Vodafone international strategic development Essay

Vodafone international strategic development - Essay Example The initial acquisition move of the company was a merger with AirTouch Communications Inc. of the United States in a $61 million deal. The company briefly renamed itself as Vodafone AirTouch in a gradual move towards aligning AirTouch to its global strategy (Johannes and Ashok, 2009, P.263). The company’s North American branch was integrated into a new entity branded Verizon Wireless together with Bell Atlantic’s mobile business with the company retaining 45% stake in the new venture. Verizon wireless was the largest mobile phone operator in the North American market with 36 million customers and 24% market share in 2003. The targeting of large firms is in line with literature that suggests that large scale acquisitions provide potential scale economies and are expected to outperform small scale acquisitions (Risberg, 1999, P.76). The targeting of large firms is also observed in the acquisition of Mannesmann in a deal that helped it own D2 mobile phone business, which w as the private market leader in Germany. This deal made Vodafone one of the 10 largest companies in the world helping it achieve scale and scope economies (Johannes and Ashok, 2009, P.264). ... was a good strategy as mobile companies shared some similarities with Vodafone in capabilities and were likely to exhibit some level of homogeneity with its structure. Such acquisitions also helped Vodafone secure a platform for acquiring the existing business position (Risberg, 1999, P.82). Unlike its competitors, the company used shares for its acquisitions. This strategy helped the company emerge from the telecom crisis relatively early so that it could concentrate on growth while virtually all of its competitors were preoccupied with debt reduction (Johannes and Ashok, 2009, P.264). The company had acquired other businesses along with the mobile phone business as was the case of Japan Telecom and Mannesmann where it owned fixed line operations. Vodafone had an explicit desire to concentrate on its core business of mobile telecommunications, and this made it look for ways to dispose of the other non-core businesses. Vodafone insisted that it was mobile focused and intended to stic k to that strategy in all of its acquisitions and subsidiaries. The emphasis on only retaining those operations in the acquired firm that were core to its expansion strategy is in line with literature that suggests that strategic fit is important in creating shareholder value (Risberg, 1999, P.81). Vodafone’s strategy was to increase revenue growth and margin improvement by providing enhanced services to its customer base. This principle had three tenets. The company would increase voice and data revenues through increased marketing focus on its established high-quality customer base. It intended to extend its operational leadership of the mobile industry through maximizing the benefits of scale and scope by using partner network agreements, increasing equity investments in firms where