Comparison of Telecom South Africa and Vodafone Europe - Assignment Example

COMPARISON OF VODAFONE EUROPE AND TELECOM SOUTH AFRICA Name: University Lecturer Course Code: Introduction This report is to compare two different companies found in South Africa and Europe. The companies under comparison analysis include Telecom South Africa and Vodafone Europe (Gio and Wiederhold, 2013). All these companies are operating within the Tec communication industry and therefore have the same operation style. Telecom started to operate in 2004 with the aim to improve mobile connectivity across South Africa. Vodafone is another telecommunication company with it’s headquartering in London (Cooper and Coulson, 2014). It is considered the second largest telecommunication company across the globe. This is because it has more than 434 millions subscribers. Its network operates in more than 21countries and partner with other 40 additional countries (Andrea et al, 2015). Since these companies operate within the same industry, it is easy to compare their performance and environmental impacts it has on the local communities and stakeholders. 1.0 Business model of Vodafone and Telecom. Vodafone and Telecom uses corporate social responsibility as a vital model to improve its value. This makes them to act responsibly towards its environment and also to treat employees as very important assets of the company (Cooper and Taylor, 2011). Vodafone Company is also responsible for the environment it operates in. It uses devise which cannot pollute environment and ensure that there is a close relationship between different stakeholders. This company is also able to offer quality services and treats its employees with great care as they reward them handsomely and also offer incentives to motivate the employees (Andrea et al, 2015). The incentives it offers and the reward to employees in better than that of Telecom. This makes it to be seen as a company which has a social responsibility than Telecom South Africa. The company also recruits its employees through the right employment procedure. This prevents discrimination which hinders the selection of employees with required skills and proficiencies (Cooper and Coulson, 2014). Vodafone also participate in other social activities such as sports and even sponsors education of other students in Europe. This increases its industrial relationship with the local communities. It also provides job opportunities to different people. This also contributes to its strong corporate sustainability. 2. How did the firm enhance its engagement with stakeholders? Vodafone Europe and Telecom South Africa uses different stakeholders ranging which include shareholders, employees, customers, creditors, debtors, potential investors, local communities and even employees. These companies improve their engagement with their stakeholders by ensuring that there is efficient communication system which enables stakeholders to communicate freely. This therefore ensures that there is closer engagement between the company and other stakeholders (Cooper and Coulson, 2014). The engagement is also improved by allowing all the stakeholders to participate in the budget preparation. This ensures that all employees in every department contribute towards the budget preparation and other planning activities. This allows stakeholders to come together and participate in one a single activity. These two companies also foster positive engagement with their stakeholders by ensuring that they participate in annual general meeting (Cooper and Taylor, 2011). This therefore allow all the stakeholders to participate in annual general meeting discussion. It can also be done by allowing all the stakeholders to participate in company projects such as the development of new affiliate companies (Choo and Nick, 2002). There two companies can also allow the stakeholders to participate in sports activities. This will allow most of the stakeholders to involve in games thereby engaging in sports events. These activities and events are very important to foster positive relationship between the company and all the stakeholders. 3. What are the top 3 trade-offs between the six capitals in the year, whereby one capital is increased but another decreased by the same event The organization can make trade offs within six different capitals so that value can created for other business organizations (Andrea et al, 2015). The top three trades off include human capital which is able to increase satisfaction of employees but reduce financial capital by using financial resources to improve the value of employees (Cooper and Coulson, 2014). Payment of trainings to employees or increasing the number of employees consumes financial resources and increase value to the organization by having manpower that is able to perform better. The final trade of is management or entrepreneurship (Andrea et al, 2015). When there is an increase in management, there is a reduction in financial capital because there has to be higher usage of money to make management to be efficient and effective. These therefore create a trade off between each of them and the other. 