Vodafone Group Plc.

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An CAO                                         

110017566

Corina Baltag

110028142

Shafik Ali Bin Raja Mohamed

100064665

Table of Content[pic 3]

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Company Profile

Vodafone Group Plc. is a multinational telecommunications company, which is headquartered in London, United Kingdom. It is the second largest mobile group in the world, second only to state owned China Mobile (http://www.telegraph.co.uk/finance/2945382/Vodafone-loses-crown-as-worlds-biggest-mobile-group.html).  It offers a wide range of services and products. This includes voice messaging, data services, fixed-line solutions and communications devices (http://uk.reuters.com/business/quotes/companyProfile?symbol=VOD.L). In just 25 years since Vodafone started, it has grown into a multinational corporation and the 7th most valuable brand in the world. Vodafone now operates in over 30 countries and partner with networks in over 40 countries (http://www.vodafone.com/content/index/about/about_us.html). Vodafone has a market capitalization of about £87.09bn (http://markets.ft.com/research/Markets/Tearsheets/Summary?s=uk:vod). It is also the 3rd largest company by market value on the London Stock Exchange (http://uk.finance.yahoo.com/news/Week-Ahead-Vodafone-Compass-digilook-2362102432.html?x=0). [pic 5]

Competitiveness

Figure 1: UK mobile network sector by market share

(http://www.telecomsmarketresearch.com/resources/UK_Mobile_Operator_Subscriber_Statistics_2.shtml#Mobile_Operator_Market_Share_1Q10)

The UK market for the mobile network is highly concentrated. In 2010, as Figure 1 shows, the four-firm concentration ratio was 92%. Vodafone acquired 24%, ranked second after O2. However, with the merger between T-Mobile and Orange, Vodafone found more worrying market position since it would face with a much larger takeover firm named Everything Everywhere which had 41% market share. (http://www.shinyshiny.tv/2010/05/orange_and_t-mobile_everything_everywhere.html) The Oligopolistic market, therefore, could be argued that less competitive with significant barriers to entry to the industry[pic 6]

There are significant barriers to entry to the industry. Even demand for mobile phone has increased significantly, new entrants could find it extremely hard to attract new costumer. The reason is these five largest firms usually have huge advertising budgets which used to increase brand awareness and create brand loyalty among their customers. Vodafone, which ranked after O2 in the bradtop100, in 2010, spent £44.5 million on advertising in order to boost its image. http://www.bradtop100.co.uk/10-telecommunications/05-vodafone-uk-ltd). Millions of pounds spent on branding are not an option for new entrants who lack sufficient capital. This, in turn, restricts their eagerness to enter the industry.