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527 Downloads I Published: 29 Apr ,2020
Business strategy is long term action plan which is designed to accomplish specific goals of objectives or goals. It is a method to bring regarding desired future like for an instance solution of problem, achieving goals of firm etc. Strategy is helpful in achieving long term goals in an effective as well as better manner. It is related with seeking of competitive advantage at market place at business preferably than the corporate level. Competitive advantage is anything which provides an organisation as comparison to to its strong competitors in order to attracting the consumers as well as defensive itself (Ackermann and Audretsch, 2013). Under this, company attract the consumers, strengthening performance, accomplish organisational aims and compete successfully. This present report is based on Vodafone company. It deals in telecommunication sector which main motive is to make improvement in services of small market of United Kingdom. This firm operates its services in regions of Africa, Oceania, Asia and Europe. It opearts its busienss in more than 50 countries. Under this report mentions about affect as well as influence macro environment and also business strategies. ‘VRIO/VRIN’ model will be discussed about identification strategic capabilities which are posses through company. In given assignment, competitiveness of the telecommunication sector of United Kingdom through using model of Porter’s five forces is going to discuss.
External environment is combined of all those factors which affect business operation from outside of an organisation. External environment of a company consists variety of different factors which impact on performance as well as behaviour of an organisation. Action of all these factors can be impact directly and indirectly (Alsoboa and Aldehayyat, 2013). Main factors which impacts on business is competition degree.
1) PESTLE model for environmental analysis
Environment analysis is helpful in determining those factors which impact on business negatively. It is a strategic tool to determine internal and external elements which affect performance of company. There are several tools of environmental analysis which company used. PESTLE analysis is used in business for gaining information regarding circumstances of firm. Management of Vodafone organisation conducts its business at international level. For environment analysis PESTLE Analysis is given below as above:
Political factors- These type of factors take current political condition of country. Under this political condition at international level impact on business (Bentley, Omer and Sharp, 2013). The political system of every country is different from each other. Then firm is conducting its business in another country then there is a need to know about the political system of another so that nay kind of hurdles can not impact of business. In context to Vodafone telecommunication company, political factor impacting Vodafone consist Roaming Regulation of European Union which aims to reduce usage of mobile phone charges by 70% and enhancing level of customer rights.
Economical factors- It is related to environment under which finance or can say money is concerned with those factors which impact on an economy as whole. It consists fluctuations, exchanges rates, unemployment, inflation and many others. Vodafone Group Plc can be use economic factor of country like for an instance inflation, growth rate and economic indicators of customers like growth rate of telecommunication sector. Vodafone business firm analysing economic factors which may be hinder its business operations in some of the target countries.
Social factors- In this modern era, tastes of consumers are changing day by day. It is a responsibility of firm to determine needs of consumers and then produce effective quality of goods in a better or efficient manner (Cadle, Paul and Turner, 2010). In regards to Vodafone, management of this firm analysing social structures, religion, income level, education backgrounds before marketing of its products as well as network operations of services to whole market.
Technological factors- In this, technology impact on business in a positive manner. If firm will adopt advanced technology then it can perform its business operations in a better or easy manner and its performance will be increased. Vodafone operates its business operations in more than 50 countries, so it uses innovative technology in its business for advancement. In telecommunication sector, technology plays an important role and without it firm can not perform in a better manner.
Legal factors- Legislations are changes time to time and these modifications impact on business environment. In addition to this regulatory body set some rules of firm. Vodafone company adopt as well as implement all kinds of legislation at workplace in order to run business successfully and legally. Before entering in other market, Vodafone company examine about the legal system of that country.
Environment factors- Various markets have the different rules as well as norms which can affect on profit level of company in those type of markets (Curwen, 2011). Before beginning of new business as well as enter in other market, it is essential that company should determine all environmental standards of those markets. The main aim to Vodafone is to reduce environmental footprints which enable lees carbon, resources use and wastage. In order to reduce environment challenges this firm rec9ognised as green brand in around 75% of developed markets.
