Business Strategy: A Case Study of British Telecom

This report examines the business strategies of British Telecom (BT), a leading telecommunications company in the UK. It analyzes the impact of the macro environment on BT's operations using the PESTEL model and Ansoff's Growth Vector Matrix. The report also assesses BT's internal environment and capabilities through the VRIO framework, highlighting its strengths and weaknesses. Furthermore, it evaluates the competitiveness of the UK telecommunications sector using Porter's Five Forces model and explores strategic options available to BT using Bowman's Strategy Clock model. The report concludes with recommendations for BT to maintain its competitive advantage in the dynamic telecommunications landscape.

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Table of Contents
Introduction...........................................................................................................................................3
Task 1....................................................................................................................................................4
P1: Analyse the impact and influence the macro environment has on your chosen organization and
its business strategies.........................................................................................................................4
Task 2....................................................................................................................................................8
P2: Continuing with your chosen organization, conduct an assessment of the organisation’s internal
environment and its capabilities.........................................................................................................8
Task 3..................................................................................................................................................11
P3: Evaluate the competitiveness of the UK’s telecommunication’s sector using Porter’s Five
Forces model...................................................................................................................................11
Task 4..................................................................................................................................................14
P4: Using Bowman’s strategy clock model, analyse the strategic direction and options available for
your chosen organization.................................................................................................................14
Conclusion...........................................................................................................................................16
References...........................................................................................................................................17
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Introduction
Business Strategy deals with the various strategies implemented by the business organization
in order to achieve organizational objectives and the competitive advantage. In the following
assignment we have discussed about the various business strategies in relation with the
British Telecom, which is the leading company in the British telecommunication sector and is
the major provider of communication as well as internet broadband services in UK. The
company is currently providing its services in more than 197 countries across the globe. The
report will discuss the influence of the external as well as the internal environment on the
business operations of the British telecom.
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Task 1
P1: Analyse the impact and influence the macro environment has on your chosen
organization and its business strategies.
PESTEL model for environmental analysis
The PESTEL model will help us in evaluating the external macro environment of the British
Telecom so as to review its political, social, economic, technological, legal environment. It
helps in analysing the current market situation of BT and future directions for business.
M1: Political: Political factors have a great impact on the business operations of a company.
The government of UK as well as the rules and regulations made by them severely affect the
telecommunication industries of UK. The political stability of UK is of great importance for
the success of the BT’s business operations. The global issues of politics have a significant
impact on some of the services of the British Telecom. In addition to this, the business
operations of BT as well as the expansion is affected by the terrorism activities in UK and
other countries. The decision taken by UK of leaving European Union has also affected the
business operations of British telecom.
Economic: The economic situations like rise in globalization these days have a great impact
on the operations of the business. The increasing economic crisis in the country is affecting
the growth as well as the profitability of the organization. It has been observed that the
revenue generation of BT in UK has reduced by 4.5 % due to the economic situations of the
country. In order to overcome the losses incurred in business, BT is planning new methods.
For example, BT is in process of developing new and more-fast network for the broad band
services so as to make for the losses. It is also checking carefully its flow of cash in the
company. Moreover, BT is making more efforts to do more market research so as to have the
proper knowledge of the customer needs and expectations and also working on its E-business
(Chaturvedi, 2018).
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Social: Social factors are related to the society and their beliefs that are prevailing in the
country and affect the business operations of any organization. The culture, the beliefs as well
as the standard of living of people of country affects the business of British Telecom. The
educated population and the high standard of living of people have made it possible for the
British Telecom to offer high quality services in UK. Also, the business operations of the
company help the society in many ways. As for example BT has helped the needy by
providing employment opportunities during the times of economic crisis and recession in the
country.
Technological: The technology these days is developing on the fast rate and becoming more
advanced day by day. This leads to the increase in the requirements of the advancements in
the telecommunication sector in form of wide range of network growth. Being the major
telecommunication service provider of UK, BT also needs to implement technological
advancements in its services and provide better and fast services to its customers. In order to
ensure this, BT is working on creating new and improved Set-Top boxes in order to entertain
its customers (Chaturvedi, 2018).
