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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Solution Summary
A case study for Vidafone in India are determined.
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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 ...
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