2) Ansoff’s growth vector matrix
Strategic positioning is a kind of positioning of company in future while taking in an account changing environment and systematic realization of positioning in a better manner. Positioning strategy includes weaknesses as well as strengths of business firm, there is a need to an organisation to determine requirements of consumers or market and also position of the strong rivals. The main motive of positioning strategy which allows an organisation to particular field where firm can compete with its strong competitors. In addition to this, Ansoff Matrix is strategic planning technique which gives a structure to assess senior managers, marketers and executives to devise the strategies for future development. This matrix is developed through strategist Igor Ansoff in order to assess teams of management to focus on business development. The Ansoff Matrix given below as above:
Market penetration- Under this, business firm tries to develop its current services or products in its present markets (D'Aveni, Dagnino and Smith, 2010). It will be helpful in enhance its market share in an existing market. It includes enhancing market share in existing market and accomplish through selling more goods to manufacture consumers or searching new consumers in exiting markets. It can be achieved through reduce cost of goods, enhance distribution and promotion support etc.
Vodafone company use this strategy by launch its mobile related services under those cities or countries in which it already operating its business functions. This firm launch its existing goods in its current market.
Market development- In this, Vodafone tries to expand its new market which the help of using existing services or goods. From this large number of consumers will be attracted and sales of firm will also be maximised. Vodafone Firm used this kind of strategy for target new market with current goods. Vodafone business firm continue expand its brand in all over the world by using this strategy. This company can expand its business in India and some of other European countries.
Product development- Under this, main focus of this strategy on demands of existing consumers which are present in market. Company creates new goods and launch at existing market. On the basis of changing demands and needs of consumers, Vodafone firm provide various services with unique quality. This firm also makes some modifications in existing products and services and provide to consumers (E. Dobbs, 2014). It will be helpful in increasing more market share of business. Product development is required when the consumer base of an organisation is goods and market for its current goods has reach at the saturation point.
In context to product development, Vodafone launched new service which is “V by Vodafone” which enable customer for connect the many home and also electronic items to international IoT network group.
Diversification- Company develops through diversifying in new business with the help of producing new goods for the new market segment in a better manner. With the help of this, Vodafone company can increase its growth rate. This strategy is more risky because in this there is a need of market as well as product development.
Macro environment affects on business from outside. In macro environment, external factors are includes and these are political, economical, social, technological, legal and social. These factors can affect on the management decision of company. Strategic management decisions are helpful in achieving long term goals of an organisation with in specific period of time. In regards to this, it is a responsibility of manager of Vodafone company to determine all these factors and then try to work on reducing their affect in an effective manner so that company can perform its operations as well as activities effectively. From this, firm can take effective decisions in favour of an organisation.
Internal environment is composed of components with in a business firm consisting management, corporate culture, staff members which explains regarding behaviour of employee at workplace. Internal factors affects on business from inside of an organisation and management can control all these factors in a systematic and proper manner (Firnkorn and Müller, 2012). On the other hand organisational capabilities refers to abilities of firm to manage the resources like for an instance staff members, gain benefits over rivals etc. It is necessary that organisational capabilities should focus on ability of company in order to meeting demand of consumers in an effective way.
1) Strategic capability
Strategic capability is ability of business to employ successfully the competitive strategies which permits to survive as well as enhance value over period of time. The capabilities are necessary to manage all necessary resources in an organisation in a better manner. It consists resources, skills, set of core competencies which can provide long term competitive benefits for business firm in better manner. In context to working with framework of strategic management, capable staff member's give their better contribution in achieving aims of firm. Competitive position of a business firm is enabled through its competencies in context to perform at high level in different manner (Grover and Kohli, 2013). If organisational capabilities will be goods then firm can achieve its aims and objectives with in specific period of time. In addition to this, capabilities are cross- functional as well as collective. If firm will have good strategic capabilities, then in this case company can determine needs of consumers and try to fulfil them in an effective as well as better manner.
