Q. Vodaphone has a corporate plan that focuses on expansion in emerging markets. To what extent do you think having a corporate plan guarantees the business success? Justify your answer with reference to Vodaphone and/or other organisations that you know.
A. A corporate plan sets out what the business as a whole is trying to achieve its aims and objectives and how it intends to achieve this. It will include the corporate objectives and the overall business strategies to be pursued. Within corporate planning senior management carry out a situational audit to analysis internal and external influences on the business. As part of this analysis research into the businesses strengths and weaknesses are taken into account such as emerging markets. An emerging market is used to describe a country in the process of rapid growth and industrialisation.
People in emerging economies are optimistic about their countries prospects. Not only are the local countrymen optimistic, but businesses and organisations are also. Businesses such as Vodaphone have seen the potential in these and have invested heavily. One of the countries that they have invested in is Egypt. Their corporate plan will be vital to their success as they don’t have any experience in this market and need to be thoroughly prepared. The plan shows they are aiming for mobile focused ventures with the goal of supporting youth while boosting the Egyptian economy. A weakness they would have discovered whilst carrying out their situational audit would have been the language barrier between the managing team in Egypt and the head office of Vodaphone. Corporate planning takes into consideration the long-term consequences; this allows the business to analysis the risk involved in planning to invest in ‘Emerging Markets’. Consequently, the company maybe more successful in the implementation of this market development strategy.
The corporate planning process is not always accurate, mainly due to the fact that external factors are outside of the company’s control. Such as hurricanes, rises in taxes and unexpected damages or breakdowns to machinery, although this could be avoided by regular maintenance. It is only a plan and this means everything cannot be accounted for. This was proven when Tesco’s tried to break into the US market of supermarkets. They failed, after ten years to make a profit and then decided to sell up. Mainly due to the fact they miss judged the national market loyalty to Walmart. In the UK people are happy to run into a local shop to pick up a small connivance shop. In the USA they don’t just get a small shop, they do a huge shop and load them into their big cars and don’t worry about the shopping for another 2 – 3 weeks. Cultural differences are often under estimated when companies choose a market development strategy. By Tesco’s misjudgement they were then forced to close all and remove themselves from the US market completely, before they then lost further profits. If they would have judged this better in their corporate plan they may have found a way to gain some of Walmarts loyal customers who were willing to try something new, or opted to never go ahead with the idea in the first place. Luck of timing was also an issue as launched in 2007 shortly before the credit crunch.
By caring out a corporate plan, it allows management to understand and identify strategies to reduce cost and therefore make the business more profitable. For example, offshoring, outsourcing or locating
