Business strategy is referred to a long-term planning through which company easily attaining their set goals and objectives in appropriate time frame. Basically, strategy is related with action that taken by the company to enhance their overall performance level. Along with this, it also defines the way to operate business activities in systematic way which helps in enhancing the chances of attaining competitive advantage in market place. With the help of this management got better guidance to perform entire activities in effective manner (Chu, KrishnaKumar and Khosla, 2014) In addition of this, formulating effective business strategies helps in handling all the actions and at the same time also reduce the chances of arising issues and conflicts within the company. This will directly contribute in enhancing the performance level of the company in an appropriate way (Yuliansyah, Rammal and Rose, 2016). Present report is based on Vodafone, is a mobile telecommunication company which operate their business in Europe, US and Africa as well. As a biggest and leading telecommunication firm offer better services to its customers. Different factors of business environment also impact on business strategy is mentioned in this project. Along with this, competitiveness of telecommunication industry is also discussed in this project which may leads in enhancing the chances of attaining success.
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Macro environment and its influence on activities of business organisation and its strategies
Macro environment is use to define those factors that exist outside the organisation and largely affect its activities and decision-making process. Identification and analysis of external elements is very essential as this support manager in formulate better strategies which ensure effective implementation of business operations (Mellat-Parast and et. al., 2015). Political, legal, social, economic, environmental and technology is all are come under the macro environment. Impact of all these elements on functioning and strategy of Vodafone is given in the following points:
This is one of the most popular and effective tools use by business firms to examine the external forces in order to take better decision (Malerba and et. al., 2015). As Vodafone operate in various areas of world and offer different type of services to all its customers. So before expand its operations in new areas it is very important for organisation to undertake a study related with external forces of that country.
Importance of PESTLE
One of the main feature of PESTLE is that it provide an opportunity to manager to identify and examine the factors exist in business environment. This help in formulate effective policies and support entity to maintain its position in market (Lueg, Pedersen and Clemmensen, 2015). With help of this analysis entity can formulate a contingency plan and can respond to the carnages take place in external business environment.
Political factors: This aspect help in determine the government and its various rules exist in a specific country. Political conditions exist in country largely affect the activities of business firms. Further various relevant factors such as peace of state, political instability and many more all affect the growth of company and the industry (Torrent-Sellens, 2015). Like when government get changed in UK then Vodafone operations get impacted most just because they require to again and recraft their strategies in define manner of course. It is very important for Vodafone to examine this because approval of government is very essential before set up a new plant in a country. Thus, such aspects of political consideration need to assess and determine in better and supportive manner (Chang, 2016). In addition of this, Brexit is current issue in UK which define instability in political factors. Brexit is that incident that largely affect the telecommunication sector. In context of Vodafone, they also affected from Brexit in which they reduce their performance level. Wifi and internet are the daily part of an individual's life. Customer believe that data and internet should be treated the the same by service providers. There is a a complex fight between service providers, people and government.
Economic factors: This is one of the most significant factor that require to be analyse by entities because this directly impact on profits of company. Mainly this aspect covers the inflation rate, deflation rate, currency rate and GDP of a specific country. Good GDP indicate high purchasing power of individual and this increase the success chances of entity’s product. Movement in economic conditions of country directly affect the profits of firm so this require to be examine by Vodafone (Hofmann and et. al., 2014). Economic condition affect telecommunication sector and also impact decision taken by the firms operate in that such as Vodafone. Another thing which need to assess by management of Vodafone is to start operations at such course by evaluating the nature of depression and recession. If they found that country is facing either of the situation then they have to frame such kind of strategies which enable in managing that as well as support in managing economic growth as well. For example, recent time economic crisis the nation has been face by Vodafone. Along with this global uncertainty is also impact on company which directly change all the strategies. Interest rates, taxes and inflation rate affect the telecommunication sector. Expenses affect pricing per plan. Huge funds are to build towers and resources in rural areas and the consumers who don't live in big cities get affected.
