Business Strategy in Virgin Mobile (PDF)

BUSINESS
STRATEGY OF
VIRGIN MOBILE
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Table of Contents
INTRODUCTION .................................................................................................................................................. 3
ANALYSING THE IMPACT AND INFLUENCE OF THE MACRO ENVIRONMENT......................4
i) Pestle analysis of Virgin mobile...........................................................................................................4
ii) Ansoff matrix of Virgin mobile........................................................................................................... 6
TASK 2...................................................................................................................................................................... 9
INTERNAL ENVIRONMENT AND ORGANISATION CAPACITIES....................................................9
i) Strategic capability.................................................................................................................................... 9
ii) Applying the VRIO model determining the strategic capacity of Virgin mobile...........9
iii) The organisations’ strength and weakness .............................................................................10
TASK 3................................................................................................................................................................... 12
Analysis of telecommunication sector....................................................................................................12
TASK 4................................................................................................................................................................... 16
UNDERSTAND AND INTERPRET STRATEGIC DIRECTION............................................................16
CONCLUSION...................................................................................................................................................... 19
REFERENCES...................................................................................................................................................... 20
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INTRODUCTION
The trend of globalisation has changed every growing industry in this current
scenario. The mobile telecommunication sector is one of the most rapidly growing industries,
which are being affected by the trends of globalisation. As the market is growing for
telecommunication sector, the competition in the market for acquiring more number of the
customer base is also growing faster. However, the competition is not only seen in the
national market but also when it comes to telecommunication the competition is being
International. In this situation, the different telecommunication organisation of all over the
world is implementing their different strategy for the growth and development of their
organisation. However, this strategy is referred to some unique tactical and strategic decisions
which are made by this organisation for developing competitive advantage in the targeted
market. In this study, the diversity of strategies which are implemented by Virgin mobile for
the development and improving the competitive advantage will be explained.
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ANALYSING THE IMPACT AND INFLUENCE OF THE MACRO
ENVIRONMENT
Sir Richard Branson is the founder of Virgin mobile which is part of the virgin group
Limited. However, this organization is considered under the first mobile network operator
which start working under a joint venture with T mobile in the year of 1999 in the United
Kingdom. Therefore it can be said that the organization did not use their network but using
long-term contract with T-Mobile for their existing mobile service (Johnson, 2016).
To understand the impact of the micro-environment in the organizational skills by which the
employee satisfaction is usually affected. For understanding the demand of the market from
this organization, the analysis of micro-environment and Ansoff matrix will be done
i) Pestle analysis of Virgin mobile
Political factors: the political elements of United Kingdom are imposed by the
government of this country which is associated with intervention in the organisational work.
The political factors of this country are affecting the services and products promotion of the
organisation with subsidies and also with traffic and tax policy environmental law and trade
restrictions create the stability of the organisational work. The organisation Virgin mobile is
being influenced by the political initiatives of the United Kingdom on the telecommunication
industry. The organisation has developed their 3G network with his associated with the
promotion of the government for using the technology of T-Mobile (Fletcher et al. 2017).
Economic factors: The inflation rate of the country and the income of the customer's
exchange rate at the environmental factors which are affecting the Virgin mobile. From 1999
to 2003 the organisation has developed a maximum number of subscribers. However by the
introduction of the prepaid segment the traffic structure of this organisation Virgin mobile
has changed. The use of prepaid segment has changed the entire structure and also result
which cause a loss of many valuable customers of Virgin mobile.
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Figure 1: Pestel analysis of Virgin Mobile
(Source: Ghezzi and Frank, 2015)
Social factors: The social factor of the business environment of Virgin mobile it has
been seen that the safety of the customers, increasing population and career attitude are
positively impacting the business. Virgin mobile has developed the outlook of their products
by understanding the social trend, colour pattern and the choice of the young generation. By
using this strategy, the organisation is focusing on the employee satisfaction factor for
achieving their organisation objective. By using this strategy, the organisation is focusing on
the employee satisfaction factor for achieving their organisation objective.
Technological factors: the total change of the organisation product and services of
Virgin mobile is related to the technological advancement. The organisation is providing new
attractive offers for the customers by using technological advancement in this organisational
service Virgin mobile able to provide the reduction in the cost and also Quality Services
organised (Cubas‐Díaz and Martínez Sedano, 2018). The collaboration with the T-Mobile has
upgraded their service from 3G network to 4G networks. This new protocol of this
technological advancement is known as the virgin by which is comparatively satisfactory for
the customers than the competitions in the market.