2) ‘VRIO/VRIN’ model
‘VRIO is framework of business analysis which forms part of strategic scheme of an organisation. In order to understand competitive advantage sources, Vodafone using this tool. VRIO tool falls internal analysis and also examining all capabilities as well as resources of an organisation. The existing business strategy of Vodafone is to develop business by geographic expansion, sustain current consumers, acquisition of the new consumers, enhancing usage with the help of innovation technology. In addition to this, business strategy as well as its sustainability strategy of Vodafone are inseparable. The main aim of Vodafone is to determine ion those areas which can be sustainable in a most effective manner. On the other hand, VRIO analysis is an effective analytical technique for an evaluation of resources of an organisation and also its competitive benefits (Johnson, 2016). VRIO expands for Value, Rareness, Imitability,Organization. It is helpful in analyse those resources which can fulfil criteria of firm. This model was developed through Jay B. Barney to evaluating resources of firm. The VRIO model is mention below as above:
Valuable- Under this, designers and engineers are more necessary to the success of an organisation. The resources add some value through enabling an organisation to exploit effective opportunities against any threats. Resources are more valuable for an organisation and helpful in enhancing value of consumers. It is done through maximisation of differentiation and also reducing cost of goods. Those resources which can not be meet with this kind of condition , lead to competitive disadvantage.
Rare- Under this, resources which can only acquired through one or some organisations are included one. Valuable as well as rare resources grant the temporary benefits. Competition is more in telecommunication sector so there is a requirement to Vodafone organisation to provide training or development to staff members for increasing their working capabilities. In context to manage risk in better manner, there is a need to Vodafone firm to hire more experienced professionals (Kernbach, Eppler and Bresciani, 2015).
Imitability- Some of the necessary resources like for an instance capabilities of specific company can imitated through some other firms whose originality of products is minimum. Companies with the rare capabilities and resources are difficult to imitate through some other companies fain some of the competitive advantage at market place. Vodafone has an effective technology through which it can produce its innovative products and can also helpful in providing any effective resources. This technology is not use or implement by any firm before.
Organisation- IT is last step in VRIO analysis. It needs identifying rarity, imitability and value. If all resources has been passed all these three then in this case firm can be organized its activities in an effective manner. It consists formal reporting structure of firm, compensation policies and management control systems which decide organising firms in a better manner.
3) Organisation’s strengths and weaknesses
Strengths are capabilities of firm and weaknesses is limitation. It is necessary for an organisation to overcome from its weaknesses (Klettner, Clarke and Boersma, 2014). Strengths and weaknesses of Vodafone given below as above:
Strengths is beneficial for an organisation but weaknesses is not good for business of company. In addition to Vodafone organisation, manager of this firm conduct SWOT analysis to determine strengths and limitations of business. If the capabilities of firm will be good then it will be considered as strengths of firm. It is essential that company should make improvement in its organisational structure, skills as well as capabilities in an effective as well as proper manner (Pagani, 2013). The internal capabilities of Vodafone is effective or attractive promotional strategies from which people attracted and buy its services. On the other hand the staff members of this firm are very talented and have good knowledge, it is another internal capability.
It is considered as an effective tool which is used to analyse and evaluate the forces which increases competition within an industry. It will help organisation to make an effective strategy and plans in order to compete with various complex situation that may arises due to environment which are contingent and complex in nature. Therefore in order to compete with their competitors the company must required to make changes in their services and pricing policies in order to attract the interest and buying decision of large number of customers. Through this, the company can successfully achieve competitive advantage and sustain in telecom industry for longer period of time and generate huge revenues as well. It includes five forces which are briefly described as below:
Bargaining Power of Suppliers: The suppliers of the telecom industry are strong instead of that the company are operated with huge profits. Vodafone as a cost leader generates huge revenue as compared to their competitors which help them in adjusting the prices increases by their suppliers more easier than their rivals (Porter, 2011). As a big company, Vodafone has power to control cost increases by suppliers due to which they can provide services to their customers at an effective prices and earn regular profits as well. In order to attain huge customer strength, it is important for Vodafone to control or reduce increment in prices or select such suppliers who agreed to provide them services at less prices as compared to other suppliers.
