with political institutions has not always been brilliant. It tends to be good on technical issues, although it has not always fully presented the longer-term options, in order to make the choices and their implications clear.   2.2.2) Economic Factors For much of the developed world, and increasingly fro the developing world, the communication industry is a pillar industry, a flag of economic progress. Without an communication industry, it is impossible to develop an efficient telephone business, a network industry or a computer business – other central foundations of economic progress. The communication industry in which Vodafone is attached has been a core industry, a unique economic phenomenon, which has dominated the twentieth century. However, the industry now suffers from a series of structural schisms and has become riddled with contradictions and economic discontinuities. For the capital markets and the finance sector, it has lost a lot of its significance, as a result of ever declining profits and stagnant sales. The proliferation of products means that it has become hopelessly wasteful of economic resources. While all these and more sound like a very gloomy assessment of such a vast economic phenomenon, the industry is not in the end despondent. A different future is possible for the industry, a highly desirable one.     2.2.3) Social Factors The world’s communication industry let say Vodafone, affects the society as a whole. It employs millions of people directly, tens of millions indirectly. Its products have transformed society, bringing undreamed-of levels of mobility, changing the ways people live and work. The social value of the additional mobility that this industry brings involves the value of the people being able to commute over longer distances easily, among many others. For most of its existence the communication and technology industry has been a model of social discipline and control and it is not just that the communication and technology sector offers a ‘pillar’ of something else. There are, on the other hand, particular social issues to address in many developing countries, often those that are the result of an undertone of religious faith. The automotive industry has the role to play in helping develop the mobility of such countries and it can be achieved at an acceptable social cost of the country is prepared to learn the necessary lessons from those who have travelled this route before it, and to make the necessary investments.   2.2.4) Technological Factors The Vodafone works on a scale so awesome and has an influence so vast that it is often difficult to see. The level and diversity of technologies that it must deploy are increasing, which imposes both new investment burdens and new uncertainties and risks. Roughly a million mobile phones and other communication technology are built around the world each week – they are easily the most complex products of their kind to be mass-produced in such volumes. The company uses manufacturing technology that is the cutting edge of science. But still, the potential for developing coordination skills, intellectual capabilities and emotional sensitivities through electronic technologies remain far from fully exploited.   2.2.5) Global With regards to the global performance of the company, Vodafone is quite expressive as compared to other communication and technology businesses. Other than the mobile phones and communication technologies themselves, the business is intricately tied to the manufacture of a wide range of components and the extraction of precious raw materials. The effect to the communication companies like Vodafone are that they needed to establish R&D centres to take advantage of research infrastructure and human capital, so that they can develop communication products locally to satisfy the requirements of the global environmental and safety regulations more effectively.   2.3) SWOT Analysis             2.4) Conclusion   Task 3 (Approximately 1400 words) 3.1) Introduction 3.2) Risk Analysis 3.3) IS Strategy/Planning – Porter’s Framework 3.3.1) Value Chain Analysis (please include the figure) 3.3.2) Porter’s forces (the analysis should be drawn from the”effect /probability/action grids”(to be included in the appendices))   3.4 Conclusion   Task 4 (Approximately 900 words) 4.1) Introduction 4.2) Soft Systems Methodology (SSM) 4.3) Stages of SSM 4.4)Study for the case 4.4a)Illustration of Stage 1 and Stage 2 as a whole in SSM(include the figure of Rich Pictures) 4.4b)Stage 3: Naming Of Relevant Systems. 4.4b1)Root Definition 4.4b2)CATWOE analysis 4.4c)Stage 4: Conceptual Models( include the figure of conceptual model) 4.4d)Stage 5: Comparing Conceptual Models with Reality 4.4e)Stage 6 and 7: Implementing ‘Feasible and Desirable’ Changes —Pls reference for the SSM_reference.rar to finish this part, thks—- 4.5) ICDT Model 4.6) SSM/ICDT Approach 4.7) Conclusion   Task 5 (Approximately 300 words) 5.1) Summary Appendices References Bibliography (Any thoughts, ideas or quotations which don’t belong to you must be fully attributed to their sources using the appropriate in-text citation and bibliography using the Harvard Referencing System. Authors work that is used in the paper and not referenced is plagiarism.) Credit:ivythesis.typepad.com

This Report aims to discuss the strategic practices of Vodafone

Context 1.1) Aims and Scope This report aims to discuss the strategic practices of Vodafone. Basically, this study will illu...