Environmental factors: The organisation Virgin mobile is associated with different
programs and events related to the environmental development process and adopting
environmentally friendly approaches. In addition to that, the communication and marketing
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are essential for the development of the environment. The organisation is also trying to
decrease the marketing activities and their impact on the environment.
Legal factors: There are various rules and regulations which are affecting the
organisational environment externally. For improving the preferred airline bundles, free
Voicemail process is the part of the organisational development. In addition to that, the use of
safety and health laws are also forcefully implemented in 2004. These regulations are helpful
for increasing the sales of Bluetooth headset. However, it has been seen that the Virgin
mobile has used the joint venture which has collaborated with T-Mobile for getting a better
advantage in the commercial market of the Telecommunication sector (Brewster, 2017).
ii) Ansoff matrix of Virgin mobile
The Russian American and shop have developed the Ansoff matrix in the year of
1957. This matrix is used for developing strategic planning, and by using this metric the UK
based organization, Virgin mobile can develop their strategic planning which is being
executed by the marketing department and senior managers for their future development
process.
Market penetration:
The Virgin organisation mobile uses this market penetration process to understand the market
share and also for launching new variety of their existing products. By developing market
penetration, the organisation can easily develop promotional and advertising strategy. By
using this strategy, the organisation was able to capture market share from the Rival BT in
the broadband services (Bakshi, 2014).
Product development: For this strategy, the organisation has launched the new product for
their existing customers. For improving the earning of the organisation or for the current
portfolio the organisation has developed more than 100 Mbps services of broadband.
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Figure 2: Ansoff Matrix
(Source: Woerner and Wixom, 2015)
Market development: the market development strategy is unique because the expansion of
the organisation in the new market for their existing product is the process. In addition to that,
the organisation Virgin mobile has launched their broadband services for especially the
existing network of Virgin mobile are being used for they are operational services for
capturing the market share of BT (Scholes, 2015).
Diversification: The use of differentiation strategy is one of the best approach used by Virgin
mobile for increasing the intensity of the competitive market the organisation has used the
differentiation strategy which is also helpful for reducing different organisational risk.
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Figure 3: Strategic management decision about the Macro environment.
(Source: Saebi and Foss, 2015)
From the analysis of microenvironment, it can be said that the work of supplier and customer
are being affected by the political factors. The organisation Virgin mobile has introduced new
Strategies for satisfying their customers and enhancing their revenue. The greener policy has
also affected the services of this organisation. The inflation rate, unemployment rate and
exchange rate are narrow down the organisational structure. The impact of technological and
social factors are also affecting the revenue of the organisation and shifting the organisational
services by using technological advancement like online transactions. In addition to that, the
environmental analysis has shown that the contribution of this organisation in the
environment is changing depending on the situations (Olsonv et al. 2018). Finally, it can be
said that the legal factors of this country are insulting the liability compensation related to the
services and products of the organisation and therefore the organisation can provide a better
quality of services like free talk time and cheaper rate.
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TASK 2
INTERNAL ENVIRONMENT AND ORGANISATION CAPACITIES
i) Strategic capability
Every organisation has its strategic capability. By understanding the strategic
capacity, the organisation Virgin mobile can easily appreciate their internal size and also the
customer demand from the organisation. The strategic capacity planning process is associated
with internal organisational capacity. However, the internal capacity includes human
resource, production lines and different constant, which are mainly measured. Depending on
this continuous the organisation can easily develop their objective by measuring this constant
(O'Brien and Welford, 2018).
For understanding the organisational capacity the first step which is used by the
organisation Virgin mobile properly measures the organisational size which is essential for
reaching the organisational goal. The internal capacity and market shares of the organisation
is used for the objective meeting process of Virgin mobile on a regular basis and the
evaluation of this process. By understanding the strategic capability, Virgin mobile can also
develop their future process because it helps the organisation in the forecasting by measuring
the current constant of the organisation (Mosnaim et al. 2015). Achievement of different
organisational goal will be possible for the organisation by understanding the market situation
and strategic capability.
ii) Applying the VRIO model determining the strategic capacity of Virgin mobile
For understanding the Strategy capacity of Virgin mobile, the use of VRIO model is
very useful. For the customer-oriented business of international market, the organisations like
Virgin mobile are using smart and practical marketing strategies which will be helpful to the
success of the organisation (Massa and Afuah, 2017). By managing the resource of the
organisation, the marketing process of the organisation has been developed by the business
for them for the future. However, the Virgin mobile has also developed infinite ways of
creating brand value in this market which is quite admirable in this current
telecommunication industry. By developing an effective marketing strategy and promotional
strategy, the organisation has adequately utilised their organisational resources. However
managing resources are vital for the organisational growth of any organisation, but the
significant features which have been added by Virgin mobile are team up with different
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telecommunication organisations, like T-mobile, which help the organisation in purchasing
your time and also increasing the popularity of the brand Virgin mobile.
