Vodafone, a British company, headquartered in Newbury, Berkshire, England, is the worlds second-largest mobile communications operator, with networks in 64 countries in five continents, serving 458 million customers. Its annual revenues in 2015 were UK 42.2 billion and its EBIDTA 11.9 billion. (1 = $ 1.51 or 1.40).

About 90% of Vodafones revenues come from voice communications. But data over mobile devices is gaining momentum. More than 20 million of its customers were already using 4G services in 2015. Industry forecasts predict a total of 7 billion mobile phone subscribers by 2016, with 2 billion using smartphones.

The companys business is organized into four major product units:

Consumer Services, Europe: 41% of the companys service revenues in 2015. This segment is sensitive to the availability of 4G networks.

Unified Communications: 20% of revenues. It aims at satisfying increasing customer demand for bundling multiple technologies: 3G, 4G, WiFi, cable, and fibre.

Consumer Services, Emerging Markets: 23% of revenues. Mobile banking and data are core activities of this business unit, with sales doubling annually since 2011.

Enterprise Services: 27% of revenues. High growth potential, as ubiquitous round-the-clock customer and employee relations are becoming a standard enterprise practice

Regulatory and Technology Challenges and Opportunities

Vodafone began its activities in 1982 as Racal Electronics, a manufacturer of military communications equipment, and entered the civil cellular sector in 1985, at a time when telecommunications was a highly regulated industry in most of the world. Deregulation in Europe began in the mid-1980s, first in Britain and later in Continental Europe. This development was followed in the 1990s by the introduction of a pan-European technological standard, the Global System for Mobiles (GSM), which is now used in 219 countries on harmonized frequencies that enable seamless roaming. Vodafone was one of the very first telecommunications services providers to convert its network to the new technology.

Threat of Foreign Competitors

The advent of GSM and the abolition of state monopolies in EU mobile telephony stimulated speculative investors to get into the industry. By 1998 there were in the average three mobile operators per country. The more ambitious ones, from France and Germany, quickly saw opportunities for expansion in the Continent and Britain. Vodafone came under attack, through alliances built by competitors wanting to exploit the UK market.

International Expansion

In a defensive reaction, Vodafones management began contemplating overseas expansion. It considered that confronting its major Continental competitors head- on was risky. Its first internationalization moves were towards former British colonies and protectorates, such as the Gulf States and Malta, where cultural differences were low. The business potential of these markets was, however, limited. In a bold move, the company decided to sail across the Atlantic, where cellular telephony was still fragmented with scores of small operators jockeying for limited geographical territories. The British company was in June 1999 successful in acquiring 45% stake in AirTouch Cellular, a Californian corporation using AMPS technology standard. It was a year later renamed to Verizon Wireless.

Confident after this strategic move, Vodafone made an offer to buy a controlling interest in Germanys second-largest mobile operator, Mannesmann, which was already in partnership negotiations with two heavyweights of the industry, Hong Kongs Hutchinson Whampoa and Frances Vivendi. But quickly, Mannesmanns CEO and Board replied they were not interested to sell. Vodafone swiftly made a hostile takeover bid directly to the German companys shareholders. In spite of resistance from the German government and general public, Vodafone in February 2000 succeeded to strike a friendly merger, paying $180.95 billion for the control of 50.5% of the new company. This transaction, the largest cross- border merger ever, did not involve any cash: Mannesmanns shareholders received Vodafone shares in lieu of payment. This companys global expansion followed rapidly, and the stock-swap payment method has been enshrined in Vodafones financial strategy. Its strategic goal has also remained steady: to invest in the number two operator in the target country. Vodafones network is today composed of 24 wholly- or majority-owned subsidiaries and 40 associated, partnership and joint venture operations. Customer billing is done in local currencies. Through interconnection agreements, Vodafone also offers its users roaming to practically any country on the globe. Its submarine cable infrastructure reaches 100 countries.

Vodafone is a truly multicultural organization. It employs 101,443 persons from two-dozen different nationalities. Its CEO is an Italian, while his predecessor was Indian. Women occupy 24% of senior management positions.

The Emerging Markets have taken prominence in the companys internationalization strategy, with emphasis on Asia and Sub- Saharan Africa. Vodafone is organized in two geographical divisions: Europe and AMAP (Africa, Middle East, Asia-Pacific), which contribute at 66% and 32% respectively to total revenues. Vodafone failed to enter the Chinese market with an acquisition, but it broke- through in India, where today it serves 142 million customers.

Expansion Hurdles and the Future

Vodafones internationalization has not always been smooth. Technology incompatibility with national standards in Japan and America, shareholders appetite for dividends, and cross-cultural issues in certain markets have forced the management to divest from its ventures in Japan, France, and USA, thus reducing the companys market value. It has now become a target of takeover bids by China Mobile, the worlds largest mobile operator, and AT&T of Dallas, Texas. In Europe, where mobile telephony revenues have fallen 11% between 2009 and 2015, industry consolidation is in the air, with Orange, Telefonica, Hutchinson Whampoa, Liberty, new-entrant Altice, and corporate raiders looking for acquisitions. Vodafone may benefit from this race or become its victim.

Q. In terms of marketing program elements, what can management do to ensure Vodafone succeeds in these markets?

Applying the concepts of essentials of successful global firms in this topic, discuss Vodafones winning global strategy. Do you think Vodafones winning formula will see it through a new world order (Post-COVID-19 crisis)? If yes, why yes? If no, why, no?