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Case Study - Vodafone in India

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Please use the attached guidelines (Vodafone Case Study Instructions) and the 4 PDF articles to assist me with the following assignment. Thanks!

According to the Wall Street Journal:

It wasn't long ago that India was hailed as one of the world's most promising growth markets. But mercurial regulation, stifling bureaucracy and slower economic growth have shaken foreign companies' confidence about making big investments here. Now a case at the country's highest court threatens to make the climate chillier still. India's Supreme Court is preparing to issue its decision on whether U.K.-based Vodafone Group PLC must pay about $2.6 billion in taxes on an $11.1 billion deal it struck in 2007 with a unit of Hong Kong's Hutchison Whampoa Ltd. to enter India. (Sharma, Becket & Bahree, 2012).
Reading Materials
I suggest that you read the materials that I am providing to you in this order:
1. Multinational Firms Brace for Vodafone Ruling in India.pdf
2. Vodafone India.pdf
3. Vodafone.pdf
4. Vodafone-Outcome.pdf

I am required to write an 8-10 page case study based on the attached 4 documents.

In this case study, I am required to examine the company Vodafone in the context of its merger to form Vodafone India. I am required to consider the merger in light of the suit brought against Vodafone India by the government of India to collect about $2.6 billion in taxes that India asserts are owed to it as a result of the merger.

For this case study I am also required to:
1) Frame the issues of the case
2) Do a SWOT analysis
3) Analyze the corporate-level strategy pursued by the company as compared to the SWOT analysis
4) Make specific recommendations for what the company should do next and directions that it should take
5) Specifically consider the cultural orientations of the countries participating in case, and their impact upon it
6) Answer these questions:
-What are the pros and cons of the mode of entry chosen by Vodafone to enter the India market? What is your opinion of the one they chose?
-What is your opinion of the strategies that Vodafone used to hedge their risks in their India market entry, and do you think these were sufficient? Should Vodafone have anticipated the legal entanglement they encountered? What, if anything, would you have done differently?
- Vodafone has developed a reputation as a company that is relentless in its determination to avoid taxes. At the same time, India has developed a reputation for taxing foreign entities in ways that are unexpected, and that many companies think are unfair. Having reviewed the materials for this case, what do you think about the merits of the Vodafone India tax case?
I am also required to have at least 8 website references in addition to the attached case study references. Please use in-text citations so I understand what reference source each citation comes from and can look them up on the internet. I am assigning the maximum number of credits to this assignment because it is very important to my studies. Please be sure to provide a thorough response that is understandable so I can learn from it.

Thanks for your assistance.

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Vodafone in India Case Study Guidelines
Issues of the Case
The main issues for this case are related to dispute between U.K.-based Vodafone Group PLC and Indian government on tax amount of about $2.6 billion that should had paid by company after an $11.1 billion deal with a unit of Hong Kong's Hutchison Whampoa Ltd. to get entry into India in 2007 (EY, 2012). According to the Indian Tax authorities, transaction related to asset purchasing of an Indian corporation is legally responsible for paying taxes in India. But, Vodafone considered that it was not liable to pay tax India for this deal (Menezes, 2013).

This case represents legal issue related to lack of transparency in the Bilateral Investment Treaty of Indian law that creates conflicts between business corporations and legal system of India. Apart from this, another issue is related to breach of assurances that were provided by Indian government to investors to make investment in India. In this deal, two overseas companies were involved to transfer only shares, not capital assets situated in India, but tax was charged retrospectively that opposes government decisions regarding charging tax on Vodafone (Venkatesan, 2012). In addition, there was uncertainty in Indian law in area of taxes that created a gloomy picture to foreign investors abut investment in India.
SWOT Analysis
Strengths: Vodafone Group Plc is UK based Telecommunication Company that is the world's largest mobile telecommunications company in terms of revenues and second-largest in terms of subscribers. Quality and wide range of its products and services also makes it better than other players in global telecommunication market. Its effective diversification strategy helps to provide its products and services to customers quite effectively all over the world including Europe, the Middle East, US and emerging markets such as Africa and Asia Pacific (Deresky, 2006).
Weaknesses: Company does not perform in America as effective as other countries in the world. Its main revenue generates from operations in Europe that shows its dependency on European market.

Opportunities: There are various opportunities for company to enter into untapped rural market in emerging countries of Asian and African region, to diversify its business in new areas and to grow data business and enterprise solution market (Aaker & McLoughlin, 2010).
Threats: Intense completion in telecommunication market can create threats for company in future. Many small companies are entering in to European markets that can affect revenue and profit level of the firm. Along with this, different laws of different countries also create threat for successful operations in foreign countries.
Corpo
ate-Level Strategy
In order to get success in different product markets, company implemented various corporate level strategies. Initially, company focused on new product development in same market by manufacturing different products such as voice and data services, fixed line solutions and devices, mobile phones, etc. It grew its market by entering new markets through mergers, acquisitions and alliances including Mannesmann, TDC, Airtouch, Bell and Eircell that facilitated cost advantages for it by increasing economies of scale and decreasing rivalry in competitive market.
It expanded its business in continental Europe by acquiring Mannesmann because it constituted a major portion of the market share in this industry. Main focus of Vodafone was to penetrate to largest possible markets by making available mobile phone services to more number of customers. This strategy was helpful for company to capture more demand of telecommunication products and services in different markets of world. But at the same time, its market diversification strategy shows high operational relatedness and low corporate ...

