BT Business Strategy: Analysis and Strategic Directions

This report provides a comprehensive analysis of BT's business strategy, utilizing frameworks like PESTEL, Porter's Five Forces, VRIO, and Bowman's Strategy Clock. It examines the company's strengths, weaknesses, opportunities, and threats, identifying key strategic capabilities and potential growth directions. The report concludes with recommendations for BT to enhance its competitive advantage and achieve sustainable growth in the telecommunications market.

BUSINESS STRATEGY

Table of Contents
INTRODUCTION...............................................................................................................2
TASK 1...............................................................................................................................3
P1 PESTEL MODEL FOR ENVIRONMENT ANALYSIS AND ANSOFF’S GROWTH
VECTOR MATRIX FOR ANALYSING ORGANISATIONS STRATEGIC
POSITIONING................................................................................................................3
TASK 2...............................................................................................................................8
P2 MEANING OF STRATEGIC CAPABILITY AND VRIN MODEL FOR
DETERMINING STRATEGIC CAPABILITY AND THE ORGANISATION
STRENGTHS AND WEAKNESSES..............................................................................8
TASK 3.............................................................................................................................12
P3 PORTER’S FIVE FORCES MODEL FOR BT........................................................12
TASK 4.............................................................................................................................15
P4 ANALYSING THE STRATEGIC DIRECTIONS AND OPTIONS USING
BOWMAN’S STRATEGY CLOCK MODEL.................................................................15
CONCLUSION.................................................................................................................18
REFERENCES................................................................................................................19
1

INTRODUCTION
The mobile telecommunication is regarded as the rapidly growing sector across the
world. The survey of the Deloitte Company states that about 50% of the people of UK
are using the mobiles when they are walking. BT, Virgin, EE, Vodafone, Three are some
of the operators of the mobile in the UK. The survival of these companies seems in
danger as the competition is high in the market. This report deals with the overall study
of the BT by doing the analysis with the help of pestle as well as Porter's five forces
model in order to estimate the level of competition possessed by it so that an effective
business strategy is developed for the BT.
Figure 1 British Telecom Organisation
2

TASK 1
P1 PESTEL MODEL FOR ENVIRONMENT ANALYSIS AND ANSOFF’S GROWTH
VECTOR MATRIX FOR ANALYSING ORGANISATIONS STRATEGIC POSITIONING
The services offered by the British Telecom organisation consists of the mobile, fibre as
well as the TV services across the United Kingdom and also serving the services in
more than 180 countries around the world. It is headquartered at London, in the United
Kingdom (Yüksel, 2012). The size of the organisation is about 102,000 numbers of
employees. About 50% share of the organisation are given to the public. The digital
products are being provided by the organisation. Also, the knowledge about the
technology is being given to the organisation so that the profits associated with the
organisation can be maximized. In addition to this, the services of the organisation need
the less monitoring by the organisation. The revenue generated by the British Telecom
organisation is £ 24,062 million. The BT vision, as well as the mission, is concerned with
the giving the superior quality services to the consumers of the organisation.
PESTEL MODEL FOR BT
The micro-environment impact is being described and evaluated with the help of Pestel
model. The description of the various challenges faced by the organisation socially,
politically, environmentally, technologically, and legally for the organisation is described
below:
Figure 2 Pestel Model
3

Source: Administrator, 2016.
Political
The organization profit is affected by the political factors which in turn affects the market
share of the organisation. The various branches around the world are affected by this
factor (Florin, 2014). The risks associated with these factors can be mitigated by
analysing it. The elements of the political factors comprise of the level of the corruption,
government interference with the organisation, relocation of the property, working days
as well as the working hours regulated for the employees. In addition to this, this also
contributes to the product labelling, military risks, etc.
Economic
The organisation has done the acquisitions in the year of 2015 with the organisation of
the Orange which resulted in the enhancement in the working efficiency as well as the
cost efficiency of the organisation contributing towards increasing the productivity of the
British Telecom organisation (Löffler, et al. 2014). The 4G infrastructure is possessed by
the BT organisation so that the expansion of the market can be done globally as well as
increasing the opportunities for further growth in the future. An effective pricing strategy
of keeping the prices at the lower rates will bring the loyalty of the consumers. The
organisation is also thinking about the expansion of the services in the areas of big
data, cloud computing, as well as M2M.
Social
The social culture is being affected by the social factors which further include the
behaviour and the perception of the people towards the organisation as well as towards
the services of the organisation (Bouyssou, et al. 2010). The behaviour of the people is
being analysed within the industry as well as in the market. The social factors take into
account the numerous elements such as the varied cultures, varied interests, varied
roles, varied qualification possessed by the employees of the organisation.
Technological
4

