Business strategy is referred to high level plans formulated by the top management of the firm which assist in gaining competitive advantages (Chen and Jermias, 2014).. It helps company in the growth and development. In respect to survive in competitive advantage it is essential for the firm to formulate effective strategies and implement them in systematic manner. Regarding this, the focus of the firm will be on formulating various types of strategies which can be applied in operational, tactical and strategic role of the firm. The present research is based on Vodafone company is operating its business in telecommunication industry. This report will cover Impact and influence of macro environment on Vodafone. Along with this Vodafone internal environment and capabilities will be assessed.
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TASK 1: THE EXTERNAL ENVIRONMENT
P1. Impact and influence of macro environment on Vodafone
Macro environment is known as the external environmental factors which can affect the operations of the firm. In order to analyse the external environment, Vodafone can conduct PESTLE analysis and Ansoff matrix strategy. The Vodafone business strategy will used these both models in respect to know the impact on its strategies
Political factors: Political factors are known as the rules and regulations made by the government. It can directly influence the business strategies and plans. EU roaming regulation is one of the factors that affect Vodafone. It leads to reduce the changes for usage of mobile phone out of the country by 60% and enhance the consumer rights in Europe (Goerzen, Asmussen and Nielsen, 2014). The political environment can impact the business in many ways such as it can add risk factor that can make company to suffer from loss. The political environment is known as the factor which is least predictable. Government have power to change their rules and regulations which can adversely affect the business strategies. Company can make purchase of risk insurance which help them in managing the political risk. The firm who are operating business at global level required to use such insurance in order to reduce risk exposure.
Economic factors: There are various economic factors which can directly and indirectly affect Vodafone. It includes interest rate, recession, inflation, etc. All these factors can directly affect the strategies of Vodafone. Impact of BREXIT on the UK is high due to which most of the companies are affecting who are operating in the country. It is essential for the firm to ensure that strategies which are formulated do not get affected by the recession, GDP or any other factors. Hence, to survey in unstable economic condition of the UK, Vodafone developed strategies to expand in that country and target a large number of customers. Due to increase in interest rate it made tough for the company to take loan for implementing strategies. Along with this for the expansion of business company unable to take loan for carrying out business activities.
Social factors: Social factors are those factors which has impacted the strategies of Vodafone such as changes in lifestyle of customers, taste and preference, etc (Gray, Smart and Bennett, 2017).. There are many companies who are providing high speed internet in less price which easily divert the attention of customers. Hence, it is essential for Vodafone to consider this factor while formulating strategies. The social aspect focused on the forces within the society. Technological factors: In the present time there are many new technologies are introduced in the market. Vodafone always make sure that all the contemporary trend get follows in order to retain customers (Goerzen, Asmussen and Nielsen, 2014). Therefore, with the rise in 5g technologies business strategies of Vodafone is high affected. At present management of Vodafone investing in order to provide 5g internet facilities to its customers in UK and other countries. Adopting new technology can help company in saving cost and time. Along with this it make easier to carry out day to day activities in an effective manner.
Environmental factors: At the time of carrying out business it is essential for the firm to focus on preventing the environment from any type of harm. Vodafone focused on keeping environment safe, therefore it is using renewable sources of energy in most of its departments. Along with this, the firm is part of social corporate responsibility so it carried out many campaigns in respect to make conscious people about environmental protection (Chen and Jermias, 2014).
Legal factors: Legal factors incorporate the national laws and corporate, legislation and policies. Therefore, carrying out the business in UK it is essential for Vodafone to ensure that all rules and regulations are get followed strictly. Company can focus on employment rights laws, health and safety act etc.
Hence, the above following factors shows that company can easily impact the firm and its operations. It is important for the firm to develop various strategies so that it can easily overcome issues and carry out business successfully.