Solution Summary

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Government-funded projects and geographical conditions

Please see the attachment.

Case Study 1
Minimum of 200 words for EACH case study question.

Begun in 1985, the Dulhasti Power project, set in the northern Indian provinces of Jammu and Kashmir, represents an example of a disaster in project cost estimation and delivery. As initially conceived, the project's cost was estimated at 1.6 billion rupees (about $50 million). By the time the contract was let, the cost estimates had risen to 4.5 billion rupees and later successively to 8, 11, 16, and 24 billion rupees (nearly $750 million). As of 2004, the project has still not been completed, although well over $1 billion has been spent pursuing it.
The project was based on a straightforward concept: Dilhasti was designed as a 390MW hydroelectric power plant to be built on the swift-flowing Chenab River in the Doda region, a rugged, mountainous section of the Himalayas, and several hundred kilometers form larger cities. The project sought to build a dam, erect a hydroelectric generating station, and string hundreds of miles of transmission lines starting near the headwaters of a system of rivers flowing onto the plain south of the mountain region. When the contract was awarded at a price of $50 million, the contracting organizations anticipated that the project could be completed in a reasonable time frame.

The contract for the power generation project was first awarded to a French consortium, who almost immediately asked for an upward price revision. The Indian government refused, suspecting that the French consortium has known all along that their initial bid was too low and were hoping to simply "buy" the project prior to renegotiating. The government's refusal to revise their price resulted in a second bidding process. Because of wider competition from other European countries now in the field, the second, accepted French offer was then even lower than their earlier one. Although this process initially appeared to save the Indian government money, it was not a good beginning to the partnership between the government and the French consortium.

Situated in the mountainous region of the Jammu and Kashmir provinces, the site was intended to capitalize on the proximity to large river systems capable of providing the water capacity needed to run a hydroelectric plant of Dulhasti's dimensions. Unfortunately, the site selected for the project came with some serious drawbacks as well. Pakistan and India. Jammu and Kashmir have been the epicenter of numerous and serious clashes between separatist forces supported by the Pakistan government and Indian army units stationed in the region to keep the peace. Constructing such an obvious target as a power plant in the disputed area was sure to provoke reaction by nationalist groups, using terrorism as their chief means of opposition. Thus, the additional costs of providing security to the site quickly become prohibitively expensive. A second problem concerns the sheer geographical challenge of creating a large plant in a region almost totally devoid of supporting infrastructure, including an adequate logistics network (roads and rail lines). Building the plant in the foothills of the Himalayas may be scenic, but it is not cost effective, particularly as almost all supplies had to be brought in with air transportation, at exorbitant costs. All raw materials, including cement, wood, stone, and steel, had to be hauled by helicopter for miles over snowbound areas.

The work on the plant continued in fits and starts for over 15 years. By the turn of the century, over $1 billion had been spent on the Dulhasti project and the plant is still not operational. Further, in order to offset the expense of the project, the cost of power to be generated by the plant has risen by over 500%, making the plant an inefficient producer of electrical power for the countryside. The original French-led consortium that contracted to develop the plant has pulled out, forcing the Indian government to rebid it and award the contract to a Norwegian firm.

What is the status of the project to date? Still unfinished, the budget continues to be revised upward in hopes that the project will come on line by late 2005. A recent government report, including an evaluation of the project's current status, suggests that key elements of the project are less than 50% completes and will require yet another upward revision of the budget for Dulhasti, perhaps to a much as $1.6 billion. The project's end is still not in sight, form either a completed power plant or budgetary perspective.

And answer the following questions:

1. Explain the challenge of delivering accurate cost estimation when working in harsh geographical conditions.

2. The original bidding process favored the lowest project construction bids using a "fixed price" contract. What are the advantages and disadvantages to the Indian government when using this type of bidding process?

3. How did it contribute to gross underbids and successive cost escalations?

Case Study 2
Research London's Millennium Dome and provide input on the questions below. Inputs should be a minimum of 200 words.

1. Consider the following statement: "Government-funded projects intended to serve as "prestige projects," such as the Millennium Dome, should not be judged on the basis of cost." Do you agree or disagree with this statement? Why?

2. Does O2's decision to take over the site and spend an additional 600 million pounds to redevelop it make sense? Under what circumstances could this site become a money maker for an investor?

3. Does O2's decision to take over the site and spend an additional 600 million pounds to redevelop it make sense? Under what circumstances could this site become a money maker for an investor?

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