Importance of Strategic Planning in Business

The assignment explores the significance of strategic planning for smooth business functioning. It emphasizes that effective strategic planning is crucial for providing an appropriate response to changes in the external environment. The report concludes that changes in macro-environmental factors have a direct effect on businesses, influencing their strategies, particularly in the telecommunication sector.

Business Strategy

TABLE OF CONTENTS
INTRODUCTION .........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Identifying suitable frameworks for analysing the effect of macro environmental factors on
Vodafone and Its strategies..........................................................................................................1
TASK 2............................................................................................................................................3
P2 Analysing the internal environment as well as capabilities Vodafone..................................3
TASK 3............................................................................................................................................5
P3 Application of porters five force model for evaluating competitive forces ...........................5
TASK 4............................................................................................................................................7
P4 Strategic planning for Vodafone ...........................................................................................7
Strategic Focus and Tactics: Management in Vodafone is planning to recruit highly talented as
well as skilled workers, as this will help an enterprise in fostering market growth........................9
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Business strategy can be defined as set of decisions or tactics which is implemented by
manager in an organisation for accomplishing desired business objectives. It can also be
considered to be as long term plan developed by manager for driving an enterprise towards
success. Formulation of business strategies is especially important for expanding business.
Strategic planning includes detailed information about the activities which will be executed for
accomplishing desired results. It helps management in analysing the business performance. An
effective strategic planning assist firm min gaining competitive advantage.
The report have focus on analysing the effect or influence of macro environmental factors
on business strategies in context of Vodafone. Study will include determination of firm internal
environment as well as educabilities. It will also include evaluation of various forces which
might have effect on competitive strength of an enterprise. Project will also include the various
strategies which can be adopted by business entity for increasing competitive strength.
TASK 1
P1 Identifying suitable frameworks for analysing the effect of macro environmental factors on
Vodafone and Its strategies
Vodafone is one of the best organisations operating business in telecommunication
sector. There are various external environmental factors such as political, legal, social etc. which
has great influence on business strategies of an organisation. Changes in macro environmental
variables can have both positive and negative effect on enterprise. Pestle analysis is considered
to be as an appropriate framework which can be utilised by manager in Vodafone company. This
is considered to be as an appropriate technique as it helps manager in addressing those factors
which have direct as well as significant effects' on Vodafone business as well as strategies.
PESTLE analysis helps manager in identifying the suitable strategies for minimising the adverse
impact or influence of changes on macro environmental constituents on business (Aithal,
Shailashree and Kumar, 2015).
Political factors : these variables includes changes in rules as well as regulation related to
industry etc. As Vodafone is multinational company Changes in political factor have direct as
well as major effect on business operations. Major political constituents which has effected
Vodafone are EU Roaming Regulation that aims to decrease charges for mobile phone usages
abroad by seventy percent. Political instability in the nation can create major barriers in
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delivering services. These variables have major influence on Vodafone investment decision.
Political parties has assisted Vodafone in expanding business. In addition to this, infrastructure
building for supporting network as well as use of mobile phones by children required permission
from the government.
Economic factors: It includes rise in prices, change in tax rates, fluctuations in currency, etc. all
these constituent have direct influence on the pricing strategy of Vodafone. Global economic
crisis ion UK after Brexit has negative effect on the profitability of Vodafone. In addition to this,
decline in currency rate has provided transactional benefit to Vodafone. The increase in cost of
acquiring licences has direct effect on the profit margin of company. Adoption of discounting
pricing strategy by competitors have direct as well as negative effect on the revenue , sales as
well as profitability of Vodafone.
Social factors: This variable includes change in trend, demand for services, etc. have direct
influence on the operational decision of management in an organisation. It also has great effect
on the production strategy of Vodafone. For instance, change in work patterns has now become
very popular make people work from home increasingly relying in communication technologies
has lead to the increase in demand for the services offered by Vodafone. Changes in social
factors also have major influence on marketing strategy of Vodafone. Increase in the awareness
about the harmful radiations coming out from the mobile phone and health issues has lead to the
decline in the demand for the products offered by Vodafone (Christ, Burrit and Varsei, 2017).
Technological factors : Advancement in technology has great influence on Vodafone decision
relation to formation of strategic alliance with other business entities. The negative of
technological development is that it has given rise to intense competition due to which Vodafone
is facing difficulty in concentrating on core business operations. In addition to this, the
emergence of third generation mobile phone technology has enabled organisation operating in
telecom sector to deliver more services to customers (ZHAO and et.al., 2018.).