Ansoff growth vector matrix
Ansoff growth matrix is known as the strategy that provides a path through which company can innovate new product or enter in new market . Here below are the Ansoff growth matrix
Market Penetration: Market penetration take place at the time when company wants to advertise its existing produces which assist them in gaining market shares. It is known as the minimal risk strategy of Vodafone. It is because the firm need to put efforts in marketing for capturing high market shares (Chen and Jermias, 2014).. The company need to keep efforts for making sure its leverages the current capabilities, resources and skills.
Market Development: Market development takes place at the time when firm wants to expand its business in new market through selling its existing products. For instance, Vodafone wants to enter in a new market with the current products (Buckley and et.al., 2016).. For instance, company wants to enter in Indian market with its current products that clearly reflect its market development strategy. However, it is considered as a risky strategy as compared to market penetration strategy. As because firm need to put efforts in identifying its target market, marketing etc.
Product Development: This is the strategy in which company focuses on developing a new product in its existing market. Vodafone can use this strategy in UK through introducing new product in the market. However, this strategy is known as the optimum strategy which help company in sustaining competitive market. Through leveraging the brand name, Vodafone can easily develop new product and gain success.
Product Diversification: Product diversification in which company focus on launching new product in the new market. This strategy is very risky because no one know about the firm and its products which reduces the chances of sales. Vodafone need to put lots of efforts in order to develop its impact in the market so that people will come to know about it and make purchase.
TASK 2: THE INTERNAL ENVIRONMENT AND ORGANIZATION CAPABILITIES
P2. Assessment of Vodafone internal environment and capabilities
To survive in competitive market, it is important for company to robust internal organisational structure with proper allocation of the resources and appropriate use of internal capabilities. With the help of VIRO, company can easily analyse its resources in order to determine the strategic position of the firm (Madrigal, Jiang and Roy‐Chowdhuri, 2017).
VRIO model for analysing strategic capabilities of Vodafone. VRIO framework model is known as the specific model. To analyse the internal capabilities of Vodafone, VRIO model will optimum and accurate. Here below are provided are the analysis:
Value: There are many resources which are used by the Vodafone such as human resources, financial, technological and physical resources (Madrigal, Jiang and Roy‐Chowdhuri, 2017). All these resources are important for the firm in order to carry out business activities and gaining competitive advantage. Vodafone is operating its business in UK and it is essential for them to use all these resources in an effective manner.
Rare: In present time mobile communication market growing fastly in all over the worlds. It leads to make difficult for the firm that they use rare resources which support them in gaining competitive advantage. It is analysed that Vodafone company is using its own resources and patented information which assist them in gaining competitive advantage. Apart from this, there are various mechanical resources which is used by other firm who are operating business in same field such as O2 and Giff Gaf etc (Wollenberg, 2017)..
Imitate: The firm is using patient information and highly advance technology which can is not easy to be imitate by other companies. Further, robust structure and appropriate manpower help company in sustaining in competitive market of United Kingdom.
Organised: The firm is using its resources in an effective manner and due to this reason, they thrive in the competitive market. Therefore, all the resources which are used by the firm help them in gaining competitive advantage.
Here below are some strength and weakness of the Vodafone.
Strength: One of the main strength of the firm is that it is operating its business in all over the world. It has large number of customer base due to which company is making huge profit in the industry. Though providing a advance network which help in aiding quality of the network. Along with this company can easily make good profit through selling its product around the world (Wutzler, Weissbach and Springer, 2017).. Apart from this, marketing of the Vodafone is fabulous. The pub of Vodafone is known across the globe in respect to follow Vodafone users everywhere. Along with this, Vodafone Zoooo is also effective which help in gaining the attention of large number of customers.
Weakness: The weakness of the firm is that its subscribers in US and UK getting reduced. Along with firm also face heavy losses in India too because of the network issues. Due to large number of competitors such as Giff Gaf etc has affected the overall business and especially fall in the European market (Madrigal, Jiang and Roy‐Chowdhuri, 2017).. Hence, value of brand is reducing because of new companies entering in the market. One of the main reason for dropping in the subscriber based of Vodafone is known as the brand valuation of the firm which was very strong in the beginning. But its brand valuation was dropped in last year due to which it sales are highly affected.
