Vodafone
Vodafone
The move to sell Verizon does not fit the better-off and best alternative tests, which require that a business unit should gain competitive advantage from its link with the firm. The test requires that the company as a whole must be financially more valuable with the offering than without it (Mathur & Kenyon, 2008). Selling Verizon is likely to affect the unit cost of other offerings considering that data and voice services often go hand in hand. Vodafone and Verizon are interdependent and hence the decision to sell Verizon must not be separately analyzed. Being without Verizon is not the best alternative because the price at which it was sold cannot be assumed to be the best price obtainable in the market meaning that in the short run Vodafone may not be better off without the data unit.
How should have consideration of the AAA strategies affected the thinking of Vodafone executives while pondering this sale?
Aggregation extends the focus on global integration where the focus is to overcome differences in foreign markets. Adaptation reflects local responsiveness and the focus is on embracing local differences and caters to the differences across foreign markets. Arbitrage places the focus on benefiting from local advantages by exploiting differences across national borders. Considering the AAA strategies, the executives would have been convinced not to proceed with the sale. The strategic and competitive benefits of considering the AAA strategies include the aspect of expanding the marketplace to national and international, which is a significant strategic benefit (Twarowska & Kąkol, 2013). A balance of aggregation, adaptation, and arbitrage would call for the retaining of Verizon so as to take advantage of the national and international markets.
How does sizeism factor in this sale?
In the sale, size is part of the equation. This is because of the understanding of Vodafone as a global brand and Verizon as only part of the equation rather than a unit that contributes to the global presence of the brand. Vodafone expects to tap into other innovative areas, which would be beneficial in the future. Therefore, to Vodafone, it was impractical to end up devoting huge sales efforts to big data customers that operate in segments of little future interest. Instead, the executives decided to focus on the segment of small customers who are identified as being vital for the business future.
Vodafone strategic plan and Verizon disposition- Was this a good deal for Vodafone?
Vodafone employs a global strategy that emphasizes selling standardized products and developing a global brand that people recognize everywhere. The management sought to coordinate operations on a global scale thus the aspect of strategic internalization, which allows the company to benefit from economies of scale. Selling off Verizon was not a good idea because it was part of the business that attracted customers from the data services offered. This is because it has shed off a big deal of customers considering that the wireless market dependent on Verizon is significant. The deal to sell Verizon relates to Vodafone’s decision to reinvest in emerging markets and take advantage of the future growth potential. However, it may be difficult to tap into the emerging markets because local clusters of knowledge may be unfamiliar and difficult and call for heavy investment and the establishment of subsidiaries.
References
Heidenreich, M. (Ed.). (2012). Innovation and Institutional Embeddedness of Multinational Companies. Northampton, MA: Edward Elgar Publishing.
Mathur, S. S., & Kenyon, A. (2008). Creating Valuable Business Strategies. New York: Routledge.
Twarowska, K., & Kąkol, M. (2013). International Business Strategy-Reasons and Forms of Expansion into Foreign Markets. Management, Knowledge and Learning International Conference. Zadar, Croatia
