Impact of Environmental Analysis on Business Success

The provided document is a detailed report on the study of environmental factors that impact business success. It utilizes the PESTLE (Political, Economic, Sociological, Technological, Legal, and Environmental) analysis to assess the external environment's influence on business operations. The internal environment's effect on business is analyzed using VRIO (Valuable, Rare, Imitable, and Organized) and SWOT (Strengths, Weaknesses, Opportunities, and Threats) analyses. Additionally, Porter's five forces model is applied to evaluate the competitive forces in the market and its impact on the company. Finally, Bowman's Clock model is used to devise a strategic plan for the business.

BUSINESS RESEARCH

Table of Contents
INTRODUCTION...........................................................................................................................1
LO 1.................................................................................................................................................1
P1 Impact and the influence of the macro environment on the company...................................1
LO 2.................................................................................................................................................4
P2 Impact of the internal environment on the company.............................................................4
LO 3.................................................................................................................................................6
P3 Application of Porter's Five Forces model on the company..................................................6
LO 4.................................................................................................................................................8
P4 Strategic management plan....................................................................................................8
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
The business research may be defined as the series of step or the process through which
detailed information can be acquired relating to each and every area comprising the business and
other information which is used in maximization of revenue and the sales. The present case study
on the company Three networks. It is a company founded on 3 rd March 2003 as a mobile
telecommunication and also UK's first commercial video mobile network.
The case study will start by discussing about the macro environment and its impact on the
company's working with the help of PESTLE analysis and the Ansoff vector growth matrix.
Further it will outline the influence and the impact of the internal or the micro environment on
the operations of the company (Sreejesh, 2014). This will be done by using the SWOT analysis
and the VRIO analysis. After that it will highlight the application of the Porter's five forces
model on the company in order to evaluate the competitive forces of the market and its impact on
the company. At last the report will apply the Bowman's Clock model to interpret and devise a
strategic plan for the company.
LO 1
P1 Impact and the influence of the macro environment on the company
The macro environment refers to as the sum total of all the forces and factors which
impacts and affects the working and the operations of the company. These affects the company's
working the most because these are the factors which are not in the control of the company. The
impact of the macro environment can be studied with the help of the application of the two
below discussed model.
PESTLE analysis- this is a logical and analytical tool which helps the company in assessing and
analyzing the role and impact of the factors consisting of the PESTLE analysis on the company
and its operations. The factors of the PESTLE and its impact on Three are discussed as follows- Political factors- these factors have a great impact on the running of the business in the
direction towards the achievement of its objectives (Goss, 2015). Political factors include
political stability, instability, political rules and regulations, etc. The Three network
company has to consider the whole political setting of the state wherein the company is
operating. Furthermore, the company is also affected by the environment of the state as
well as political instability.
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 Economic factors- it is one of the most important dimension which have an impact on
the functioning of the company and also has an impact on the economy of the country.
Economic factors play a vital role towards the smooth running of the business because
more the GDP of a country, more would be the income of the people which in turn leads
to better capability of the company in adapting to the latest technology. Hence, Three
network company crucially examines the economic factors of the country in which it is
going to operate. This is done because of the reason that it has to gain the competitive
advantage over its rival firms and competitors. Social factors- these factors includes factors like beliefs, culture, customs and values,
norms of the people in which the company is operating. In order to survive and grow the
market share, the company Three network needs to keep on changing its policies and
methods of working based according to the values and beliefs, needs and requirements of
the people and consumers in which the area the company is operating.
 Technological factors- Three network is known for bringing in constant innovation and
up-gradation in technology (Neelankavil, 2015). The basic reason behind companies huge
investment in research and development is to bring advanced technology in the company
with the objective of survival and grow in its market share in this cut throat competitive
world. If the company does not focus on the technological development then it will lack
in the race of competition.
 Legal factors – it is very important for all the companies to take into consideration all the
legal factors in order to avoid complexities in carrying out business activities smoothly.
Complexities arise because the companies operate in many places and countries and
every country has its own specific law or rules and regulations. Hence, for this purpose
Three network lays immense emphasis on legal factors to avoid penalties and enhance its
brand image.
 Environmental factors – in this globalized world, it has become very important for
business firms to take into consideration environmental factors to maintain and build the
image of the company. Hence, Three network company has adopted various sustainable
and ethical practices to gain competitive advantage over its competitors and rivals.
