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Developing and implementing a strategic approach to ethics

01_Introduction customers. In order to grow, Vodafone must attract new customers


and retain those it currently has. Serving customers well relies on
Vodafone is a leading global player in mobile telecommunications. the ability to attract and retain good quality staff. Both these
It operates in over 26 countries worldwide. This Case Study looks stakeholder groups care about the company’s ethics. Vodafone
at how the Vodafone Group and its UK subsidiary value ethics. It has carried out extensive research which confirms what the
examines how ethics supports the company’s growth. Ethics are company believed – operating ethically generates clear benefits.
also the “right thing to do”. It describes some of the changes in this The results showed that customers are loyal to companies they
dynamic market and how Vodafone’s ethics drive the company’s trust. They also favour companies that operate in a responsible
actions in these areas. manner.

02_Ethics and business aims


Vodafone has grown rapidly since it was originally formed in
1984. It has responsibilities to its 60,000 staff and 151 million
customers and shareholders.

It also believes it has a responsibility to society. The company aims


to continue to grow. Economies of scale improve efficiencies,
enhancing the company’s performance. This increases returns to
shareholders and makes money available to improve services to
Vodafone operates in a competitive market; its competitors also 03_Ethics, strategy and values
want to grow. In order to achieve competitive advantage, Vodafone
must understand its position relative to its competitors. Research Vodafone takes a strategic approach to its ethics and business
below shows the company’s strong position. decisions. This involves managers considering the impact of
important decisions in the long-term. By discussing options
Stakeholders perceptions of Vodafone’s CSR Performance managers are more likely to achieve agreement. Goals that are
agreed are more likely to be met.
Competitor 1
Public The graph shows how Vodafone has six global goals. One of these is ‘to be a responsible
25%
Vodafone is perceived in
business’. This includes the issues of ethics. Companies develop
Opinion 10% comparison with other
operators with regard to
strategies to meet their goals. Vodafone has eight key Corporate
formers
how seriously it takes its Social Responsibility (CSR) strategies. These form part of the
Competitor 2
responsibilities to society companies approach to meeting its global goal of being a responsible
Public 29% and the environment. business. One of these is responsible marketing: an example would be
the company’s decision not to send bulk unsolicited (i.e. un-requested)
Opinion 14% Groups of opinion formers
formers emails or SMS messages to its customers, they have to choose to
and members of the public
Competitor 3 were asked:“How seriously opt- in to receive communications.
do you think company X
Public 23% Vodafone’s employees implement company strategies in a fast
takes its responsibilities to
society and the changing competitive environment. They have to make effective
Opinion 5%
formers environment? tactical decisions. To do this they need a consistent and shared set
Vodafone of values. The company’s values are driven by its four passions.
The percentages show the
Public 27% number of respondents
replying ‘very seriously’ or
Opinion 33% ‘fairly seriously’.
formers

Companies’ actions are influenced by other stakeholders including


pressure groups and government regulators. A business that
did not care about ethics would simply seek to maximise revenues
regardless of how its products affected society. It is unlikely that
such a business would continue to grow because, for example:
• regulators would punish their actions e.g. imposing fines and
revoking operating licences
• pressure groups would highlight unethical actions, adversely Customers
affecting what customers think. • marketing products and services responsibly
• communicating openly and honestly
Ethical companies do the right thing and concern themselves with the • protecting customers.
long term. This may damage financial performance in the short term.
Ethics guide decisions. When Vodafone first included moderators People
into young people’s chat rooms to create a safe environment for • recruiting and retaining the best people
chat, the number of users dropped significantly. This led to reduced • investing in improving skills
revenues for the company. However, the company believed that this • involving and motivating employees.
was the right thing to do. The growing esteem in which the company
is held by the wider public justifies this approach. Results
• setting clear goals
• focussing on achieving goals
• rewarding staff for achievements.

The world around the company


• investing in local and national charities via The Vodafone UK
Foundation
• monitoring and actively reducing the impact of the business on
the environment e.g. recycling mobile phones, reducing waste,
energy reduction activities
• listening to any concerns local communities, pressure groups,
customers and other interested parties may have about the
company's impacts, and working to address these concerns.

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Vodafone’s staff are empowered and ethical. They share these
passions. This helps them make better decisions when reacting to
changes.

04_The external environment


Ethics guide companies in reacting to changes in the environment.
Managers can use a number of different tools to understand the
environment. This understanding is important. It helps managers to
make better decisions.

SLEPT analysis is one of these tools and which looks at changes


in five areas:
Technological factors
Social - trends in society
The mobile phone industry has seen a great deal of technological
Legal - legal restrictions and considerations
change and will continue to do so. Mobile phones were originally
Economic - the health of the economy, inflation, etc used for telephone conversations. Text messaging became
Political - government policy available and usage has increased dramatically. However, most of
Technological - developments in computing, etc. the texts were between people who already knew each other and
had swapped contact numbers. In other words the users were
The following sections provide some examples of each factor, which happy to communicate with each other.
are relevant to Vodafone.
As technology developed, it has become possible to swap
Social factors
information between mobiles and other devices via Bluetooth
Society is concerned about under 18s being at risk. Parents may
technology. This can be used inappropriately to send anonymous and
have concerns about their children being contacted (using mobile
unwanted texts. This practice is known as Bluejacking and can be
phones) by paedophiles or other adults. Society is also concerned
distressing particularly if the recipient is a child or young person.
about adult content being available via mobile phones to under
18s. Adult content includes gambling, violent games, erotic
The advent of 3rd generation (3G) mobile phone technology is
material etc. Further issues related to ‘social’ include the rise of
bringing with it a richer mix of content and providing more
mobile phone theft.
services. This further raises the issue of ethics as Vodafone (and
Legal factors other suppliers) can now offer a wide variety of content to mobile
Some laws regulate all businesses e.g. The Sale of Goods Act 1974 phones with this new technology. Naturally, 3G will help the
stating all products must be fit for the purpose they are intended. A companies to increase their sales revenues. However, Vodafone
mobile phone must therefore work. Certain laws are created to recognises that it brings additional responsibility. This includes the
regulate particular industries. Examples include the ban on using need to protect young people from inappropriate contact, including
holding a phone while driving introduced in 2003. violent games, gambling and erotic material.