The technology is responsible for increasing the growth of the organisation. The speed
matters a lot in the organisation of the British Telecom. There is two type of the speeds
while talking about the organisation of the British Telecom. The growth of the
organisation is achieved with the help of slow speed whereas the decrement in the
growth of the organisation is noticeable by using the fast speed. The technology will
create an impact on the products, services, design structure, and the diffusion rate.
Environmental
The environment comprises of its various standards which must be followed by the
organisation in order to achieve the growth of the organisation in terms of the profit. The
laws, as well as the legislation, are being included in the standards of the environment
so that the organisation can recognise it for sustaining in the market as these standards
play a vital role in defining the survival capacity of the organisation. The pollution laws,
waste management, product recycling, changes in the climate are the factors which
affect the functioning of the organisation (Indiatsy, et al. 2014). The restoration of the
balance of the ecosystem must be maintained by the organisation.
Legal
The organisation set up is being affected by the framework as well as the standards
which are defined legally for the organisation. This is done for the purpose of protecting
the intellectual property rights of the BT organisation in order to secure the loss of
information (Van den Steen, et al. 2015). The employment laws, consumer rights laws,
data security laws, trust laws are associated within the organisation.
ANSOFF GROWTH MATRIX FOR BT ORGANISATION
The market growth of the organisation as well as products can be determined with the
help of an effective tool called Ansoff’s Growth Matrix. The existing products, as well as
the newly developed products, are being analysed with the help of this growth vector
matrix by taking into consideration the product life cycle so that the diversification,
development, and development of the product can be done.
5

Figure 3 Ansoff Matrix
Source: Admin, 2013.
Market Penetration
The company sales, as well as the profits, can be enhanced by building an effective
strategy for the organisation so that risks can be minimized. The products rebranding is
done in the organisation of the British Telecom organisation for building the customer
base and also increasing the organisation efficiency (Djurica, 2010). The new contacts
are established by the organisation of the British telecom organisation. The pricing
strategy7 adopted by the organisation proves beneficial for the organisation. The
demands of the old, as well as the new consumers, are not avoided by the organisation.
Product Development
The risks associated with the product selling has not affected through the organisation
and also the merging process of the BT organisation with the other organisation helps
inefficient product delivery as well as management so that profits can be increased of
the organisation (Hussain, et al. 2013).
Market Development
The risk possessed by the organisation of the British Telecom is medium. Also, the
deals were given by the various organisations to the British Telecom organisation based
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on the various parameters associated with the organisation. It aims to provide the
numerous services for its customers with the view of increasing the share of the market.
Diversification
With respect to the diversification, the high risk is attained by the organisation of the
British telecom (Shaw, 2012). Along with this, the barriers associated with the
organisation are determined and analysed so that the survival of the organisation
becomes easy in the market.
7

TASK 2
P2 MEANING OF STRATEGIC CAPABILITY AND VRIN MODEL FOR
DETERMINING STRATEGIC CAPABILITY AND THE ORGANISATION STRENGTHS
AND WEAKNESSES
The survival of the organisation is dependent on its strategic capability so that the
market value of the organisation can be enhanced thereby bringing the competitive
advantage for the organisation. The areas which the strategic capability draws attention
are the resources of the organisation, market share of the organisation, and the
financial fund needed by the organisation in order to provide the numerous opportunities
of employment in the forthcoming years (Johnson, 2016). The identification of the
competitors is effectively done with the help of the phenomena called the strategic
capability. This strategy plays a significant role in any organisation. The vendors of this
strategic capability are the business leaders, employees, government, as well as the
investors. The growth of the organisation can be achieved by following the strategic
capability of the organisation. The strategic capability further helps in evaluating as well
as monitoring the business with the help of government and the business analysts. The
strategic capability is carried out with the help of the strategic value analysis. The
strategic value analysis is based on acquiring the data from the various sources namely
the annual reports as well as the surveys (Hamel and Prahalad, 2013). The numerous
elements are considered in this strategic value analysis namely the structure possessed
by the organization, the organisation assets, human resources, the employee's qualities
and the potential possessed by them, and lastly the policies which determine the price
of the various products of an organisation.
VRIO MODEL FOR BRITISH TELECOM
The VRIO Model helps in determining the capabilities possessed by the British Telecom
so that the organization can gain the competitive advantage. This model tells that the
resources of the organisation which are internal to the organisation must possess the
value in the market so that the alternatives to these resources cannot be done in the
8