Legal factors: Changes in government legislation have direct impact on the Vodafone business
plan, policies and strategies. For instance, few regulation which has been enforced by
government in UK has forced Vodafone decreases the usage charges for mobile phone.
Permission for importing as well as exporting of services has helped Vodafone in increasing
sales and profitability.
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Environmental factors: Increase in competition as well as changes in environmental factor has
direct effect on business operation of Vodafone. Climate changes can have major impact on the
way services are being delivered to customers. Competition in industry has encouraged
Vodafone to develop innovative products or provide unique combination of services to its client.
This factors have less effect on Vodafone, as an organisation has established recycling
programme in order to inspire people to disposed of their mobile handsets as well as accessories.
This is done by an enterprise through responsible advertising. In addition to this, an organisation
has also launched incentive scheme, in order to motivate its clients to return unwanted phones
for the purpose of recycling.
TASK 2
P2 Analysing the internal environment as well as capabilities Vodafone
Vodafone has a matrix business structure. According to this structure, workers in an
organisation is required to report mainly two persons these are production as well as functional
manager, In 2010, Vodafone has announced to change its business structure in order to bring
improvement in the delivery of strategic goals.
Internal capabilities of Vodafone is that an organisation has team of highly skilled and
talented workforce which has helped business entity in fostering growth. In addition to this, an
organisation deliver high value position to its customers which has help them in gaining
competitive advantage in the market (Grünig and Kühn, 2015).
Swot analysis is considered to be as an appropriate framework which can be utilised for
analysing the strength, weakness, opportunities and threats. It is considered to be as an effective
technique as it assist management in identifying the techniques for converting the strength into
weakness as well as overcoming weakness.
Strength: Good brand name.
Innovative marketing strategies.
High brand visibility as well as strong recall of
brand.
Global presence.
Highly efficient websites which enables
Weakness : Negative effect of Br-exit,
economic crisis in the nation has lead to the
decline in the profitability of Vodafone.
Low market share
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customers to make online payment of bills.
Opportunities: Vodafone has an opportunity
to expand business as well as enter into new
market.
An organization to launch 5 G networks, as
this strategy will help an Enterprise in fostering
market growth.
An organization has an opportunity to merge
with other organization in industry.
Threats: Increase ion competition
Changes in legal factors.
Discounted pricing strategy adopted by
competitors can have negative effect on
Vodafone profitability. It might also have
adverse influence on demand for services
offered by Vodafone.
The biggest competitors of Vodafone are
reliance Jio, Virgin mobile, Tata Docomo etc.
Mobile Number Portability to other
competition can lead to decline in customer
base.
VRIO Analysis
VRIO analysis is considered to be as an appropriate framework which can be utilized for
evaluating organizational resources. This is suitable for analyzing the internal situation of an
organization. It also helps management in identifying area of improvement. Vrio analysis also
assist management in making strategical as well as tactical decision.
Valuable: Vodafone offers resources which adds value for its clients. An organization has
unique as well as valuable resources utilizing which company provides services to its customers.
In addition to this, Vodafone has advance technology utilizing which a firm able to provide
quality network services to its customers. Vodafone also have global presence which is
considered to be as crucial asset for an enterprise, as business entity is taking initiative to
increase its size, market share and sales. It is considered to be as an appropriate technique
earning more revenue from existing as well as new clients.
Vodafone offers quality as well as satisfying services to customers. It is required by
business entity to utilize human capital management information for recruiting as well as
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retaining productive, productive, highly talented and skilled workers. As this strategy will
support an enterprise in delivering professional services to customers.
RARE : Vodafone is considered to be as leading company in telecommunication sector globally.
An organization has high brand visibility in the market. Competitors of Vodafone is not utilizing
data-based employee management. It will assist an enterprise in gaining competitive advantage.
Inimitable : In short term, no competitors of vodafone could gain internal presence. Airtel, Idea
etc. would take lot of time as well as resources for establishing global presence. In addition to
this, Vodafone has expensive resources, but it can be easily copied by competitors. It is required
by Vodafone to develop unique combination of resources by utilizing resources, as this strategy
will assist firm in gaining the competitive advantage. Data-based employee management is
difficult to imitate at same time it is costly too. Other companies operating in telecommunication
sector in order to implement data-based employee management system need to maker high level
of investment in providing training to workers (Johnson, 2017).
Organization : Vodafone has organized structure, management as well as procedure. All
workers including human resource management team in Vodafone are provided with training
related to Data-based employee management system.
