Firm Governance and Strategy in the Institutional Context

Background of Vodafone Group Plc

Vodafone Group Plc. is a British transnational telecommunication firm whose headquarters are situated in London. It provides services in different countries across the globe, especially in Oceania, Europe, Africa, and Asia. The company evolved from the early 1980s after a joint venture between Millicom and Racal Radio ltd formed an organization known as Racal (Harlow 2). Vodafone emerged from the Racal Telecom trademark in the 1990s to the present brand. Vittorio Colao is the current chief executive officer (CEO).

In 2016, reports indicated that the firm is placed at position five globally in the mobile operator category and second in terms of the number of subscribers (Sekhar 6208). Moreover, it owns and controls networks in more than 26 countries. Vodafone also works with partner organizations in 50 other nations. The division of Vodafone Global Enterprise offers IT and telecommunications services to company customers in over 150 countries (Pranathi, Noor, and Priyadarshini 66).

Types of Property Rights

The UK has a wide range of property laws. Precisely, the English law is applicable in Wales and England because they have similar land law (Gardiner et al. 2). Therefore, the land law in Wales tends to be identical with that in England apart from few exceptions. However, Scots law is different from English law in terminology and structure (Geppert, Matten, and Williams 42). It is characterized by typical mix of civil law and common law concepts. The agreement of the Union allowed for protection of Scots traditions. For instance, the land law maintains the feudal legacy in the Channel Island and the Isle of Man. Furthermore, the Irish Land legislation is based on the common statutory traditions. However, it did not obtain the 1925 land reforms, hence, it has retained its ancient fashion (Harlow 2). Some of the property rights in the UK include the real property rights, personal property rights, trust rights, and intellectual rights.

Real Property Rights

The UK has powerful real property legislation originating from laws such as the Land Registration Act 2002, the TLAT Act 1996, the Land Charges Act 1972, the SL Act 1925, and the LoP Act 1925 (Botha, Kourie, and Snyman 10). The modern land Laws in the UK are derived these old legislations. One of the key legislation that protects real property rights is the 1925 property legislation. In particular, the Law of Property 1925 established the crucial conceptual framework, which works as the backbone of the current law (Gardiner et al. 3). It introduced rearrangement of equitable and legal land interests and it established absolute ownership interests.

In the UK, real property rights and interests in a particular property are suitably executed. Since 1862, the Land Registry Act has facilitated reliable recording of liens and mortgages (Kew and Stredwick 13). The land registry is the official database where every land transaction and ownership data is stored for Wales and England, which is available online. Scotland operates a different land registry while in Northern Ireland these services are accessed via the Land and Property Services (Geppert, Matten, and Williams 43).

The physical existence on non-residential property for a long-term is not considered against the law in the UK. However, police normally take action if squatters engage in other crimes when staying or entering in a property (Harlow 5). Squatters living on a piece of unoccupied land for a long time can become legal owners even without permission of the owner (Jeremy 3).

Intellectual Property Rights

The UK statutory system offers a great magnitude of protection concerning intellectual property rights (IPR). The execution processes are similar to those accessible in the United States. The country is signatory to the World Intellectual Property Organization (WIPO) (Geppert, Matten, and Williams 44). The UK has also ratified a number of EU Directives preserved into UK law (Harlow 5).

The Intellectual Property Office (IPO) is mandated body to ensure protection of rights on intellectual property. In this respect, it protects such as patents, trademarks, designs, and copyrights. The IPO delivers all-inclusive data on UK practice and law in such areas (Gardiner et al. 7). Additionally, the British authority reports and monitors seizures of fake goods and respects the consequent sale and production as a criminal activity. It also reports the incidences of violation of intellectual property and ways in which they affect the UK economy. It also eliminates infringing goods within the UK borders. Intellectual property lawyers offer legal counsel and other services in the UK markets (Kew and Stredwick 17). The country profiles on WIPO provide data concerning domestic laws and contacts at IP offices.

State Fiscal and Legal Capacity Evolution in the UK

The UK has one of the solid legal, financial, and regulatory environments in the world. Similarly, it has highly skilled and dynamic workforce as well as supportive infrastructure. For instance, London accommodates one of the biggest and most broad fiscal centres internationally. The evolution of legal, fiscal, and state capacity of the country has transformed over the decades (Geppert, Matten, and Williams 45). The state capacity advanced historically over times in reaction to the pressures of war. In this regard, the war generated incentives for regimes to spend resources in revenue-raising organisations. They also paid close attention on sources of taxations (Botha, Kourie, and Snyman 12).