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(Source: Introduction to PESTLE analysis, 2018)
Ansoff Growth vector model- this is a strategic marketing tool which is used in linking the
marketing strategy of the company with the general strategic direction. This matrix is basically
used for determining the strategic positioning of the company by matching the existing and new
products with the existing and new markets (Antwi and Hamza, 2015). This growth matrix
depicts four areas where the company can have the growth options. These are as follows- Market penetration- this option is concerned with selling the same product to the
existing customers with the objective of increasing the existing customer base without
expansion in the product line of the company. The company Three network can use this
strategy in order to adopt market penetration by extending their working hours with
intention of enhancing their long-term appeal. Market development- this strategy is concerned with attracting the new customers
towards the existing product in order to increase the market share. This would help the
company in increasing the brand awareness on the global level. For example: the
company Three network can use this market development strategy by entering into new
demographic area and reaching to a new customer base. Product development- this strategy is concerned with developing and increasing the new
product line by creating new products by limiting the customer base that is sell only to
existing customers. In telecommunication sector, companies widely adopt this strategy
because of changing needs and preferences of the customers.
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 Diversification- this strategy is concerned with selling new products in the new market. It
is a highly risky strategy and is generally adopted by the large firms who have high risk
appetite. Three network company can take this strategy into consideration as it has a
brilliant supply chain which will help the company in fostering and approaching new
customers easily with the new product.
LO 2
P2 Impact of the internal environment on the company
VRIO analysis is basically an analytical technique which is used by Three to evaluate the
companies resources and also the competitive advantage. VRIO is basically an acronym which is
used as initials of the different dimensions of evaluation. These dimensions and elements are as
follows:
V- Value
R- Rareness
I- Imitability
O-Organization
This analysis is considered to be the important tool which is used by the company for
strategic planing in order to make the effective direction for the business (Storey, 2016). This
analysis helps in obtaining the information and also the result which provide company a
competitive advantage. This also helps in analyzing and evaluating the resources of the
company.
V- Value of the resources
Three is efficiently analyzing the value of the resources that means they evaluating that
how much the resource is beneficiary for the company as resources are capable of reducing the
impact of the threat. Resources help the companies in many areas that it can be internal or
external. Resources helps the organization in eliminating the risk which may caused by external
factors of the environment, if company using these resources efficiently.
R- Rareness
This refers to the rareness of the resources which means Three having the resources
which is very rare than company can take advantage of it and can over the competitive
advantage. Resource of the company's and its capability needs to be short in supply and also to
persist over time in order to be source of sustained competitive advantage. If both the elements
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are not meeting than the resources and capabilities of the firm is not able to sustain the
competitive advantage. If any resource is not rare than it lacks in rarity and availability than
needs to be avoid by the company In order to avoid competition.
I- Imitability of the resources
Any resources which is rare and difficult to acquire is difficult to imitate and this can help
Three in taking the competitive advantage by owning the resource which is rare and as it will
lead to the no chance of imitation. Company determine the resources before owning it that the
worth to their fund and time or not and if not than they obtain the resources by easily duplicating
it.
O-Organization
This considered to be the final step of the VRIO analysis. As it includes the determination
of the value, rarity, imitability and of the resources is capable of passing all the three steps than it
is required by the Three company to be organized. Company could exploit the competitive
advantage. Under this stage departments of the organization need to analyze and ensure that they
are ready to use these resources to full potential.
Strength and the weaknesses of Three company
Strengths-
Three's company has the global presence which results in capturing the high market share
which in turn increases the sale of the company. The major strength of the company is that the
attitude of its employees is positive and strong which leads to achievement the organizational
goals effectively and efficiently. The company facilitates excellent service to its customers so
which enables them in gaining the customer loyalty towards the brand.
Three's company has adopted several ways for maintaining the relationship with their
customers as they take timely feedback regarding their services so that they could provide the
services and the products as per the specifications of the customers (Olavarrieta and Villena,
2014). This enterprise has attained the leadership in relation to the innovation of their product ass
they seek strategies for reaching the growth of the business like new product development or
creation in the existing product etc.
It can be summarized as ;
 Providing higher quality of goods
 strong customer relationship
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 strong goodwill
 capturing larger hare of the marketable competitive firm
Weaknesses-
 Three has many competitors which are giving tough competition to the company in their
product range such as vodafone, EE, Virgin, Gif Gaff etc.