TASK 3
P3 Application of porters five force model for evaluating competitive forces
As it has been analyzed from the given case scenario, there has been continuous decline
in the sales of vodafone. It is required by manager in an organization to utilize Porters five force
model, as this technique will assist management in analyzing the attractiveness of industry. In
addition to this, porter five force is considered to be as suitable framework which can be utilized
for identifying the competitive forces.
Rivalry among existing firm: It is high. As there are many companies operating in an industry
as well as offering same products and services to customers. Vodafone competitors in order to
influence market is offering products as well as services at lower price to customers. This factor
has direct as well as significant effect on the profitability of Vodafone. It is required by
Vodafone to adopt flexible pricing strategy, as this will aid firm in reducing the negative
influence of competition on business performance (Amran, Ooi and Devi, 2015). In addition to
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this, Vodafone can collaborate with competitors, as this strategy will aid business entity in
reducing competition. It will also support an enterprise in increasing market share.
Bargaining power of buyers: This is high in telecommunication industry. As switching cost for
customers is low they can easily switch to other brand easily. It is required by Vodafone to
concentrate on providing quality services to customers, as this will help business entity in
retaining profitable clients. In addition to this, Firm can launch new offers as this will help them
in attracting number of customers.
Bargaining power of suppliers: It is high. Vodafone has adopted cost leadership strategy which
has assisted business entity in increasing its profit margin which further enables business entity
to recover the high price paid to suppliers. As Vodafone is very much popular brand, it has high
potential to negotiate with buyers and get the prices of products down. It is required by an
organization to develop as well as maintain strong relationship with buyers as this strategy will
help them in getting the continuous supply which is very much crucial for making quick
deliveries of services to customers. In addition to this, by developing the effective supply chain
with multiple suppliers , Vodafone can reduce this threats.
Threat of new entrant : It is low. The reason is that telecommunication industry is very big and
many large corporation such as Vodafone has already captured wide market share. The other
reason is small companies in order into telecommunication industry requires lots of investment
which is not at all possible for them. But new firm can enter into telecommunication industry
with innovative products or services which can led to high pressure on Vodafone. Small firms
by launching new products in the market can force Vodafone to reduce the prices. In addition to
this, firm need to make investment on research and development (Zamberi Ahmad, 2014.). In
addition to this, by establishing the high level of standards, Vodafone can create big barriers in
context of entry of new companies in telecommunication sector.
Threats of substitute : This is high. As there are some companies in telecommunication sector
those who have highly expensive resources as well as they are financial sound. These companies
can launch substitute product in the market. It is required by Vodafone to concentrate on
delivering Unique value proposition to customers, as this will help business entity in gaining
competitive advantage. In addition to this, it is required by business entity to adopt service
oriented approach. Vodafone can conduct market research, as this tactic will help firm in
developing the understanding about customer needs as well as demands.
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Porters generic strategy
Cost leadership strategy : As per this strategy, it is required by Vodafone to keep the prices of
its services as well as products low when entering into new market. Cost leadership strategy will
assist business entity in gaining the competitive advantage in the market. It will also help firm in
attracting customers. Vodafone can offer low prices products or services to specific market
segment. Management in an organization need to make plans for reducing the operational cost
which is very much essential in order to deliver goods or services to customers at low price
without compromising with profit margin.
Differentiation strategy : It is required by Vodafone to develop innovative products or services,
as this will assist an enterprise in gaining competitive advantage. In addition to this, Vodafone
can design its own label, as this tactic will support business entity in differentiating its products
from that of competitors (Amran, Ooi and Devi, 2015).
Focus strategy : It is required by Vodafone to target niche market, as this strategy will help an
organization in reducing competition.
TASK 4
P4 Strategic planning for Vodafone
Strategic planning can be referred to as systematic process which includes identification
of different plan of actions which can be executed for accomplishing organizational goals.
Vodafone has able to achieve leading position in telecommunication industry due to an effective
strategical plan. Strategic planning process includes different activities starting from analyzing
the existing situation of an enterprise.
Executive summary : Strategic planning is very much essential for smooth running of business.
It helps management in establishing vision and mission for company. Manager ion Vodafone
need to before developing the mission and objectives needs to develop the understanding about
business.
Background statement: Vodafone of is one of the most popular company in telecommunication
industry. Business entity has its located in different places as well as different countries which
enables form to deliver products or services to wide number of customers. Vodafone has adopted
Low cost pricing strategy which has assisted an enterprise in achieving leadership position.
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Business structure : Vodafone has matrix organizational structure. Employees have to report to
persons.
