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The terminology used to describe Vodafone’s growth strategy is acquisition. Acquisition is the best strategy for growth to use in the delicate telecommunication industry. This strategy allows the acquiring company, enough leverage to have a controlling stake in the target company. This strategy allows the company to take advantage of the economies of scale as synergies take shape. These advantages are:
- Possession of skilled workers: The telecommunication industry in some countries faces a lack of enough qualified staff as the education systems do not prepare the students well in how to deal with challenges that come with being associated in the industry. The cost of training both in terms of time and expenditure is greatly reduced (Banzhaf, 2005).
- Increased buying power: Vodafone’s ability to purchase equipment manpower and other resources necessary for its operations is greatly enhanced when it acquires companies, as it now has more fixed assets that t can use as collateral when seeking new funding.
- Larger customer base: Vodafone is able to benefit from an increase in customers as it just acquires the former customers of the target company. This reduces the cost it was to incur in marketing if it was to start a new company.
- Possession of Technology: This strategy allows Vodafone to inherit already existing infrastructure. The only task that the company has to undertake is upgrading in cases where it is needed. This eliminates all costs of purchasing equipments which is a very expensive undertaking (Banzhaf, 2005).
- Direct Cash Flow: Since the acquired company has an already existing network, Vodafone does not have to wait for the network to be adopted by new consumers and this means that as long as the existing subscribers continue to use the network, revenue to the company is still being attained.
- Joint Overheads: Expenses within the two joint companies is shared this allows the company to invest in future initiatives. This allows the company to grow rapidly in a short time span.
Measures carried out by Vodafone in integrating companies in which Vodafone owns a controlling interest is by carrying out of branding initiatives which will address the existing company as a challenger of the national operator. Rebranding all the companies under the Vodafone program initiative, the company took steps by integrating the various cultures within the different countries in which it operates. All these are done through marketing and branding development (Banzhaf, 2005).This program was implemented through media in terms of office memos, internet and emails.
A principal is conceived and strictly followed that embodies the new culture that they are currently adopting. These are the ten business principles. Rotation programs are initiated whereby probable managers are exposed to all activities across all countries in which Vodafone has a presence. All the integration activities are conducted with the principal that the acquired company assumes autonomy and is independent. The company instills the core values of the parent company within the staff and this is replicated in all the countries Vodafone has companies. A new governance structure and an operating structure are put in place to replace the existing one. All these are done to enhance efficiency in both decision making and speed at which tasks are done within the company.
References
Banzhaf, J. (2005). Vodafone: Out of Many One. New York: ESSEC Business School.
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