Opportunities: Vodafone company have opportunity to expand business in emerging market. There are many roles that can be played by the firm in emerging market. One of the major issues which customers of Vodafone are facing is due to network issues (Harrison and Wicks, 2013). The firm is known for its poor network . Therefore, keeping an eye on the network and make improvement in it is one of the best opportunities that firm have in respect to increase customer base.
Threats: One of the major threat of the Vodafone is known as mobile phone portability. It is because whenever any competitor provides cheap plan then customer easily switch from its brands to another (Gray, Smart and Bennett, 2017).. Large number of competitors are one of the major threat due to which company unable to make good profit. It is essential for the firm to focus on premium pricing strategies so that it can easily give tough competition to its competitors.
Through conducting SWOT analysing it become easy for the firm to understand its weakness and opportunities. Vodafone can overcome the weakness of the firm through focus on factor which are impacting the firm. Along with this, company can use new technology as the opportunities so that it can easily survive in competitive market.
Task 3 – Analyzing the telecommunication sector:
P3 Competitiveness of UK's telecommunication sector by using Porter's Five Force model
Porter five force model is effective enough in order to analyse the competitiveness of the telecommunication industry UK. The provided model is effective enough in order to understand the forces which can impact the firm. Here below are the competitive analysis of the industry
Bargaining power of buyers (High): Bargaining power of buyer is known as the high in UK as because of there are many new companies who are entering in telecommunication market. It leads to provide wide range of choices to the customers as they no need to depended on one firm (Blackburn, Hart and Wainwright, 2013).. This implied that company need to device new strategies and plan which help them in retaining customers for longer time. Regarding this, Vodafone can formulate new pricing strategies and focus on the quality of services which help in grabbing the attention of customers.
- Bargaining Power of suppliers (Low): Suppliers are those who provide resources to the firm. In the UK, telecommunication sector has provided partnered with the suppliers so that barriers can be removed in the in supply chain management process. Suppliers play important role because if company do not get resources on time then it will become tough for them to deliver product on time (Gordon, 2017).. On telecommunication industry supplier power is low. Therefore, Vodafone should keep strong relationship with its customers in order to increase productivity and sales.
- Threat of new entrants (Moderate): In telecommunication sector threat of new firm is not high nor low as because of Brexit. The firm is surviving due to because of governmental policies and increase in advance technologies (Burke, 2017). New firm need to face so many restrictions while entering in this market such as competitors. Laws, etc. Therefore, to survive in new marketing companies need to focus on adopting strategies of existing companies. For instance, Vodafone company need to make new strategies so that it can easily survive without getting affected from new entrant.
- Threats of Substitutes (Low): In telecommunication sector threat of substitutes are low as because of lack of alternative customers (Blondiaux and et.al., 2017).. There are less substitutes available who can give tough competition to the firm. However, the company should not underestimate its substitute channels. It is because there are many social networking sites which are offering free calling option such as WhatsApp, Facebook etc. However, these applications are not mostly used by the user because they need internet connection of calling. Hence, Vodafone company should focus on these issues and try to devise strategies accordingly to overcome all these problems
- Rivalry within the market (High): In present time it is not easy for the firm to survive in competitive market. There are many strategies which company need to formulated in respct to remain in global market client (Amato and et.al., 2017).. There are many orgisation who are operating there business in the same market such as Giff-gaf, O2 etc. it is essential for Vodafone company to make innovative products and services which are different from its competitors. Along with this firm can focus on devising new strategies so that it can easily grab attention of customers.
P4 Analysis bowman's strategy clock model for determining strategic direct and available option for Vodafone.
Bowman model is used by company to derive its competitive position as per competitors such as Virgin, Giff-Gaff etc. The framework of this model is divided into eight strategic option which will help in developing critical understanding over Vodafone and its strategic directions. The analysis with the help of model is described under:
- Position 1: Low Price / Low Added Value: As per this, it can be said Vodafone holds competitive position because the schemes offered by telecommunication brand are complete different from competitors. Moreover, the pricing strategy of firm is also not on the basis of competitive pricing instead it is focused on unit pricing where the management first calculates profits and then develops different. Offering schemes with profits plans is the action which represents competitive spirit of organisation. Thus, the company and its services are not focused low price and low value added index for attaining competitive advantage.