Mission : Vodafone mission is to gain customer loyalty by delivering them, good quality of
goods as well as services at low cost.
Vision: To become more valuable as well as preferred brand among customers.
Market analysis: Anshoff matrix:
Market development : An organization is planning to use different as well as unique channel for
targeting particular market segment or customer group. In addition to this, Demographic market
segmentation strategy will be utilized by Vodafone.
Market penetration : Vodafone is planning to bring improvement in order procedure in order to
make easier for customer to get access to the products or services. In addiction to this, Vodafone
is planning to extend business hours (Lai, Chou and Chen, 2015. ).
Product development:Vodafone is planning to launch 5 G networks . In addition to this, An
organization can also launch bandwidth. As this strategy will assist an organization in gaining
the competitive advantage. It will also help firm in increasing sales and profitability.
Diversification : As Vodafone has good brand image in the market, business entity is planning to
acquire other small companies for achieving diversification.
Swot analysis:
Strength : Innovation skill.
Global presence
Weakness : Low market share:
Opportunity : To expand business.
To launch 5 G networks.
To acquire small firms
Threats: Increase in competition:
Changes in Legislation.
BCG matrix : This is an effective technique which can be utilized by manager in Vodafone for
analyzing the present situation of company. Vodafone is in star position , but whenever there is
danger in its business it acts as a cash cow to maintain its position. An organization in order to
expand business in new countries is the position of question mark where chance of market
growth is very high but market share is low .For that they can invest huge, decide mode of entry.
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Cash Cow : 4 G network launch by Vodafone is in High demands.
Question mark: there few products which are not giving any return to company. In addition to
this, there are few stores which are adding just cost to Vodafone.
Dog: The mobile segment of vodafone has uncertain future.
Stars: New applications as well as mobile models launched by Vodafone with unique features
has helped business entity in increasing sales and profitability.
Key strategic Goals: To foster market growth. Other strategic of Vodafone is to earn high
revenue. To increase customer base
Resource implications: Lots of resources such as finance, technology , humans are required for
development as well as implementation of strategy.
Strategic Focus and Tactics: Management in Vodafone is planning to recruit
highly talented as well as skilled workers, as this will help an enterprise in
fostering market growth.
Monitoring and evaluation of performance: Market research will be conducted buy an
organization for monitoring performance (Kueng, Li and Yang, 2016). In addition to this,
Customers as well as employees feedback will be taken utilizing personal interview as well as
questionnaire method for analyzing their perception about services or goods offered by company.
CONCLUSION
It has been concluded from the assignment that strategic planning is very much crucial
for smooth functioning of business. Study has also concluded that an effective strategic planning
is very much necessary in order to provide an appropriate response to changes in external
environment. It has been concluded from the report that changes in macro environmental factors
have direct effect on business as well as influence on strategies of companies. Report has
concluded that changes in legal , environmental as well as technological factors have direct
effect on telecommunication sector.
An organization has been provided with recommendation to develop new products , as
this will assist them in gaining competitive advantage.
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REFERENCES
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Zamberi Ahmad, S., 2014. Small and medium enterprises’ internationalisation and business
strategy: some evidence from firms located in an emerging market. Journal of Asia
Business Studies, 8(2), pp.168-186.
Christ, K.L., Burritt, R.L. and Varsei, M., 2017. Coopetition as a potential strategy for corporate
sustainability. Business Strategy and the Environment, 26(7), pp.1029-1040.
Aithal, P.S., Shailashree, V. and Kumar, P.M., 2015. Application of ABCD Analysis Model for
Black Ocean Strategy.
ZHAO, J. K. and et.al., 2018. Research on the Development of Little Red Book—By Adopting
SWOT Analysis. DEStech Transactions on Social Science, Education and Human Science,
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Grünig, R. and Kühn, R., 2015. Strategy Planning Process. In The Strategy Planning Process.
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Johnson G. 2017. Exploring strategy: text and cases. Pearson.Knowledge management as a
factor for the formulation and implementation of organization strategy. Journal of
Knowledge Management 21(2) pp.308-329
Amran, A., Ooi, S.K. and Devi, S.S., 2015. The Impact of Business Strategies on Online
Sustainability Disclosures. Business Strategy and the Environment. 24(6). pp.551-564.
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Kueng, L., Li, N. and Yang, M.J., 2016. The impact of emerging market competition on
innovation and business strategy (No. w22840). National Bureau of Economic
Research.Halal, W.E., 2015. Business strategy for the technology revolution: competing at
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