4.0 How does the firm differentiate human capital from social and from intellectual capital; and others? There is a great differentiation between human capital, social capital and intellectual capital as described by different firms (Gio and Wiederhold, 2013). Human capital is a section of intellectual capital which is used to measure the economic value of workers in terms of their skills and proficiencies. It is different from intellectual capital which is the overall value of the business organization (Choo and Nick, 2002). It also includes human capital and other benefits which the firm may receive when the employee retires. Human capital therefore show the value which the employees can provide to the business organization in terms of economic performance. It is based on the individual input since every person is able to perform differently and has his own ability. It is therefore important to note that the company is able to improve human capital by just investing in them by way of offering training to them to acquire additional skills. According to different firms, the difference comes when there is a belief that not all human work forces is equal but the company have the capacity to improve its human capital (Gio and Wiederhold, 2013). Intellectual capital can also be improved by improving human capital and the quality of assets and other resources that are not included in the balance sheet. Human capital includes the experience, academic qualification and the employee’s potential (Choo and Nick, 2002). These values are very important to the organization as they are able to contribute significantly towards the firm’s performance. Intellectual capital is sometimes is important when evaluating the wealth of the firm (Khavandkar & Khavandkar, 2009). It is therefore considered as the amount in which the value of the firm tops its physical assets. It is therefore the value of the firm which cannot be accounted for in the balance sheet. Intellectual capital is therefore consisting of three components which include human capital, structural capital and relational capital (Gio and Wiederhold, 2013). Human capital is also different from social capital as social capital involves the value which the organization gains as a result to its good relationship it has with its stakeholders. Human capital only covers the benefits that can be derived by the firm because of skills and ability the employees provides. This makes it to be different from social capital. 5.0 Which firm is creating greater value, in the widest sense of the word? Vodafone Europe is able to create greater value than and Telecom South Africa. This is because it has more employees and subscribers than Telecom South Africa (Sward, 2006). This means that it has higher human capital and social capital than Telecom South Africa therefore has more people with more ability, experience, and academic qualification. Vodafone Europe is also having higher social value than Telecom South Africa. This is because it has a stronger relationship with its stakeholders such as customers, creditors and suppliers and even creditors. Although Telecom work close with its stakeholders but it cannot be compared with the way Vodafone which values customers and employees very much. This reduces the value of Telecom in terms of intellectual capital (Sward, 2006). The value of Vodafone is also very high because it has high sales revenues than the sales revenues of Telecom. This could be because; it has a stronger goodwill which ensures that it has more customers than the other company. Vodafone is also able to generate more profit margins because of the increased number of subscribers. This makes it to be seen as a company that is able to provide high return on investment to stakeholders such as shareholders. The value of physical assets of this company is also higher than that of Telecom (Sward, 2006). This is also a valid reason that shows that Vodafone has higher value since it has plants and machinery, land and building stock and cash of higher value than those used by Telecom. This is therefore a surety that Telecom has a lower value than Vodafone. Finally, Vodafone has higher equity capital value showing that it has more permanent capital than Telecom. This is a strong indication that this company is able to provide value to its stakeholders more than Telecom. Conclusion The value of a business organization does not only depend on the value of physical assets in the balance sheet but also it depends on the social value, human capital and intellectual capital. When the value of intellectual capital is more than the physical value of asset, it therefore means that the company with higher intellectual value has greater value than the other. For the sake of Telecom South Africa and Vodafone Europe it is clear that Vodafone is a company of higher value than Telecom due to the relationship it has with its stakeholders and the number of subscribers it has as compared to Telecom South Africa. References Andrea B et al (2015) “Exploring metaphors of capitals and the framing of multiple capitals: challenges and opportunities for ”, Sustainability Accounting, Management and Policy Journal, Vol. 6 Iss: 3, pp. 290-314 Cooper, C. and P. Taylor (2011) “Accounting for human rights: Doxic health and safety practices – The accounting lessons from ICL”. Critical Perspectives on Accounting, Vol. 22, pp. 738-758. Cooper, C. and Coulson A (2014) “Accounting activism and Bourdieu’s ‘collective intellectual’ – Reflections on the ICL case.” Critical Perspectives on Accounting, Vol. 25, No. 3, pp. 237-254. Choo W and Nick B (2002).The strategic management of intellectual capital and organizational knowledge. Oxford University Press Gio Wiederhold (2013) Valuing Intellectual Capital, Multinationals and Taxhavens; Management for Professionals, Springer Verlag. Khavandkar J & Khavandkar M (2009), "Intellectual Capital: Managing, Development and Measurement Models". Iran Ministry of Science, Research and Technology Press. Sward, David (2006). Measuring the Business Value of Information Technology. Intell Press Vikas et al (2005). "Dual Emphasis and the Long-Term Financial Impact of Customer Satisfaction". Marketing Science, 24(4) Appendices 1. Screenshots of integrated financial report of Telecom South Africa 2. Integrated financial report of Vodafone Europe Read More