Social factors: This element of macro environment indicate the lifestyle, hobbies, language, culture and behaviour of local people living in the area in which entity operate or wants to operate. Study of this element increase knowledge of managers about the attitudes and behaviour of individuals. This help in manufacture product as per the specific requirements of customers and results in customer satisfaction. In this way, entity can retain its customers for a long time period. Vodafone requires to determine needs and preference of their clients and customers properly (Lewis, 2014). This assist in getting each and every consumer properly as well as control the social aspects properly. When entity consider needs of customers while manufacture and offer its products then it help in retain customers for a long time period. Along with this, for maintaining and managing goodwill at market world, Vodafone need to contribute in society as well. This facilitate in managing their operations properly. As it is relate on local beliefs and customers culture in which Vodafone operate their activities to improve their performance level. Horizontal growth of telecommunication sector is limited. Due to monopolies in telecommunication sector they have the power to charge of both internet and mobile carriers.
Technological factors: In today’s business environment when an organisation use updated technology then it helps in attract more customers and provide support to respond to the changes that take place in business environment. As Vodafone is known for offer better and effective products to all its customers so to maintain its market share, it is very essential for entity to use the new and updated technology (Chang, 2016). With this, organisation can utilise the opportunities exist in market and can generate more number of profits. By use new and updated technology Vodafone can manufacture and offer featured products to its customers and can sustain in market for long run. When a big change take place in technology then it affect the sector. As Vodafone is focus in the latest trends and technologies in which firm easily enhance their productivity level. In recent time company use 5G within this activities this will change customers behaviour and taste as well. Basic needs in smartphones, like voicemail and caller ID. Now people wants internet access that's why data is added to mobile plans. Technology is one of the factor that replace very fast with changes in time. Technology is growing with economic growth and in the firm that us updated technology get growth and success. Telecommunication firms with 3G services are not allow to avail tax breaks.
Legal factors: This is another significant element of external environment. Mainly this indicate the laws and regulations introduce by legal bodies in order to get a control over business operations of enterprises (Yuliansyah, Rammal and Rose, 2016). It help in monitor and measure the actions taken by commercial firms to serve its customers. When firm does not follow the rules then it either results in penalty or legal action. Vodafone face a issue that it does not give much consideration to needs and wants of its staff members and this is the main reason why large number of workers are leaving the organisation. For improve this situation, entity require to introduce some changes in its product and should focus more on needs of its staff members (Grant, 2016). It is very important that healthy and positive working environment should be offer to employees so they can work well. When government introduce changes in legal policies then it affect the decisions and profitability of various sectors. In order to maintain its positive image and to enhance its goodwill, it is very essential for Vodafone to take business decision as per the laws and regulations exist in that country. As Vodafone follow anti- trust law in wireless communication industry to enhance their performance level at market place. Telecommunication sector is often affected by the legislations issues. A separate department of Telecommunication was developed in 1985 which was created to expand, develop and maintain significant aspect of telecommunication system.
Environmental factors: In today’s business environment, customers are become more aware about various issues and safety of environment is one of it. Entities who consider this element before take business decision attract more customers towards its products and services. Further this help in create and maintain a positive image in market that offer large number of long term benefits to entity (Parnell, 2016). Vodafone have to preserve and work in favour of environment as well. This enable and support them in managing things properly. Thus, they have to work properly and in determine manner so that environment would get preserve and manage properly so that all related issues would get minimise with positive reflection on society by establishing secure network of radiation. Global warming and climate changes affect how telecommunication products reach to consumers and this directly affect the telecommunication industry and its various players.
All these are the major factors of external environment that affect the actions and decisions of a business entity. By examine these factors, Vodafone can ensure effective expansion of all its commercial activities in new areas and at the same time can attain its set goal and objective. In addition to this, entity can achieve optimum utilisation of business resources as this bring efficiency in business process.
Ansoff’s growth matrix:
This is a tool which can be use Vodafone in order to determine the competitiveness of telecommunication industry of United Kingdom. One of the main benefit of this it provide direction to manager which help in take better decision related with business operations. Further this help in utilise the opportunity either with help of new market and product or with current market or product. Mainly this matrix is divided into four parts as given in the following points:
Market development: Under this, entity start selling its products in new market or areas. Vodafone is already operating in large number of areas and due to this profit number of entity is very large (Mellat-Parast and et. al., 2015). By offer its services in rural areas entity can increase its customer base. But for increase the sale of its products, Vodafone requires to opt an effective channel to interact with target audiences. It is very important Vodafone to carry out research in order to identify needs of customers as with this, entity can make products as per their specific needs and requirements.