In 1798, Britain initiated its first income tax in its financial plans because of pressure from the economic conditions, especially due to the Napoleonic war. During the First and Second World War, UK increased its income tax structure (Jeremy 9). For instance, in 1944, the UK government presented the pay-as-you-earn procedure of tax collection. Since the 13^th century, the country has uniform land taxation. The legal systems were founded on the needs to meet the public goods and demonstrating citizens’ common interests (Kew and Stredwick 15).

Types of Legal System Has Evolved in the UK

In the UK, the legal system prevailing in Wales and England was established through the court rulings or legislative process. It also comprises civil law and criminal law. Since the middle Ages to the 19^th century, the judges enacted the UK common law instead of legislators. Therefore, their decisions were based on legal precedent from earlier court cases (Kew and Stredwick 11). Local customs greatly influenced the law, which was known as Anglo-Saxon law, and was based on canon law and Roman law. Judges comprised the public officials and clergy. In 1272, the early statute law was passed to supplement the unprinted common law after establishment of the House of Commons. By 1300, the royal council greatly influenced the law (Reddy, Nangia, and Agrawal 56). By 1372, the king and Lord Chancellor were given powers to assign reprieve in cases where injustices occurred in execution of the law such as fraud. In 15^th century, there was collapse of the legal order. In the 16^th century, there was revolution against the Roman law. Moreover, parliament was given powers to pass regulations and laws on exports and imports. In 17^th century, common law was consolidated in the country. In 18^th century common law, modernization began in the country (Harlow 11). Reforms continue in 19^th century, which introduced criminal procedures and rights protection. In 20^th century, public law was introduced and European Union regulations in 1973. Some of the notable changes in 21^st century are commencement of processes to withdraw from EU regulations (Kew and Stredwick 15).

Market Characteristics and Its Effect on Vodafone’s Strategies

Labour Conditions and Working Practices

The UK labour laws standardise the relations between trade unions, employers, and workers of Vodafone Group PLC (Kew and Stredwick 16). The employees in the country take advantage of minimal charter of job rights based in equity, common law, regulations, and different Acts. Vodafone Company must comply with the regulation of minimum wage of 7.50 pounds pursuant to the National Minimum Act 1998 (Vodafone PLC). Similarly, the firm should also observe the rights of its workers by allocating 28 days remunerated holidays from employers according to the Working Time Regulations 1998 (Kresak, Corvington, and Williamson 54). The UK legislations such as the Employment Rights Act 1996 allows for the right to vacation for child care as well as right to demand for flexible functioning patterns in the workplace. Vodafone company should also adhere to the Pensions Act 2008 because it gives civil liberties to be instantly registered in a simple work-related pension and the funds should be safeguarded in accordance with the provisions of the Pensions Act 1995 (Geppert, Matten, and Williams 49).

Vodafone Company follows the fair treatment ideals in the employment based on the Equality Act 2010. Therefore, all its employees should be treated in the same way except in cases with adequate justification (Vodafone PLC). The organization is prohibited from discriminating people based on their age, beliefs, sexual orientation, race or gender (Kresak, Corvington, and Williamson 63). To fight social exclusions, proprietors should meet the necessities of disabled people. It should also practice equal treatment for all individuals on fixed-term contracts, agency workers, and part-time staff (Jeremy 13)

Corporate Governance Practices

Corporate governance is an important factor in the United Kingdom. Therefore, Vodafone Company must develop the strategies based on the corporate governance practices in the country, especially those related to board composition, remuneration, and disclosure (Whalley and Curwen 371). The Financial Reporting Council (FRC) issued the Corporate Governance Code, which applies to the organisations with a top record of equity shares on the stock market such as the London Stock Exchange irrespective of whether they are founded in the country or not. The FRC Regulation on Audit Committees is revised based on the Code to adapt to other market expansion. The corporate governance code also pay particular attention on the succession planning and corporate culture. It also conducts inquiry on the practices of corporate governance (Harlow 10). For instance, in 2016, the Business, Energy, and Industrial Strategy initiated a review on corporate governance concentrating on the duties of directors, boardroom’s composition, executive pay, and gender balance as well as worker representation in decision-making positions (Reddy, Nangia, and Agrawal 58).