However, by using the value analysis, the internal aspects of the organisation can we
understand which is associated with the competitive implication in the market (Johnson,
2016). In addition to that this analysis will also help in understanding the potential
improvement which is possible in the future and to understand the strategic capability of the
telecommunication organisation Virgin mobile.
Value: The recent report shows that the Virgin mobile is one of the major
telecommunication Organisation in the United Kingdom because they provide internet
service up to 50 MB which is ultra fast internet service in this country. More than half of the
population of this country is benefited by this strategy taken by Virgin mobile by adding
value to the organisational product and services for developing the competitive advantage.
Rare: Creating rareness in organisational product includes a different adaptation of
resources like experience employees who can directly contribute to the success of the
organisation. However, for creating rareness Virgin mobile, has already developed rare
quality which is also premium by providing the best quality of raw materials to the services
and products for the customer's convenience (Fletcher et al. 2017).
Imitability: The resources used by telecommunication industry are imitable. Instead
of the original resources, alternative resources are being used. But the organisation Virgin
mobile is associated with providing their customers with the best quality of services and
products with a proper reasonable procurement and pricing. The organisation has focused on
Ultra Quality sources for their process of production.
Organization: For any organisation, a organised the internal structure is essential
because it directly enhances the effective management of resources and helps in achieving the
organisational goals (Ghezzi and Frank, 2015). Therefore the organisation Virgin mobile has
used the collaboration strategy with T mobile for their products which is part of their
marketing strategy.
iii) The organizations’ strength and weakness
Strength:Virgin mobile is one of the popular names of Telecommunication industry in the
United Kingdom which are known for their premium quality products. The different strengths
of Virgin mobile:
1. The organisation of customer convenience services for being a famous brand in the
United Kingdom telecommunication market. These convenient services for customers
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include smart features India premium quality mobile phones and ultra-fast internet
speed.
2. The organisation is associated with collaborating their products with the T-Mobile
3. The raw material which is being used by this organisation is original and premium in
quality
4. The internal structure of Virgin mobile is associated with appropriate marketing
strategy and planning which is much organised (Cubas‐Díaz and Martínez Sedano,
2018).
Weakness:
The different weaknesses of Virgin mobile are:
The strong competition in the telecommunication market has provided this organisation is
travelling situation at any time which is directly affecting the marketing opportunities of this
organisation
1. For providing Ultra quality and premium raw material half the organisational services
and products, the organisation has to enhance the cost of the production
2. Therefore, it can be said that the organisation is struggling in this United Kingdom
market of Telecommunication because of numerous competitors and new entrances
which is directly affecting the capability of this organisational products and providing
the organisation many challenges.
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TASK 3
Analysis of telecommunication sector
Michael Porter is establishing the model of Porter five forces in the year of 1979. This model
is useful for understanding the competitiveness of any organisation in the market and also
highlights the area of enhancing the profitability. For adopting the five different external
forces of the competitive market, the organisation Virgin mobile has properly done the
market research (Brewster, 2017). For increasing the profitability and enhancing the
competitiveness of the market the adaptation of porters five Force model at the following:
Bargaining power of buyers:
In the telecommunication industry minimising the service rate of the organisation is
very useful. However, for retaining the customers, the Virgin organisation mobile are adopted
different strategies like providing lower prices than the other organisations are offering free
discounts for the customers which directly contribute to not leaving the network by the
customers. For minimising the risk of the organisation providing renegotiated details about
the organisation to the customer is part of the process. In addition to that, the organisation has
already tried to develop their competitive advantage by introducing more value for the
customers (Bakshi, 2014). Therefore for this crucial area of gaining a competitive edge, the
organisation has established adequate organisational policies which can help the organisation
in increasing their value on the market.