Market penetration: One of the main benefit of this strategy is that it ensures optimum utilisation of all resources and enhance efficiency of business process. This increase market share and business growth of company (Malerba and et. al., 2015). In this section, Vodafone need to focus on their current products and services and try to sale out them in new market world or in current market area. This enable and support them to managing things properly so that desire growth at market world could get assess in define course of frame.
Product development: Under this strategy, new products are manufacture and offer by firm to serve its customers and get their satisfaction. With this, entity can retain them for long time period and can get a competitive position in market. Vodafone need to try to develop new offers adn services in telecom sector which consider under the product development course. This assist and support them in developing products properly at new market world so that define growth and sustainablity get done adn procure better.
Diversification: Under this strategy, entity offer new products in new market to increase its market share and to increase the number of its profits. Vodafone can expand themselves in two define criteria where one is related diversification and another one is unrelated diversification. Thus, business could utilise their related diversification so that they could attract vast range of individuals by introducing relevant products and services like mobile phones etc.
All these are the major strategies cover under the Ansoff’s growth matrix. Before choose a final strategy, it is very essential for manager to collect information about the situation exist in market and undertake a situational analysis will be beneficial for entity in this.
Analysis of internal environment of company
Undertake an internal analysis is related with identify strengths and weakness of firm. One of the main benefit of this type of analysis is that it helps manager in take better decision and help in minimise the negative impact of its weakness. Vodafone operate on an international level, so undertake internal analysis is very important for entity to achieve desired goals and objectives.
Strategic capability: This aspect reveals the ability of a business entity to do achieve a competitive benefit which help in attract large number of customers towards its product. it examines the strategy and various tools use by firm to execute its business operations. Further, market position of company and all its resources is also examining in this (Torrent-Sellens, 2015). Strategic capability of organisation play a big role in its success as this help in get a competitive edge in market. Interested individuals such as employees and supplier do efforts to highlight strategic capability of firm. Managers undertake a detailed study about strategic capability as this help in get desired outcome provide basis to generate more profits as compare to its rivals. Financial bodies and government agencies also indicate a interest in strategic capability of firm.
VRIO analysis: This is another tool which is use by business enterprises to examine the usefulness of resources and its importance in success of entity. It help in utilise all business resources at an optimum level and also provide competitive benefit to organisation.
Valuable: This aspect of VRIO analysis help in identify the resources that are valuable to a business entity and are the ones that help in capture a large market share (Lueg, Pedersen and Clemmensen, 2015). One of the main benefit of these type of resources is that it support in offer more value to the customers which entity in maintain its market share. These types of resources add effectiveness in business. This save both time and cost of entity. Determine the value of its resources is very significant for Vodafone as with this, entity can offer value to its customers and at the same time can satisfy their needs. Although, Vodafone have to value their each and every product better as well as value about resources properly. This enable and support them in managing and gaining competitive advantage and become leader at global market world. Thus, for this aspect, they need to utilise each and every resource in better and determined course of manner. In addition of this, Vodafone use valuable resources which may helps in increasing the customers taste and demand towards the company products and services. For attaining success at market place, company should review all the resources in daily basis so that they easily get competitive advantage and at the same time also make necessary changes within internal and external changes to meet customers expectation.
Rare: Valuable and rare resources boost up the success process of entity and also provide competitive benefit. Unique resources support entity in manufacture featured products for its customers and at the same time help in attract large number of customers (Hofmann and et. Al., 2014). All resources are rare in frame which need to understand by Vodafone management better. This rareness enable and support administration to get done things correct so that competitive edge could be assess better. This will boost up the success of a firm in define course of manner. As Vodafone has identical resources through which firm can make and implement effective strategies to attain competitive advantage form its rivals. For attaining the same, Vodafone should be neglect all those resources that are common. This will important for company to survive in competitive marketplace.
Costly to imitate: When organisation’s resources remain difficult to imitate by other organisations then it increase effectiveness of business process. As resources use by Vodafone are difficult to imitate by other entities so this provide large number of benefits to company.
Organised to capture value: To get various benefit, it is very essential for business entity to determine the value of various resources it use to carry out its activities. With this, firm cam formulate plan to utilise all resources at an optimum level and can get a competitive position in market (Moseley, 2017). Vodafone need to organise their resources properly where they have to determine importance of each and every aspect properly. This grouping of resources enable Vodafone to utilise them better which further support in gaining and defining competitive advantage.
