Mobile Phone and Vodafone Japan Essay examples

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VodaFone K.K.

Defined as Vodafone K.K., Vodafone Japan is the third largest mobile operator in Japan, and is also the largest foreign investment in Japan as the parent company Vodafone Group Plc. Owns the subsidiary in 100%. Vodafone entered Japanese market 2001 by buying the local mobile operator J-Phone. Then the company gained a significant presence with more than 15 million subscriber, by providing access to mobile services with advanced handset technologies to high-spending customer segment. Moreover, Vodafone-Japan is the operator that first commercializes the 3G services on roaming database in 2002. At the end of 2005, Vodafone-Japan had total assets of 1364.4 billion Yens under IFRS including goodwill and intangible assets, and 162 billion Yens of net income.

However, the industry giant went into trouble of continuing losing customer with unappealing handset and ineffective infrastructure. Financially, the company is also struggling with below-forecast revenue and large amount of interest-bearing debts. The problem revealed several weaknesses of the company. According to John Durkin, the CFO of Vodafone Japan, the most important reason that causes the company to fail is the internally dysfunction, which the company kept bringing new management team to fix the problem that left by the last management team. He pointed out the new management team came in 2005 was particularly ineffective as the British and Dutch mangers were insensitive to each other in terms of different racism. And the whole company fails to function well until the management team was fired in 2005 when was too late for Vodafone to turn around.

Additionally, the problem also comes from the unrealistic high expectation from foreign shareholder. The investors put great pressure on the company as they considered the Japanese market as the most profitable market compare to other, but in fact the profit margin is relative lower than the other market. Even the company do not have serious management problem, the ineffective infrastructure, which includes the unfair allocation of spectrum and low amount to base station will also prevent the company from success. To correct this problem, Vodafone Japan has to put great mount of investment on upgrading, which results the company’s growing debt. Therefore, at the moment of the dilemma, Vodafone Japan is willing to accept external solution to overcome the difficulty and release
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