Environmental: The various changes in the climatic conditions of UK as well as global
warming affect the process through which the services of the British telecom reach its
customers. The environment standards of UK affects the way of working of British Telecom
and the company needs to follow the various environmental friendly policies formulated by
government in order to sustain in the market. British Telecom also needs to mage the proper
waste disposal and waste management in order to be a socially responsible company of UK
(Frue, 2016).
Legal: The legal issues and factors have a considerable impact on the telecommunications
sector. In order to ensure the effectiveness of its business operations, British Telecom needs
to abide by the rules and regulations made by the government of UK so as to prosper and
grow in UK”s market. The leaders at the British Telecom needs to consider various laws like
anti-trust laws, employment laws, safety and security laws etc. British Telecom also needs to
be careful of its intellectual property protection as information theft in the sector has
increased. Therefore the company needs to be careful of its information leakage in order to
gain competitive advantage.
Ansoff’s Growth Vector Matrix- Strategic Analysis of British Telecom
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The Ansoff’s Growth Vector Matrix is a strategic tool used by the organization in order to
link its various marketing strategies with the strategic direction of the organization. It
provides four alternatives for the organization by using two dimensions. One is product and
other is market (Business Studies, 2012). The options available for the dimensions are
existing and new. This results in matrix which helps the organization in assessing various
potential strategies available for the growth. The resulting strategies are:
 Market penetration
 Market development
 Product Development
 Diversification
Market Penetration Strategies: The main focus of the market penetration strategies is on
selling the currently existing services or products of the company in the current markets so as
to get the maximum market share (Business Studies, 2012). The amount of the risk involved
in this strategy is very low. The various market penetration strategies that BT can adopt are:
 The easiest method to gain the maximum market share is to attract occasional customers
first so as to make them your regular customers. For Example: By collaborating with
various business corporates and providing them the range of mobile products and
communication services at the considerable rates.
 The second strategy that can be used by the British telecom to increase profitability is to
increase the consumption of its services among the existing customers of the company.
For example: BT can adopt a strategy to encourage the use of more voice and video calls
to the friends and family by providing free calls and data on the reasonable rates.
 In addition to above, BT can make efforts to improve the services of its customer care so
as to resolve issues of customers in a more efficient and effective manner.
 Another strategy which can be adopted by BT is to improve the network quality in order
to provide competition to the other networks available in the market (BT PLC, 2016).
Market Development Strategies: The main objective of the market development strategies
is to find more suitable and better markets for the existing services as well as products of the
organization. The market development strategies that can be used by BT are:
 British Telecom aims to provide faster and better quality mobile phones and broadband
services to all the rural areas of UK which are still not covered.
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 BT aims to provide superfast broadband services to the domestic and SME premises of
UK. In order to achieve this objective, BT is planning to introduce a new standard of
much faster broadband G-fast so as to provide high speed broadband to all the homes and
small businesses of UK (BT PLC, 2016).
Product Development Strategies: The main focus of the product development strategies is
on creating new products for the already existing markets. These strategies are adopted by the
British telecom in order to ensure growth by creating new products and services for the
existing customers. The various product development strategies of British Telecom are:
 BT has just introduced “MY BT” app which has become very popular among the existing
customers and have been downloaded for more than 435,000 times.
 Launch of BT Smart Hub.
 Launch of BT Family Sim.
 Launch of new BT Sports.
Diversification Strategies: This is the final option left for the organizations in order to gain
more market share as well as growth. This strategy focuses on creating new products for the
entirely new market. The level of risk in these strategies is very high.
 The British telecom benefit from diversification in UK through new markets and products
with the launch of BT sports and acquisition of EE by BT (BT PLC, 2016).
(Source: https://thecimastudent.com/2016/11/16/cima-e2-ansoffs-matrix/_
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Task 2
P2: Continuing with your chosen organization, conduct an assessment of the
organisation’s internal environment and its capabilities.