market. The VRIO model comprises the four elements which include the organized,
Rare, inimitable, and the Valuable which are further described below:
Figure 4 VRIO Model
Source: Admin, 2016.
Valuable
The valuable resources are considered in it so that the opportunities can be identified
for the organisation as well as the threats associated with it. The resources which
possess the value to attracted a large number of customers by bringing loyalty of them
towards it. There are some factors which help in deciding the Valuability of the
resources associated with the organisation (Simão, 2010). The prices of the products
are also kept low on the valuable resources. Those resources which do not possess any
value in the market create a drawback for the organisation.
Rare
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The resources of the organisation must be rare so that other organisation in the market
does not develop its alternatives in the market for the consumers. This variety of the
resources helps in bringing the growth of the organisation thereby ensuring the
competitive advantage for the organisation (H. Netland, and Aspelund, 2013). The
benefits associated with the organisation by having the rare resources are large. Also,
the resources which are similar in the function or nature should be avoided through the
organisation.
Imitate Costly
Imitation is defined as the process in which the substitutes for the products as well as
the services are developed as well as created but the implementation of this is very
difficult as various issues are encountered in it which includes the level of the
complexity possessed socially, haziness occurred in the resources of the organisation,
and lastly the process of creating the resources are originally done by the organisation.
Organized
The organisation is composed of the several departments which work collaboratively
with each other by supporting the functions along with the management of all the
department so that each function of the organisation works in an effective way
(Hinterhuber, 2013). The organisation cultures, as well as the structures, are associated
with the organisation which needs to be organized effectively so that the competitive
advantage can be gained.
BT Valuability: Yes
BT Rarity: No
BT Imitable: No
BT Competition: Yes
10

STRENGTHS OF BT
The healthy, as well as the strong balance sheet, is being maintained by the
organisation of the British Telecom. The BT organisation has gained the loyalty of the
customers towards the organisation thereby attracting numerous people. The attractive
products, as well as the services, are being provided by the organisation of the British
Telecom in serving the consumers (Crewther, et al. 2012). According to an estimate, the
review collected by the organisation helps in determining the good experience
developed by using the products of British Telecom organisation. Globally, the
organisation has expanded in the 170 countries throughout the world. The highest area
is being covered by the British Telecom organisation in the industry of
telecommunication. The operation of the British Telecom is being possessed by the
telephone lines of the population greater than the 28 million.
WEAKNESS OF BT
The dependency of the organisation of the British Telecom is high in the market
according to the growth of the organisation. The isolation of the existing partners by the
British organisation has brought the prices of the product high with providing the lower
quality products. The name of the organisation has also occurred in the account
scandals associated with the organisation which is one of the weaknesses of the
organisation named British Telecom (Vasilevskis, et al. 2010). The finance sector of the
organisation has been drastically affected by this. This organisation also lacks the
advertising as well as the promotion strategies with respect to the products of the
organisation. The various complaints were also fired by the consumers against the
services of the organisation which are also not looked into. These were the weakness of
the BT organisation.
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TASK 3
P3 PORTER’S FIVE FORCES MODEL FOR BT
The porters five forces model comprises of the five forces in order to analyse as well as
estimate the performance of the BT with respect to the competition in the market. The
BT comprises of the several elements such as mobile, vision customers, and the
broadband services (E. Dobbs, 2014). The elements mentioned above helps in
achieving the growth of the organisation with the view of achieving the goals as well as
the objectives of the organisation by building a large base for the customers. These five
forces are described below:
Figure 5 Porter’s Five Forces Model
Source: Jurevicius, 2013.
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Bargaining Power of Buyers
The high risk is possessed by the BT organisation. According to an estimate, the
customers of the BT organisation are 5 million in 2010. This organisation specialise in
making the substitutes for the products as well as the services. The advantage
possessed by the British Telecom includes the low pricing cost for the services as well
as providing the fixed lines for their customers. The products offered by the BT
organisation are available in the low cost with an additional quality of providing the
superior quality products (Rice, 2010). The Virgin, as well as the SKY, is the mobile
operators which give competition to the British Telecom organisation.
Bargaining Power of Suppliers
The low risk is possessed by the BT organisation under this force. The raw materials
are being supplied by the suppliers in the budget prices for the organisation since the
suppliers, as well as the organisation, has built the loyalty towards each other. The
quality products are being by the suppliers at an affordable cost in the bulk quantity. The
reference is also given by the suppliers with respect to the market (Porter, 2011). Huge
quantities of the orders are being placed by the organisation which helps in making the
suppliers remain consistent with the organisation.
The threat of New Entrants
The low risk is possessed by the BT organisation under this force. The revenue
collected by the British Telecom organisation is comparatively low as compared to the
others in the market. The huge customer base is being established by the organization
with the provision of giving the quality products to the potential customers. The
advertising of the various products, as well as the services of the BT organisation, are
not done by the associates of the organisation (David, 2011). The threats can be
minimized by increasing the cost of infrastructure and reducing the prices of the
product.
13