 After sale service of the company is not good which resulting in deceasing customers
demand.
 There are different slumps in company's development with its some of range of smart
phones as due to increasing competition from rival companies
 Smart phone are not capable of replacing the laptops and computers which resulting in
limited access.
 Some company's product are not affordable foe the people of middle class and also the
lower class consumers which affects the demand of the company 's product and leads to
deceasing market share of the company
 Three company took long time in entering the highly productive and booming smart
phone market which is also the weakness of the company in long run.
LO 3
P3 Application of Porter's Five Forces model on the company
The porter five forces is a strategic technique which helps in identifying, analyzing and
evaluating the different competitive forces or factors which affects the working and the
operations of the business. Michael Porter has evolved this model in order to helps the
companies in knowing their competitive position in the market. This model is based on the
concept that there are five forces which majorly affects the business and its operations. These are
the major factors or forces because of the reason that these forces determines the level and the
intensity of the competitors and the level of attractiveness within the market (Hutzschenreuter,
Kleindienst and Lange, 2016). It includes five forces which are threat of new entrants, threat of
substitute goods, bargaining power of the suppliers, bargaining power of buyers and rivalry
among existing competitors. The forces of Porter's model impacting the Three network are as
follows-
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 Threat of new entrants into the market- this refers to the force which suggests that how
many new entrants are entering into the market. By seeing the existing firms earning
more profits and growing the other people also gets attracted and they also try to start the
same business in the same market and increase the threat of the new entrant. This
entrance of the new entrants can be handled by using the method of merging with the new
entrants or by acquiring the new entrants. To stand out from other the company can also
innovate into new products or the services. Also, to face the threat the company can
increase its operations and can have economies of scale. Threat of substitute goods- the substitute goods are the goods which can be used in place
of the other good. For example instead of Three network the people can also use
Vodafone, Airtel, Jio and other similar products. The substitute goods also poses some
problems because of the companies dealing in the same industry. These threats can be
overcome by giving attention and better understanding the needs of the consumers so that
the company can provide same service as needed by the consumers so that they do not
switch the company. Bargaining power of suppliers- it is a factor of Porter's five force model which analyses
how much power and control do the suppliers have over the increase in the prices
(Chidlow, Plakoyiannaki and Welch, 2014). If the suppliers will be low or fewer then the
power relying in the hands of the suppliers will be more. The suppliers are powerful if
they are more concentrated and have less competition among them. The relations with the
suppliers can be improved by the researching with the product and by designing it by
using different types of raw materials from different suppliers. Also, the Three network
company has to maintain good and cordial relations with the suppliers so that they supply
all the materials required at minimum cost. Bargaining power of the buyers- buyers are treated as the king for all the companies.
The consumers have power in their hands when the number of consumers are less and the
sellers are in large numbers. Buying power is less if the customers buys products in the
smaller quantities. With help of the Porter's five force model the Three network company
was able to know that it has two types of buyers that is individual and the corporate
buyers. Also, with help of this analysis the company came to know that the bargaining
power of the individual customers is extremely low as compared to the big corporate
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buyers because of the reason that even the individual buyers are large but they purchase
in lesser quantity. On the contrary the big corporate customers are small but have larger
buying capacity.
 Competition in the industry- the competitiveness of any company is measured majorly
against this factor only. This factor is high when there are few numbers of businesses and
they sell identical products and services. The degree of rivalry is determined by the
geographic area under the company's business (Adams, Khan and Raeside, 2014). The
increasing competition is one of the major reason behind the fact that many mobile
operators have diversified into the new products and in order to beat the competition
many operators have started using many services. The major competitors of the Three
network company are T- Mobile, Vodafone, Telefonica and Orange.
LO 4
P4 Strategic management plan
The plan for strategic management may be defined as a document which is used by the
company with intention of communicating or transferring the information like the goals and
objectives of the business, their growth strategies, expansion strategies etc. to the employees and
the other stakeholders (Bell, Bryman and Harley, 2018).
Bowman's Clock model
It is a strategy which explores the different options for the strategic positioning which
means how a product should be positioned in the market in such a way that it gives the most
competitive position in the market. The purpose of using this model by Three network company
is to illustrate that a business will have a variety of the options on how to position a product.
Position Name Description
Position 1 Low price & low value
added
This is not much competitive for the business because the
product is not much differentiated and also the customers
does not perceive value.
Position 2 Low price Here the business positions itself as a low cost leader in
the whole market.