By this analysis Vodafone determine their strengths and weaknesses which may aid in expanding business in another countries. As a world's leading mobile telecommunication company they offer their services in various countries such as Africa, Asia Pacific and many more. As the main focus of this company is to cater customers needs in which they easily increase their revenues.
Strengths and weakness of Vodafone
Strengths: This aspect indicate the specific features and qualities that support entity in better satisfy the need of its customers. Strengths of Vodafone are given in the following points:
- Today, Vodafone is one of the leading player in telecommunication industry.
- Large number of products and services are offer by entity to satisfy the needs of its customers.
- High brand recall and brand visibility support in attract large number of customers every year.
- Due to offer various products and services, entity generate large amount of profit and at the same time firm ranked among top 2000 brands working in telecommunication industry.
Weakness: This is the aspect that negatively affect the success of enterprise. Weakness of Vodafone is given below under the following points:
- Firm is facing a downfall in number of its subscribers. To improve this, entity require to introduce some changes in its policies and strategies.
- Due to large number of competitors, entity face a price war which decrease the profits of company (Lewis, 2014).
- Ineffective distribution channel is another weakness of entity.
- Due to ineffective research and development department, entity is not able to offer new and featured services to its customers.
Examine the competitiveness of telecommunication sector
Porter’s five force analysis:
It is one of the important analysis for business organization of examine the competitiveness in telecommunication sector. Under this Porter stated that business have to maintain a close eye on their competitor but on the other side Michael also encourage as well as support business to look at their strategies of competitors which may leads in improving overall performance of the company. Along with this, he also said that there are five forces that helps in examine the competitive environment that largely impact of business activities (De Massis and Kotlar, 2014). In UK market telecommunication is fastest growing and competitive as number of companies provide telecommunication services to customers. In this context, for effectively analyse the competitive environment, five forces model adopt by the company which are as follows:
- Bargaining power of buyers: Under this, consumers are the important and king for company as it is high power of buyer. As various companies are serve their services in competitive market place. In this the main reason is that is regulated nature of industry. As it is big threat for Vodafone, thus it is important for them to make as well as implement effective policies to attain their set goals and objectives by delivering quality products and services. This will help in satisfying customers’ needs and wants in most effective manner (Moseley III, 2017). It directly contributes in capturing the larger market share from company rivals. Vodafone have unlimited number of huyers all around the world whom interference required to assess properly. Thus, management have to assess the bargaining power of buyers power which is relaitively low in tenure as there are vast number of buyers found in all over the world. Thus, management need to assess this aspect and maintain and manage their diversified operations better and in define manner of course.
- Bargaining power of suppliers: As suppliers are refer to mobile operator as they provide better infrastructure to established mobile operation in market. As manufactures are also consider as a supplier for telecommunication companies. Along with this the bargaining power of suppliers are moderate but it larger affect the competitiveness of telecommunication industry. In this company easily manage their working performance in order to established their positive brand image and at the same time also maintain their high market share. Another thing which requires to understand by management properly is bargaining power of their suppliers. Vodafone have diverse number of suppliers which restrict their suppliers to bargaining with companies (De Massis and Kotlar, 2014). Here, suppliers required to think about each and every aspect properly where Vodafone could easily switch from their suppliers.
- Threat of new entrants: In telecommunication industry in UK, threat of new entrants is significant as the potential growth is very high. In this number of new player are highly enter in market for operating their business. Thus, it is also a threat for Vodafone as they have to formulate as well as implement effective plans and strategies to make their strong place in market. With the help of this company improve their performance level high as compare to its competitors. This will directly contribute in establishing positive brand image at market place (Chu, KrishnaKumar and Khosla, 201). Vodafone found that in telecom sector, there is low threat of new entries where management could operate properly. Although, it requires huge fund investment which have to determine by small companies in appropriate frame so that they could easily working on each adn every aspect better and in define manner.
- Threat of substitutes: As in telecommunication sector, substitute products and very high because number of companies also serve same products and services at low cost as customers are easily switching. For this company have to use new technologies and ways to produce better services for their customers at affordable cost which will helps in improving their customers base. Along with this, it is threat for Vodafone company so that company should adopt effective methods to retain their customers by providing them better services (Torrent-Sellens, 2015). This will help in capturing larger market share form its rivals and also grab customers attention as well.