Meaning of Strategic Capability: Strategic Capability may be defined as the organization’s
set of abilities, skills as well as resources so as to gain competitive advantage for the long run
(Business Dictionary, 2018). It is the ability of a business organization to remain financially
strong as well as growing despite of the presence of strong competitors in the market. The
process through which strategic capability of an organization is evaluated is known as the
strategic analysis. We will use the VRIO model in order to the strategic analysis of BT:
VRIO Model: In order to analytically evaluate the resources of the company as well as the
competitive advantage of the company, VRIO Model is used. For the evaluation of the
resources of the company as well as of competitors, following questions are considered by
the VRIO model for its each dimension:
V- Value: How costly is the resources and how easily it can be obtained from the market?
R- Rareness: How rare is the required resourced?
I-Imitability: How difficult it is to imitate the required resource?
O- Organization’s arrangement: Can the organization utilize the given resource effectively
and are the arrangements support the resource?
Thus the above questions thus help the organization in the strategic analysis and development
of strategies (Hill, et. al., 2014).
BT’s Resource Based View: This strategy requires the British telecom to possess unique
resources that cannot be imitated by other companies. This strategy helps the British telecom
to gain competitive advantage over its competitors. One aspect of this strategy is the focus on
research and development by British telecom. The competitors are not allowed to copy any
patented intellectual property of British telecom. This helps the company in gaining the
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advantage of having valuable and non-imitable resource. The innovative and well-designed
resources also minimise the risk if substitutes and thus helps the BT in gaining competitive
advantage. The effective utilization of the various valuable resources is another aspect of the
British telecom’s resource based view strategy based on VRIO model. It helps in gaining
brand reputation and maintaining brand image and the strong brand image of BT helps it in
expanding its customer base and continuous introduction of new and innovative services (BT
PLC, 2013).
(Source: http://www.business-to-you.com/vrio-from-firm-resources-to-competitive-
advantage/)
Strengths and Weaknesses of British telecom:
M2: Strengths of British telecom:
 BT is the leading telecommunication services and broadband internet provider of UK
with a strong customer base.
 The company provides services to more than 170 countries across the world.
 The largest telecom coverage nationwide is owned by British telecom.
 BT has a wide range of unique products and services for its customers.
 The world’s largest renewable energy deal has been signed by British telecom.
 British telecom delivers high quality customer services and customer experience through
its quality products.
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 It maintains a healthy balance sheet because of its strong finances resulting from its
business operations (MBA Skool, 2018).
Weaknesses of British Telecom:
 British Telecom lacks in the effective promotional strategies for its services related to
“Cheap voice calls”.
 British Telecom relies on the UK market for most of its revenues which is its major
weakness.
 The company has limited liquidity.
 The presence of the company in Asia Pacific Region, which is a high growth market, is
very low.
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Task 3
P3: Evaluate the competitiveness of the UK’s telecommunication’s sector using Porter’s
Five Forces model.
The competitive analysis of British telecommunication industry using Porter’s Five Forces
Model is as follows:
Threat of New Entrants: The threat of the entry of new competitor’s in the UK’s
telecommunication sector is very significant. This is because of the reason of huge growth
potential of this sector in UK. But due to certain factors, the level of threat to entry can be
reduced which are as follows:
 The amount of investment required to set up new telecom company is quite large.
 Companies which are currently operating in the telecommunication sector of UK enjoy
economies of scale.
 The existing brands in this sector have a strong customer base of loyal customers.
Threat of the Substitutes: The threat of the substitutes in the telecommunication sector of
UK is quite high. This is because of the availability of similar products and services in the
market, cost of switching which is relatively low and easily available information of
products. However, in order to gain the competitive advantage over one another, the existing
brands make use of new innovative technologies.
Bargaining Power of Customers: For the telecommunication sector of UK, their customers
are their biggest assets and therefore high bargaining power is enjoyed by their customers.
The high competition between the various brands in the telecommunication sector of UK, the
mostly benefits are enjoyed by the customers. Various kinds of services and products with
different offers and discounts are enjoyed by the customers (Johnson, et. al., 2014).