Independent industry regulatory body: 05_Ethical responses


OFCOM - the Office of Communications. OFCOM is the
independent body for regulating the communication Vodafone’s ethical approach drives its response to
industry - www.ofcom.org.uk. changes in the environment. Whilst described above in
self-contained sections, many issues crossover, e.g. the
Vodafone goes beyond government regulation, working with its advent of 3G technology and video content is related
competitors in self-regulation. However to retain its leading to society’s concern about adult material reaching
position in the industry Vodafone believes it must exceed both under 18s.
legal regulations and industry self-regulation.
Vodafone UK’s research has revealed that parents
Economic factors do not know the types of content available via
The state of the economy, for example levels of growth can impact mobile phones. A survey of all adults showed,
companies. Companies' activities also contribute to the overall however, that they believed restricting access to
economy. Companies should remain true to their ethical values. If adult content on mobile phones was very
they do not, customers may question the company’s beliefs. important.

Political factors Together with other UK mobile


Government policy indicates that it wants the mobile phone industry phone operators, in July 2004
to create self-regulating controls in relation to content. The Vodafone UK launched a joint
government also shares public concern about unwanted contact and Code of Practice for self-
content. regulation. The Code requires
operators to stop under 18s from accessing commercial content
classified as being unsuitable for them. Operators must also offer Glossary
parents the opportunity to apply a filter to Internet access services.
When developing this Code of Practice for content, Vodafone gave 3rd Generation (3G) phones: Phones enabling access to
phones to researchers working for children’s charities. The richer content including video calling, games, music track
charities could see the sort of content available. They could also downloads and TV.
check that the restrictions were effective.
Bluejacking: When someone sends an anonymous text by
creating a message in their phone book and then sending it to
Vodafone was the first company in the UK to introduce a network
another Bluetooth activated mobile. Usually used to send
bar that effectively blocks access to all forms of content that has unwanted or nuisance texts.
been rated as 18. This bar, called Content Control, was
introduced in 2004. This prevents access to 18 rated content for Chat rooms: A virtual environment where people can
children and young people. It is automatic and the bar is lifted only communicate with others, including people they don’t know,
if customers can demonstrate they are 18 or over. by exchanging written words or images.

Vodafone led the UK mobile industry in ensuring that proper Commercial content: Content provided by commercial
restrictions and controls are in place for its customers to prevent content providers to their mobile customers – including
pictures, video clips, mobile games, music, gambling.
access to adult content by under 18s.
Content control: Methods of preventing unrestricted
While working on the Code of Practice, which is self-regulatory, access to content, including barring.
Vodafone had the opportunity to consider what its ethical stance
should be. It could interpret the requirement to block access as

The Times Newspaper Limited and ©MBA Publishing Ltd 2005. Whilst every effort has been made to ensure accuracy of information, neither the publisher nor the client can be held responsible for errors of omission or commission.
Corporate Social Responsibility (CSR): An approach
having either an where businesses recognise they have a duty to the wider
• opt in policy - i.e. everyone would be barred from accessing over community.
18 material and would have to make a conscious choice to receive
this content or Ethics: Moral principles or rules of conduct and behaviour
• opt out policy – everyone could access the material and request accepted by members of society.
to have the bar applied to 18 rated content.
Goals: What a company wants to achieve.
Vodafone, through its work with the children’s charities Moderators: Someone who ensures that users abide by the
determined that an opt in policy was the more appropriate and chat rooms’ rules/codes of conduct.
responsible position to take in the UK.
Pressure groups: Individuals who come together to
Vodafone seeks to reduce spam text messages by locating their campaign for a cause e.g. Greenpeace.
source. Its customers can help by sending these messages to
Regulation: The creation of rules and codes of conduct for
Vodafone on the company’s VSpam service. Vodafone also individuals and organisations imposed generally by regulators
watches network traffic for the sources of unwanted messages. The or governments.
efforts in this area have led to a very significant fall in customer
complaints. Regulators: Independent organisations that seek to control
or change what companies do on behalf of consumers or
In the UK Vodafone works in partnership with the government, government.
police and others in the industry to help combat mobile phone crime.
It also advises customers and the broader community on how to Self-regulation: the process by which a company or more
often industry implements rules from within rather than
protect their phones and prevent fraudulent use. Actions taken
having them imposed by others e.g. government.
include setting up a register of equipment to block stolen phones.
Stakeholders: Groups of people with an interest in a
For a number of years, prior to the ban on holding a phone while company.
driving, Vodafone UK has strongly discouraged this practice. The
company devised practical actions to help its customers, which Strategic: Long term important issues fundamental to a
included discounts on car kits to allow them to use their phones legally company meeting its goals – compared with tactical, which
and clear advice on the research relating to the use of mobile phones refers to shorter terms actions.
in cars. Strategies: Actions implemented by a company to meet its
goals.
06_Conclusion
The mobile telecommunication industry is relatively young,
compared to industries such as oil and manufacturing. Vodafone is
For more information about Vodafone
a leading player in this sector and has grown quickly, like the please browse:
industry itself. Such a growth presents challenges and the
company’s approach to ethics guides its continued growth. Ethics www.vodafone.co.uk
are central to the company’s development. They guide staff
through change.

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