Bargaining power of Buyers: The customers in the telecom industry are also high due to high competition and lack of differentiated products. As the customers have different option to get telecom services from various companies engaged in providing telecom services therefore customers prefer to use services of such companies who charges less than their rivals thus this will minimises the cost prices of telecom company. As Vodafone in order to maintain their existing customer strengths and strong position among competitors, they should adopt an effective pricing polices which will maximises the interest and satisfaction of customers.
Threats of new entrants: There are lots of barriers which restricts new companies to enter into telecom industry thus the threat of new market entrant is low. As the company ho wants to enter into such industry should required to pay huge licensing fees and regulatory issues hat are attached with such industry. Similar wise, the cost of establishing network infrastructure are high and frequent changes in technology brings more challenges and difficulties to new companies to enter and compete with the existing rivals (Scholes, 2015). However, Vodafone can able to compete with their rivals in more effective and efficient manner through improving their efficiency of their services which cannot be provided by their rivals.
Threats of Substitutes- Vodafone company faces considerable threat for services and products. CDMA and also landlines both are at declining services but demands of its broadband is more. At marketplace, there are many organisation which deal in telecommunication sectors and are major competitors of Vodafone. When new services or goods meet with same needs of consumers in various ways (Sluyterman, 2013). The threat of substitute services or goods is more in case if it gives value proposition which is varied from existing offerings of an industry. In addition to this substitute goods pose to profitability of telecommunication sector based on relative ratio of price- to- performance of various kinds of services of goods to large number of consumers in order to satisfying their wants and preferences. Threat of substitution is impacted through the switching costs. Because of strong purchasing power as well as efficient scale of economies, Vodafone company does not require to pass down prices which are attributes towards substitution to customers.
Rivalry within market- At marketplace, there are many strong competitors of Vodafone in this competitive market (Srdjevic, Bajcetic and Srdjevic, 2012). In context to this, Vodafone firm faces high competitors from its strong competitors because of minimum call rate cost which are charged through closest rivals. If at marketplace, there is high competition then in this case Vodafone firm reduce its cost and it will be helpful in increasing profit level of business. Vodafone Group Plc organisation operates is business in competitive Wireless Communications sector. Vodafone firm can compete with its competitors through collaborating them in order to enhance size of market instead of that competing for the small size market. In context to this, Vodafone business firm make regular changes in its current products and services to enhance its sales in an effective manner.
These all are the Porter's five forces and through analysing all these competitive forces, Vodafone business firm develop its effective strategies to gain competitive advantage. It will be helpful in gaining more profitability to Vodafone telecommunication organisation.
Devise is a form in mind through the new combinations of ideas as well as principles. It is a responsibility of management to make improvement in its competitive edge so that it can earn more profit (Sumer and Bayraktar, 2012). In order to make market position of firm better, management of this company develops innovative ideas and apply in producing new products. Five forces model of Porter is helpful in giving competitive advantage to consumers and increase growth rate. There is no other strategy other than Porter five forces model is only effective strategy to gain competitive market
Bowman's Strategy Clock refers to model which is used in the marketing to evaluate competitive position of an organisation as comparison to the rivals offerings. This model was developed David Faulkner and Cliff Bowman as elaboration on Porter generic strategies. IT is helpful for business firms to give better ideas to organisation to collect accurate information on its market position in context to its strong competitors. It is helpful in analysing marketing model of Vodafone firm. Some position of Bowman's Strategy Clock mention below:
Position 1. Low price and low added value- It is not competitive position with Bowman Strategy Clock. Under this, services or goods are not more differentiated and consumers realize little value and cost is minimum (Tavitiyaman, Qu and Zhang, 2011). It is segment particular option and generally organisation does not select to compete under this kind of strategy. Low cost is competitive method which organisations utilise to contend with its other suppliers.