Position 3 Hybrid In this position the company positions itself as the
combination of the low cost but at the same time going for
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product differentiation. The aim at this stage is to
influence the consumers that the products are of good
value added through the combination of the reasonable
price and acceptable product differentiation.
Position 4 Differentiation It refers to a strategy which offers the customers with high
level of value providing products. Here branding plays an
important role in the differentiation strategy. A high
quality product with good brand awareness is placed at
top to achieve the high prices (Eriksson and Kovalainen,
2015).
Position 5 Focused differentiation This dimension or strategy focuses on positioning the
product at the highest price levels because the customers
buy the product because of the high perceived value
which they derive from the consumption of that product.
Position 6 Risky high margins This is a strategy which is used at times of high risk
positioning (Wilson, 2014). By using this strategy the
business sets high prices without offering anything extra
in comparison of the perceived value. If customers
continue to buy at these high prices, the profits can be
high. But, eventually customers will find a better-
positioned product which offers them more perceived
value for the same or lower price.
Position 7 Monopoly pricing It is a system wherein there is monopoly of one firm in the
market. As there is monopoly of the firm in the market so
they do not need to position themselves high.
Position 8 Loss of market share This is the most harmful and disastrous situation for the
company. For not losing the market share the company
can set a middle range of prices with low perceived value
to win over the competitors.
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Strategic management plan of Three company
Clarify the vision – This is done in order to make a specific goal and to ensure that these
goals are communicated to the employees so that everyone works in the direction of the
accomplishment of the goals. The first step to be followed by the Three company is to set a
vision and supportive goals and the objectives to accomplish the vision. The vision will be set by
the Board of Directors by analyzing the overall performance of the company.
Gathering and analyzing information - In this stage the company tries to gather all the
major facts and figures and information and data which are relevant and related and important in
accomplishing the above made vision and mission. For this Three company used PESTLE
analysis and Ansoff growth matrix for gathering information regarding external factors. On the
contrary for analyzing and gathering information regarding the internal factors SWOT analysis
and VRIO analysis is done to gain insight for the internal factors.
Formulate a strategy - after gathering the data the next step is to create and formulate the
strategy by balancing the information, facts and figures with the objectives of the firm. For
example with help of SWOT analysis it was found that there is a weakness of new entrants and
competitors in the market (Sekaran and Bougie, 2016). So this weakness can be overcome with
the help of going for either merger or acquisition with the new entrant or even the Three
company can takeover that new entrant.
Implement the strategy - for the successful strategic plan it is very necessary and critical
to implement the strategy correctly so that objective and goals of the business are accomplished.
After formulating the strategies the Three company tries to implement the strategies. Some
strategies formulated by the company are by building a sustainable and maintainable
differentiation, collaborating with the competitors in order to increase the market share. Also, it
can develop measures to understand the core needs and requirements of the customer so that the
customer do not switch to another product, it can also make a strategy of increasing the
switching cost for the customer which will discourage the customers from switching to
competitors product and many more strategies.
Evaluating and controlling - the last step in the process of the strategic plan is to
evaluate the strategy that whether the strategy implemented is accurate and correct or not. And
also to control the strategy by comparing the actual strategy implementation and the strategy
what we planned. For example with help of SWOT analysis Three company was able to evaluate
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that it have many competitors. So by evaluation strategies can be made like good promotional
methods, increasing the quality of the products and the services and many more.
CONCLUSION
The research for the business is referred to as a crucial and essential role for the business
because it helps the company in searching and acquiring new knowledge and innovations which
helps the business in growing and expanding the business ans its operations to attain the goals
and the objectives of the business (De Massis and Kotlar, 2014). After studying the report it was
clearly visible that the study of the environment is very necessary and crucial for the success of
the business. With the above study it is evident that the macro environment has a great impact on
the operations of the business. For this it has used the PESTLE analysis and the Ansoff matrix
analysis. After that it showed the impact of the internal environment on the business with the
help of the VRIO and the SWOT analysis. After that it highlighted the application and the impact
of the Porter's five forces model on the company in order to evaluate the competitive forces of
the market and its impact on the company. At last the report applied the Bowman's Clock model
with intention of interpreting and devising a strategic plan for the company.
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REFERENCES
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Online
Introduction to PESTLE analysis, 2018,[Online]. Available through: <http://www.free-
management-ebooks.com/faqst/pestle-01.htm>
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