- Rivalry within the market: Under this, competition is very high in telecommunication sector as number of companies are involve and operate their business to attain competitive advantages. In this company also use various strategies to improve the chances of attaining higher profitability level. Along with this, promotional activities are also needs to allocation of budgetary as it defines level of competition at market place. On the other side, another element is company also invest money in research and development activities in order to make as well as produce quality products and services. In this company use advanced technologies which may helps in inviting larger number of customers towards company services (Mellat-Parast and et. al., 2015). Mainly, all these are main threat for Vodafone company as company needs to use effective strategies such as price and non-price strategies through which they easily grab customers attention towards company products. With the help of this, company easily maintain their brand image and also generate larger profitability level in market place.
Hence, all these are appropriate models for examine the competitiveness in telecommunication sector. This will help Vodafone to effectively analyse their overall performance level which may helps in improving their performance level at market place. one of the main advantage of using this company easily grab customers attention and established their positive brand image.
Strategic directions and options available to enterprise
Bowman’s Strategic Clock:
This model is more effective and important which define various option and alternations. By using this company make their strategic positioning in market place. with the help of this, company easily positioning their products in market place for attaining competitive advantage form its competitors at market place. Basically, this model defines various ways and options to set product in market as per tow factors such as price and perceived value (Chu, KrishnaKumar and Khosla, 2014). By this company easily improve the chances of attaining high profitability level at market place by inviting larger number of customers. In context of this, Vodafone is famous and multinational business which deliver quality services in whole world. As company use this model to make their performance higher in market place. this model includes 8 options which are as follows:
Low price and low value added (Position 1): it is one of the important position which shows that company does not have competitive position at market place (Parnell, 2016). so that company needs to be produce low cost products to attain competitive advantage in market place.
Low price (Position 2): It is related with the positioning of the products and business in low cost leader. Along with this, company use low cost strategy to reduce the overall cost of the company. As company enhance they profit by improving product quality.
Hybrid (Position 3): Under this, two different strategies are including which is low price and products differentiation. Along with this, the main of Vodafone is to encourage customers towards its products which may leads in improving the performance level of the company at market place.
Differentiation (Position 4): In this, company provide high quality products to its customers which may leads in improving their positive brand image at market place. Along with this, another major factor is company branding is developed by its products and services. Thus, company should deliver quality products and services to attain strong customer base which positive impact on its brand image.
Focused differentiation (Position 5): Under this strategy, company set their product price at higher level. Mainly, this type of strategy is used by company for their quality and luxury products. As company also use effective targets promotion, segmentation and distribution for attaining better success in market place (Grant, 2016). with the help of this company easily established their positive brand image and also sustain for longer period of time in market place.
Risky high margins (Position 6): It is one of the complicated and risky model in which company set their product price high which may reduce their customers and their loyalty as well. If customers are buy its products then company easily attain higher profitability at market place. On the other side, if company sell their regular products on premium price them it negatively effect on the business and its image as well.
Monopoly pricing (Position 7): This type of position, individual’s sale their products and services in market place. under this there is no choice as well as alternatives in market as monopolist set product price as per their wish.
Loss of market share (Position 8): This phase defines the strategy which should be implement as well a consider by the company to attain competitive advantage (Chang, 2016). Under this position, company set their products price to invite larger customers.
All these are important strategies which consider by Vodafone at the time of executing business activities in market place. Along with this, it is important foe company to serve quality values to attain competitive advantage at market place which may directly contribute in attaining higher success. Hence, Vodafone use Differentiation (Position 4), as they offer specific and quality services to its customers by which they enhance their brand image at market place. Along with this company make their image popular as compare to its competitors. This will contribute in establishing positive brand image and also grab customers attention towards its products as they attain higher sucess at market place.
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From the above-mentioned report, it can be concluded that strategies are important for business organization to attain set goals and objectives. Mainly, business strategy is considered as an action which help manager of the company to take better decision in order to achieve desirable results. Along with this, various factors are also defined in strategy which directly affect the overall business activities and operations as well. Thus, it is important for manager to effectively adopt as well as implement appropriate strategies to enhance the profitability level of the company at market place. In this context, PESTLE analysis is also used by the company to determining the external factors and its impact on business activities. In addition of this, strength and weakness of the business is also play vital role in examining the actual performance of company at market. By formulating business strategy company easily reduce the chances of arising any kind of issues and conflicts. With the help of this company attain better success.
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