In terms of payment practices, the LLPs and large organizations have new responsibilities to record their payment performance. The UK government has established the regulations, which demand that firms such as Vodafone PLC have published data concerning their performance, policies, and practices in terms of paying suppliers. Newly formed companies are exempted from this regulation in their first fiscal year (Molino 103). Furthermore, Vodafone Company is also required to deliver compulsory reports on gender pay disparities. Regarding executive remuneration, the government has formed an independent panel to deal with concerns arising due to challenges in the management compensation structure (Whalley and Curwen 372).

The disclosures of corporate governance in UK is an essential part of companies such as Vodafone aimed at proving to shareholders that it is operating in the interests of shareholders via transparent actions. Vodafone discloses this data in its annual records and an external auditor who reveals their insights on the standard of financial statements tests the reliability (Harlow 14). In this respect, disclosures ensures the organization remain transparent as it communicate to its investors. It also guarantees that the firm is under the right management, hence, corporate governance is a crucial part of the company (Webb 5).

Some of the strategies to warrant information disclosure and financial transparency in Vodafone include the introduction of an Audit Committee. In addition, the firm executes the Tumbull Guidance for proper internal control. The board has general obligation for the structure of internal control that offers reasonable promise against misstatement (Vodafone PLC).

Institutional Characteristics and Its Effects on Vodafone’s Internationalization Strategies

Vodafone Group PLC has internationalisation strategies to facilitate its future growth and competitive edge targets. The firm continues to develop through investments, associated undertakings, joint ventures, and subsidiary undertakings. More importantly, the institutional characteristics in the UK and European Union has influenced on the kind of internationalisation approaches adopted by the organisation (Whalley and Curwen 372). In addition, some of these strategies are utilized to take advantage of the existing opportunities in overseas countries as well as establish contingency plans to minimize existing threats. The UK institutional characteristics has a positive effects on the internalization strategies of Vodafone Group PLC since it offers intelligence concerning international markets, relationship networks, learning, and globalisation of business processes. In addition, the UK has also strengthened the nation’s image as a hub of information technology (Webb 6).

Research indicates that institutional context and environment affect the performance of a multinational company such as Vodafone (Whalley and Curwen 373). They affect performance because of the entry modes and organisational capabilities into other markets. The impacts on the institutional context on internationalisation strategy are based on the competences and resources because various companies have diverse capabilities to internalise the benefits emanating from institutional forces. The institutional features through the corporate governance and labour conditions shape the organizational strategies (Nalwaya and Vyas 67).

Some of the internationalisation strategies utilised by Vodafone PLC includes market positioning, targeting, and segmentation. Precisely, segmentation strategies enable the company to recognise meaningfully various categories of customers while targeting enables choosing of the specific group to serve (Reddy, Nangia, and Agrawal 59). On the other hand, positioning strategies are used to execute selected image and appeal to prefer segment and it also involve promotion, distribution, price, and product. Vodafone has utilised segmentation strategies in the market by providing products that meet the needs and wants of different incomes, ages, geographical area, and gender. It realised that markets are composed of many distinctive categories of individuals who have common distinguishing features as consumers (Molino 104). Therefore, they have varying purchasing power hence the company direct it services and products to address these features in the segment or subdivision of the market. The company has also created institutional relationship foreign governments in order to effectively implement its internationalization strategies and reduce the entry barriers. In so doing, the company is able to benefit from recommendations, which accelerates in adoption of cost-effective marketing strategies.

Wage Setting/Collective Bargaining

In the UK, the collective bargaining devolves and occurs at the workplace or organizational level particularly in the private sector. However, the UK government implements a National Minimum Wage and it is constantly uprated after approvals by the Low Pay Commission (Reddy, Nangia, and Agrawal 59). Therefore, collective bargaining takes place at Vodafone Company with minimal multi-employers. Additionally, the Incomes Data Services (IDS) delivers this concise overview in the manner in which wages are defined at the organisational level in the private sector (Kresak, Corvington, and Williamson 57). For instance, the wages determination in Vodafone Group PLC currently focuses on budgets established by the finance department in partnership with human resource (HR). The wages’ negotiation with staff association or trade union begins and later transferred as an award via line managers. In some instances, the firm uses personalized performance-related pay (Molino 105). Reports indicated that since the 1990s, the country has witnessed a decline the number of pay bargaining between trade unions and employers in the UK.

