This report identifies the relevant industry-related and economic-related factors which drive today’s strategic decision-making in both companies.
Both Vodafone and BT thrive within a very regulated environment. Depending on the nature of the product or services, various regulation exists which dictate pricing limitations and overall service provision. British Telecom recognizes this and routinely expresses the business’ awareness of regulatory issues and how they relate to the long-term stability of the business. The Chief Executive Officer of Vodafone describes regulation as a risk to “market share, competitive position and future profitability” (Verwaayen, 2007: 27). From a strategic standpoint, regulation is a routine part of business operations, however when various legislation is provided in different, multinational regions the business must consider whether the foreign environment is worth the investment or whether new market opportunities should be researched. Moving either Vodafone or British Telecom presence into different markets which maintain less regulatory activities (such as price controls) would allow the company to have autonomy regarding the provision of competitive pricing which best befits the business model and profit expectations. It is clear that both Vodafone and BT must consider regulatory compliance in many varieties of business decision-making.
Regulatory activity also comes in the form of litigation, where different foreign taxing powers regularly assess the value of company activities and demand capital gains taxes or other regional taxing expectations. Currently, Vodafone has appealed a case to the Supreme Court in which the business is being requested by the government in Bombay, India to pay approximately £2 billion in capital gains taxes (Leahy and Betts, 2008). In a situation where both Vodafone and British Telecom have leveraged the