Bargaining power of suppliers:
The organisation uses the bargaining powers of the supplies directly related to the raw
material with for developing their products. The supplier and its effect directly associated
with natural materials and the producer of finished goods. The supplier can provide sale high-
quality raw materials easily at the lower price to the organisation. However, the
telecommunication industry of the United Kingdom already has a backward integration, and
the suppliers can start or develop new business by collaborating with the operators. There is
also access to the suppliers in dealing with sim card and mobile phones and even with the
networking industry (Woerner and Wixom, 2015). Therefore, there is a huge possibility that
easily get maximum part of the profit. Consequently, it can understand that the low
bargaining power of suppliers is not appropriate for the telecommunication industry because
the relationship with the supplier need to be strong in this industry.
Threats of new entrants:
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The number of competitors in this industry is continuously growing because of the
new arrivals. According to the microenvironment of this organisation, it has been seen that
there are various barriers to entering this market of telecommunication in the United
Kingdom (Scholes, 2015). Therefore it can easily understand that the traits for Virgin mobile
are changing according to the situation of the market. However the organisation Virgin
mobile has to face competition with the new entrance in the market which is related to
provided deals for the customers and therefore for increasing the profitability of the
organisation they have to increase their profit margin. Depending on the market equilibrium
the organisation can also lead towards decreasing the profit. By developing the mobile site
and licensing The spectrum, the organisation can also offer low cost for their services which
also have the organisation in improving their competitive advantage.
Threats of substitutes:
The substitute products in the market of United Kingdom can easily create the effect
by offering low cost and can easily capture a huge market share in the telecommunication
industry. By providing the low-cost substitute, the organisations can easily increase the
elasticity of demand by providing alternative new products (Saebi and Foss, 2015). What the
mobile communication industry the voice over internet protocol has purchased a very
significant role. This service also associated with the different computer to computer voice
conferencing and message providing services like Google Talk or Skype. However, this
service has also affected the revenue generation of Virgin mobile. The organisation is
associated with the offering of the services which is best for conference calls and video
calling. However, this alternative internet service provided by Google has directly affected
the market of Virgin mobile by creating a better standard Framework for the customer's
convenience.
Rivalry in the market:
The organisation Vodafone and BT are the present market competition of Virgin
mobile in the telecommunication industry of United Kingdom (Olsonv et al. 2018). However,
there is a huge production in the investment and profitability in this organisation currently.
This organisation was able to create significant brand loyalty and brand name and for which
their competition with the competitors in the market is strong. This song competition also
develops strength for this organisation and can easily change the choice of the customers for
switching networks. One of the market arrivals of Virgin mobile Sky network has premium
television contain for the customer's convenience which is directly affecting the Virgin
Media. All the Virgin Media provide superior high-speed internet network, but the customer
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base of sky network is quite high. A huge number of customers are associated with bundled
services because it is easier for them to work with the single provider and get the discounts
and benefits of payments (O'Brien and Welford, 2018). Therefore the high switching cost of
the competitors is affecting the market share of Virgin Media.
For the improvement for the competitive edge and also for developing the position in the
market Virgin mobile network has developed or established strategic priorities for the
exchange of United Kingdom. Those are:
Figure 4: Market positioning
(Source: Scholes, 2015)
The organisation has developed a product portfolio which helps them in engaging the
customers and also associated with understanding and meeting the requirements of the
customer. For meeting this strategy, the organisation has used the diversification strategy for
their products which has them in dealing with their competitors and also associated with
interacting with the customer. Additionally, the organisation is also focused on enhancing the
profitability which is associated with developing new stores for the United Kingdom
customers and also providing home installation for the Virgin mobile network. Additionally
developing better for 4g for the new connections is also developed by this organisation
(Mosnaim et al. 2015).
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In addition to that Virgin mobile has included additional apps as a part of their fundamental
tools like Facebook, WhatsApp, Instagram for their mobile phones. The organisation is also
trying to introduce 5g network for their phones and superior performance for enhancing their
customer's convenience and organisational profitability for different customer segments. The
Market Positioning is also essential for improvement of profitability; therefore, Virgin mobile
is providing a cheaper deal for the internet data. For increasing the market position, the
organisation has also focused on their repositioning of the brand by using the differentiation
and cost leadership Strategy for getting better Marketplace and best rate.