- Position 2: Low Price: The company do not offer services at very low price to maximize sell instead the pricing is done the basis of consumer requirement and ability to pay. Moreover, to make pricing strategy successful the firm offers pre play plans like monthly contracts, pre phone bill etc. However, with the help of this management derives possible and suitable pricing option which can assist the organisation in serving consumers satisfaction and to maintain profits.
- Position 3: Hybrid (Moderate Price & Moderate Differentiation): The core product of Vodafone is its Voice services from which in 2010, it companies has earned 28.0 billion pound of revenue (Products and services, 2010). Apparently, the firm has managed to maintain the reputation of highly précised valued services but at fair value according to schemes. The pricing scale of company does not change as per competitors instead the strategies are focused on serving quality tele communication services to consumers. This goal and objective of the firm is the technique which allows the firm in maintaining standard of services.
- Position 4: Differentiation: Tele communication is the sector which undergoes huge competition in services and voice schemes. Therefore, to make differentiation in services, the organisation focuses on segregating services and schemes on the basis of customers. Like, with the emergence of 4G network, the competitors of Vodafone has started offering different schemes and plans of voice calling and messaging at low prices to attract consumers. However, in this situation the firm did not lower its prices instead the management planned to offer schemes at high price but with quality connection. This strategic plans of company assisted the business in developing consumer base and serving satisfactory services (Parnell, 2010).
- Position 5: Focused Differentiation: This is related to market position of company from where it can be said that organisation is known for its exclusive services worldwide and therefore offers high quality services at high price. Consumers are price sensitive but these days due to increasing competitive pricing the focus of firm has shifted to quality. Thus, it is the strategy which helped at company in attaining advantage and making focus differentiation in tele communication products and services.
- Position 6: Increased Price and Standard Product: Increasing pricing and standardizing product is the situation of risk because in this firm can not determine response of consumers towards organisational products and services. In this, of consumer accepts the price offered by firm than the situation leads to profits otherwise it can lead to shift in consumers. Therefore, in this situation, the ultimate objective and strategy of Vodafone is focused on maintaining quality of services. Thus, it can be said that this strategy of firm is effective because there are situation where buyers cut their losses because of quality products.
- Position 7: High Price / Low Value (Monopoly Pricing): Monopoly pricing is the another strategy of Vodafone which helps the organisation in managing profits as well as consumers. Despite of increasing competition the management do not offer products at low price because it will degrade its quality (Martin, 2013). Moreover, in this the action plan for Vodafone differentiate between its own product and services like the handset offered by firm are offered at low price to seek consumer attention but the voice schemes and services are always higher than competitors. The monopolistic market of enterprise is based on monthly contract and voice plans in which the schemes and plans are offered according customer requirements.
- Position 8: Low Value / Standard Price: This reflect position of firm where the company offers product at high price by degrading products. As per this the firm attain advantage in model because the services of Vodafone are successful because of high price and high quality regardless of competition, because the focus of Vodafone is to assist customers in meeting their communications needs.
From the above report it is concluded that in modern time there are many companies in are operating their business in the telecommunications sectors. All the firms are giving tough competition to each other through making innovating products and services. To survive in global market, it is essential for the firm to formulate effective strategies. There are various economic factors which can directly and indirectly affect company such as interest rate, recession, inflation etc. To survive in competitive market, it is important for the company to robust internal organisational structure with proper allocation of the resources and appropriate use of internal capabilities. Further it is concluded that, porters five force model is effective enough which help in determining forces that can impact the firms. Company should focus on making changes in products and services so that customers do not switch to another brand. Through making a good relationship with supplier’s company can easily increase its sales and productivity. In telecommunication sector threat of substitutes are low as because of lack of alternative customers.
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