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C A S E T E A C H I N G N O T E S
Vodafone: developing communications strategy
in the UK market
Roger Strang
1. Introduction
This case deals with a key strategic issue facing companies in the communications industry (and
other industries); namely how to retain market leadership as traditional industry boundaries
2. Position of the case
The case is concerned with developments in the communications industry and both business
3. Learning objectives
The case is intended to help students understand the value of industry analysis in the strategy
development process and to give them practice in applying industry analysis in an interesting
4. Teaching scheme
Vodafone lends itself to plenary discussion by working through the questions below. However it
can also be used as a simulation exercise with the class divided into teams representing each of
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5. Questions for discussion
1. At the time of the case, how do each of the four industries (fixed line, mobile, television
and broadband) compare in terms of attractiveness using Porters Five Forces framework?
6. Case analysis
1. How attractive is each of the four industries at the time of the case?
Fixed line
Very unattractive. Traditional voice subscribers are switching to mobile or internet providers
Mobile
Moderately attractive, but overall note the differences between voice (unattractive) and data
(attractive). Licence and network construction costs are barriers to entry, although LVMOs can
Television
Moderately attractive. Licence and network construction costs are barriers to entry although
IPTV has significantly reduced that and has become a rapidly growing substitute. Competition
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Broadband
Moderately attractive. Network construction costs are a barrier to entry although LLU allows
new entrants to avoid these costs up front. Competition may decrease with industry
2. What are the drivers of change and what do you expect their impact to be in the next few
years?
Regulation: The biggest impact is likely to continue to be in the mobile industry where earlier
cuts on termination charges (fees to connect mobile users to other lines) have significantly
reduced operator revenue. EU regulators are now targeting international roaming charges with
cuts planned for 2013 and beyond. Little further change unless EU forces the Premier League
(UK football) to broadcast over public channels or competition regulators restrict acquisitions.
Other factors might include:
a. Economic. Continuing reduction in operating costs and ongoing competitive pressure on
prices reducing the real costs for consumers.
3. In the next 35years it is likely that convergence will create two communications industries;
one will be mobile based on wireless networks or possibly WiMax or satellite. The other
industry will be fixed communication based on high-capacity fibre-optic networks. Mobile
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4. Vodafone is already a leader in the mobile broadband sector and of the convergence takes
place as expected, they are in a strong position to build on this strength. They will need to
continue to invest in upgrading their network to demonstrate mobile leadership, support the
Follow-up:
In April 2012, Vodafone announced an offer if £1.31bn for Cable and Wireless, a long-
established UK and global network operator which had suffered from poor management. The