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TASK 4
UNDERSTAND AND INTERPRET STRATEGIC DIRECTION
Bowman’s strategy clock model:
By using the Bowman's strategic clock organisation can easily understand the
strategic position of the organisation integrated market. By using this clock, the organisation
can easily locate its competitive position and the value of the services or product of the
organisation in the market. The Bowman strategic clock is a model which is developed for
the purpose of that is two distinct dimensions (Massa and Afuah, 2017). The first dimension
of this strategy clock is the pricing strategy of the service or product and the perceived value
of the service or product.
For developing a better strategic option and decision, the organisation Virgin mobile can
easily use the clock of Bowman. There are eight different stages of this clock which can be
used by the Virgin mobile for developing their marketing position. However, this clock is
also associated with developing a low added value and low price strategy for the services and
products provided by Virgin mobile.
1. The bargain basement strategy is the first position of the Bowman clock. According to
this position the organisation Virgin mobile can use the low price and low-value
strategy for their existing and new products (Johnson, 2016).
2. In the 2nd stage of this clock, the organisation can use the first maximisation strategy.
In this stage, the market competition is very prominent because the organisational
leaders are utilising no profit margin for implementing this strategy.
3. In the third step of this clock, the organisation can use the product differentiation
strategy which is associated with creating a hybrid view which includes low price
strategy. Using this strategy is beneficial because it is also known as value addition
process and the Virgin mobile can easily develop differentiation and show a
reasonable price which is related to the differentiation provided in the product.
4. In the Fourth Stage of this clock represent only the differentiation strategy. By
creating this differentiation within the products, the organisation can add up highest
level value or develop a new version of the existing products by providing the best
quality (Fletcher et al. 2017). By using this strategy, the organisation can also build
brand awareness and brand loyalty for the organisation (Ghezzi and Frank, 2015).
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5. In the fifth stage of this clock the focus differentiation strategy is being used which is
mainly focuses on highest price levels for the services and products provided by
Virgin mobile. According to this strategy by providing highest price, the customer can
easily get highest perceived value for the products they are purchasing. In addition to
that, some additional requirements of the strategy are seen in the distribution process
and customer segmentation strategy. The benefits of using this strategy are a high-
profit margin for selling the products of Virgin mobile for a long time.
6. The next step is the six position of the clock which is the highest positioning strategy
(Cubas‐Díaz and Martínez Sedano, 2018). According to the step, if the differentiation
strategy fails this strategy become useful. Is the high price of the organisation can
attract customer then it is associated with providing high profits for Virgin mobile, but
if the customers can get more value or same value in a low cost then it will be a risky
high margin for the organisation.
7. After that, the 7th position of the clock comes which known as Monopoly pricing is
offered by the organisation for the market. This strategy is dependable on the choice
of the customers. It is dependable on the choice of the customer if they want to buy
the product or not, therefore, monopoly pricing has to be selected by the organisation
with proper market research.
8. The final position is the 8th position of the clock which is associated with providing
the market with great competition. However, there is a risk of using this strategy
which is lead to loss of market share because of the competitive market. According to
this strategy the value of the product is low perceived but the pricing strategies middle
range. Therefore there is a possibility that the customer chooses a better option with
the same price but higher value by purchasing the product (Brewster, 2017).
Application of bowman’s strategy:
The bowman's strategy can be applied in the organisation, Virgin mobile. Virgin mobile is
one of the leading branding of Telecommunication industry their market value and market
share in the United Kingdom is high. Therefore the organisation can easily choose the
differentiation strategy for increasing their market value and competitive advantage.
However, using the differentiation strategy will help the organisation to add high value to
their product and develop a premium price for their product for a long period (Bakshi, 2014).
Instead of that, the segment-specific strategy can also use by Virgin mobile because it will
provide them with a low added value but the number of the international customer base will
enhance efficiency.
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CONCLUSION
In light of the above discussion, it can be established that one of the most rapidly
growing telecommunication sector is using different theories and models which would
enhance their business strategy in the Global market. However, similarly, the Virgin mobile
is also used for specific strategic ideas for developing their market position. For creating the
competitive advantage in this global market and for making the differentiation in the
organisational strategy to attract more number of customers this organisation has faced
different challenges in the current years. In addition to that, it can be said the Virgin mobile
has developed their business strategy for contributing to the telecommunication world
differently which can affect the customers purchasing behaviour. Finally, it can be said that
the strategic planning which has been developed by Virgin mobile is going to help the
organisation to improve their market position and competitive advantage.
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