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Transcription of this question: 3.VodafoneVodafone, the British mobile telecom operator, is still growing thanks to its portfolio Of assets inemerging markets. Vodafone predicts that these operations will deliver more value to its shareholdersthan the company’s established, mature markets in Europe, Japan and the US.With an early-mover advantage in developing markets, Vodafone anticipates that 60% Of its growthin the next five years will come from emerging markets. Revenues are forecast to rise to S310 billionby 2010, 79% above 2006, equivalent to an annual growth rate of more than 12%. This compares to4 % growth in the company’s mature markets.Consumers in countries such as Turkey, South Africa, Egypt, India and China are embracing themobile phone faster than fixed-line services. Vodafone’s own research shows how fast mobilepenetration is growing. In the first half0f2006, revenue was up 47% in India, 41 % in Romania and18% in South Africa. This contrasted with declines in Britain and Japan and gains Of barely 1 % inGermany and the US.Vodafone s continued success depends on India and China, where it owns a stake inBharti Telecom and 3.27% in China Mobile, and on building relationships with localgovernment regulators. However, even established multinationals can get it wrong in new markets,because Of legal constraints, cultural differences or misjudged capital expenditure.Source adapted from “Vodafone looks abroad for growth surge in mobile phone sector” by Arindam Nagand Martin Fluck, 4th July 2007, reprinted with permission.(a)(b)(c)Define the term capital expenditure.Explain the driving forces that influence companies, such as Vodafone, to becomemore global in their operations.Evaluate potential difficulties Vodafone may face expanding further in the[2 marks][8 marks]developing markets Of India and China.[l O marks]

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