Threats of Substitutes
The low risk is possessed by the British telecom organisation under this force of
Porters. The fixed lines have been developed by the organisation which made the
attraction to the various consumers. The competitor of the British Telecom organisation
does not focus on the providing the quality products which has reduced the substitute
risks for the British Telecom organisation.
The extent of Competitive Rivalry
The high risk is undergone by the British Telecom organisation under this force. The
British Telecom competitors are the TalkTalk/AOL, Virgin, Vodafone, Virgin Media, and
the SKY. These competitors contribute the largest share of the market as compared to
the organisation of the British Telecom. When the government has moved apart from
this organisation, the level of the competition has rapidly increased in the market. The
profits of the organisation are achieved with the help of developing the varieties of the
services (Aldehayyat, et al. 2011). The company is spending a lot on developing the
products based on the concept of innovation. An effective strategy is also developed by
the organisation in order to face the competition in the market.
The implementation of the strategy is needed by the organisation so that all the
operations, as well as the functions of the organisation, are maintained in an effective
way by making use of the available resources for the organisation. The sustainable
decisions are made so that competitive advantage can be gained in the market.
Assurance about the quality of the products as well as the services should be made
available to the consumers in order to gain their confidence (Dağdeviren and Yüksel,
2010). The testing of the products must be done in order to gain the satisfaction of the
consumers so that a brand image can be created in the organisation. Innovation must
be used for building the products by using the principles of the creativity.
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TASK 4
P4 ANALYSING THE STRATEGIC DIRECTIONS AND OPTIONS USING BOWMAN’S
STRATEGY CLOCK MODEL
The market position is analysed with the help of Bowman Strategy Clock Model so that
the competition in the market can be estimated. This model is divided into various steps
which are defined as follows; the first step helps in identification of the various
processes, evaluation, and the selection of the competitors. The second step is for
developing the strategy so that competition can be faced in the market which helps in
gaining the competitive advantage. The Bowman's strategy comprises the eight
strategies which are must for any organisation.
Figure 6 Bowman Strategy Clock Model
Source: A Level, 2010.
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Low Added Value
It includes the bargaining which the British Telecom as well as well as the other
organisations does not prefer. The organisation is giving the superior quality of the
products to the consumers and also the suppliers are giving good quality raw materials
which are needed by the organisation. The sales of the organisation are increased by
providing the attractive services as well as the products to the consumers.
Hybrid
The British Telecom organisation has the hybrid structure in delivering the services to its
potential customers (Bowman, et al. 2016). The discounts, as well as the attractive
offers, are being provided by the organisation of the British Telecom in increasing the
sales of the organisation which further results in increasing the brand image of the
organisation. The customers also become loyal to the organisation.
Standard Product as well as the enhancement in the Price
This strategy is based on the enhancing the unnecessary product price to the higher
level by not including any innovation in it. The perception of the customer varies
according to the demographics of the country. This strategy is not being followed in the
organisation. The productivity of the organisation will get enhanced as well as increased
if the high price is accepted by the consumers.
Differentiation
The differentiation of the products, as well as the services has helped in creating the
competitive advantages for the organisation. This strategy is followed by the BT
organisations. The various policies concerned with the branding as well as the pricing
are included in the strategy (Kopper, et al. 2010). The innovation approach helps in
bringing the creative products for the customers.
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Focused Differentiation
The focused differentiation is based on the concept of making the products prices high
to ensure the quality. The BT organisation does not adopt this strategy and is also
based on the buying behaviour of the consumers.
Low Price
This strategy is being adopted by the BT organisation on the belief that if the prices of
the product are kept at an optimum range then it will attract large customer base
thereby resulting in increasing the sales of the organisation which further helps in
restoring the market share of the organisation. Though the profits are low the
awareness about the products is being delivered to the market.
Low Value / Standard Price
This strategy is not followed in the British Telecom organisation as following this
strategy will crease downfall in the market share of the organisation (Cohn, et al. 2011).
The lower quality products are being sold in the market as per the rate fixed in the
market.
High Price / Low Value
This strategy is not followed by the British Telecom organisation as this strategy
undergoes a drawback of keeping the prices high of those products that are quality wise
very poor.
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CONCLUSION
This report deals with the overall understanding of the BT organization in order to
further expand its branches across the world. The strategic capability of the organisation
is defined along with the strength as well as the weakness of the BT mobile operator in
order to determine the opportunities for the organisation so that an effective strategy will
be developed for further expansion of the business. The Porter's five forces model helps
in defining the competition for the market. The Ansoff's, as well as the Clock model of
the Bowman's, is also described.
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