Unionization and Strike Activity

Vodafone Company allows its workforce to be a part of the trade union known as Prospect. The trade union is geared towards agitating for better working conditions and lives. It also support its member when the need arise. Unionization helps to empower all Vodafone’s employees through constant dialogue with the employer. Moreover, through trade unions, members benefit from advice, support and representation, information, and benefits (Whalley and Curwen 375). The company has experienced low level of strike activities. However, when they occur the organization suffers from industrial actions. For instance, in countries such as Greece, the company has suffered from workers’ strikes organized by Workers’ Union, which greatly affected their operations. They also included protests outside organization’s offices (Nalwaya and Vyas 69).

Corporate Governance – Stock Market

Vodafone’s stocks are traded on the London Stock Exchange (LSE) and NASDAQ. It is a part of the Financial Times Stock Exchange 100 index. In 2016, the company had a share value of nearly 53 billion pounds, which makes it the eight-biggest firm on the LSE (Whalley and Curwen 376). The firm is excused from most of the corporate governance practices under NASDAQ. However, it must comply with the issues on disclosure of continuing audit query, statement of material non-adherence with NASDAQ practices, the proposal of a listing agreement, and the establishment of audit committee (Kresak, Corvington, and Williamson 58). Under the rules of corporate governance in the stock market, Vodafone follows the practices such as independence of the board directors, and must have committees for compensation, audit and nominations committees. In addition, it should also adhere to stock market code of conduct, minimum quorum of shares, and must obey the related party dealing guidelines (Molino 107). Finally, it should also obtain shareholder approval for some deals involving sale by listed firm of public stock.

Merger and Acquisition

Vodafone has used merger and acquisition to increase its market share and improve its competitiveness. For instance, it merged with Idea Cellular of India in 2017. The deal enables the company to acquire all shares of its local rival (Nalwaya and Vyas 71). Therefore, the two firms would supplement one another geographically. The merger empowered the company to increase its subscribers to 376 million in India as compared to its rival Bharti Airtel at 260 million. Therefore, it currently has a market share of 36 per cent. In 2007, the company also acquired 67 per cent stake at Hutchison Telecom International (HTIL) from Hutchison-Essar. The transaction was worth of $13.3 billion, which propelled Vodafone in a controlling position in the fast and attractive Indian mobile market (Webb 7).

The Concentration or Dispersion of Shareholding of the Firm

The largest shareholders of Vodafone group PLC include Vodacom Group Limited with 69.7 per cent equities, Kabel Deutschland Holding AG at 76.7 per cent, and Safaricom Limited at 39.9 per cent as well as Forthnet S.A at 6.50 per cent. Some of the shareholders with less than 4 per cent stake include Legal & General Investment Management Ltd, the Vanguard Group, Norges Bank Investment Management, Capital Research & Management, BlackRock Fund Advisors, State Street Global Advisors Ltd, and Aberdeen Asset Investment Ltd among others (Whalley and Curwen 378).

he State Influence on Firm in Its Strategy Making

The state influences Vodafone’s strategic decision-making because of the policies and regulatory frameworks affecting its businesses. Some regions have unstable regulatory framework, which disrupts the macroeconomic environment while others have stable regulatory structure that enables growth (Molino 107). For instance, in the European markets most governments offer a predictable legal and supervisory mechanism, which guarantees returns on investments. It also expedites competitive performance and modernization (Kresak, Corvington, and Williamson 64).

The Links between Vodafone and Its Institutional Characteristics 

Vodafone Group PLC has developed the links with the variety of capitalism in the United Kingdom with its institutional characteristics (Whalley and Curwen 378). For instance, it has established relationship in the corporate governance, inter-company relations, and associations with workers, industrial links, and education. In the liberal markets economies such as the UK, Vodafone Company tends to depend more greatly on public information concerning stock markets, capital and finances. Moreover, the inter-company relations in LMEs appear to be quite competitive as compared to coordinated market economies (Kresak, Corvington, and Williamson 59). Furthermore, it has developed adversarial association between its workforce and the management in cases where executives are the main decision makers. In its industrial relations, the employers and workers are normally less organized. Therefore, the negotiations for wages occur at the company level (Molino 109). Finally, it provides training to its employees, which helps it to acquire skills that can be utilized in other fields.

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