Position 2. Low cost- Under this position, firms manufactures goods in large quantities and these will be valuable. In addition to Vodafone company, goods are sold at minimum cost which lead to be reduce profit margins on goods. In this high output value can earn more profits. When Vodafone organisation will operate its business in this strategy then its profit margin will be low so there is a requirement to this firm to increase sales in an effective manner.
Position 3. Hybrid- This kind of position includes those business firms which usage the product differentiation. In this those firms which are interesting in providing services or goods to consumers at minimum cost but also provide services with more perceived value as comparison to its competitors which provides goods at minimum cost. It is necessary for Vodafone firm to focus on providing goods art minimum cost.
Position 4. Differentiation- Vodafone organisation using this kind of differentiation strategy to provide better quality of goods on average cost (Williams and Figueiredo, 2011). Under this, an organisation develops those types of goods which provide innovate attributes and develop some value to consumers. When firm designs as well as manufactures goods then it is necessary that they can compete with its strong competitors.
Position 5. Focused Differentiation- Under this, firm provides more perceived goods against the high costs. This is not essential that goods have real value but value perception though consumers are enough to charge more premiums.
Position 6. Risky high margins- Organisations which use this position they charge more costs for goods. In this, firms takes chance and also enhance their cost without maximise value side of equation. If increased cost is accepted through consumers then profit level of firm will be enhanced.
Position 7. Monopoly Pricing- Under this, where there is market of monopoly, there is single business which providing goods. There is no need to convinced to these business that what they perceives in product. In most of the countries, monopoly is regulated in context to prevent organisations from enhancing cost necessarily.
Position 8. Loss of market share- It is not desirable position for any organisation. Any firm use this strategy will surely lose its market share. If there is low value for an organisation then it is only a way for firm to sell its goods on exact rate (Williams and Figueiredo, 2014).
All these position of Bowman's strategy clock model are helpful in evaluating the strategic direction to an organisation. In regards to this there are two different options available to Vodafone and these are diversification of business in to the new markets and other is new product development for current markets. New goods as well as services are helpful in attracting large number of consumers towards firm and retain at market place for long period of time. On the other hand in diversification, Vodafone can develop its new market and and with the help of this market share of Vodafone will be enhanced in an effective or better manner.
It refers to document which firm use to interact with a business firm to achieve aims of firm, focus energy, set priorities, strengthen operations, configure the resources and assure that staff members as well as other stakeholders are work towards aims of firm. The top management of Vodafone business firm develop an effective plan in systematic manner so that all staff members can achieve goals of firm with in particular time period (Zalengera and et.al., 2014). Strategic management plan has tangible as well as tactical strategic objectives and priorities. Strategic management is comprehensive gathering of ongoing processes as well as activities which a business firm use to align and also coordinate resources in a systematic manner. Implementation is a procedure which turns plans as well as strategies in to an actions in context to achieve strategic goals in an effective manner. The implementation of strategic plan is necessary for success of every firm.
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It has been concluded from the above given report that effective strategy assess in attaining long term objectives of company. If company will develop its effective gaols then its staff members can work on achieving company in a better manner. Under this assignment studied about the analysis of external environment which can influence on decision making of business as well as its performance level. Through determining external factors, firm can perform in a better manner and will achieve its goals in specific time period. In order to identify strategic capabilities, firm uses ‘VRIO/VRIN’ model which also studied in this report. Through knowing about weakness of company, Vodafone works for overcome from them. The Porters five forces of telecommunication sector also discussed in this mention assignment.Download Full Sample
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