Bargaining power of Suppliers: The suppliers of the telecommunication industry are mostly
those companies which provide the required network, technology as well as the infrastructure
required in order to set up a telecom company. The suppliers of this sector also include the
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various mobile manufacturers. As there is large number of suppliers present in this market,
therefore bargaining power of suppliers can be considered as moderate.
Rivalry within the market: The competitive rivalry in the telecom sector of UK is quite
high. The various pricing as well as non-pricing strategies are used by the various
competitors in order to gain competitive advantage over each other. Therefore, the various
strategies that can be used to gain competitive advantage are the budget allocation level,
finances for the market research and development of new technologies (Hill, et. al., 2014).
(Source: http://fernfortuniversity.com/term-papers/porter5/analysis/3392-bt-group-plc.php)
M3: In order to gain competitive advantage and improve its market position, British telecom
can use the Porter’s Five Force Model to devise strategies which are as follows:
Strategies to tackle threat of new entrants by BT:
 By spending more money on the research and development as well as by building
capacities.
 By using innovative technology to bring new products and services to attract existing
customers.
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Strategies to tackle threat of substitutes by BT:
 By becoming more service oriented instead of product oriented.
 By increasing the cost of switching.
 By understanding the needs and requirements of customers.
BT’s strategies to tackle bargaining power of suppliers:
 By using different materials for its products and services so as to switch to other in case
prices of one material rises.
 By building strong and effective chain of supply with various different suppliers.
Strategies to tackle bargaining power of customers by BT:
 By building relatively high base of loyal customers.
 By continuously bringing innovation in its products and services.
Strategies to tackle intensive rivalry by BT:
 By collaborating with its customers in order to increase the market size and not just
remain in the small market.
 By building quite sustainable differentiation (Brain Mass, 2018).
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Task 4
P4: Using Bowman’s strategy clock model, analyse the strategic direction and options
available for your chosen organization.
Bowman’s Strategy Clock model: It is a marketing tool through which BT can evaluate its
marketing position in comparison with its other competitors in the market by using two
dimensions. Those dimensions are perceived value and price. Various strategies can be
obtained by combining these two dimensions resulting in 8 strategies. From among those 8
strategies, the company can chose the most suitable strategy for gaining competitive
advantage (Ahmed, 2014). BT should follow the lost cost high value strategy in order to stay
ahead of its competitors and this can be understood from the following strategic management
plan:
M4: Objectives: BT should aim at providing better and high quality services by
implementing latest technologies so as to enhance the customer experience with the
company. In order to increase their profit, they aim at increasing and expanding its customer
base through high quality and low price services.
Strategy: The Company uses the product differentiation strategy in order to place its unique
image by providing unique and innovative services to its customers. They provide the
products that are different from those provided by their competitors. In order to reach the
different market segments, the products of the company are required to focus on values that
satisfy customer needs (Johnson, et. al., 2014).
In the future also, the company is trying its best to bring innovation in the telecommunication
sector of UK through the effective utilization of its resources. BT is also one of the major
spenders of UK on research and development and spends more than billion on its R& D
department. Thus, in future BT can provide better and unique services to satisfy the specific
needs of its customers. This will also gain BT the competitive advantage.
Tactics: Proper actions and tactics can help in attracting large customer base. The company
should aim to provide better and enhanced services to its customers with long term benefits in
order to maintain good relations. High speed and quick access internet services should be
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provided. The company should keep the prices of its products and services at competitive
level so as to gain advantage. And at last should adopt effective promotional strategies in
order to communicate its services and plans to the large number of customers (Johnson, et.
al., 2014).
Budget: For carrying out the above mentioned strategies, the company should allocate
budget and finances accordingly. The internal and external analysis will help the company in
assessing the financial capabilities so as to implement the tactics.
Control: In order to have control over the budget and other finance related activities, regular
evaluation, monitoring and feedback are very important. Areas should be identified where
cost can be minimised.
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Conclusion
The above report has focussed on the various aspects of the business strategies of the British
Telecom, which is the leading data and communication service provider of UK with a strong
and loyal customer base. The external analysis of BT has been carried out with the help of
PESTEL and Ansoff’s Matrix analysis. We have also conducted the SWOT and five forces
analysis of the BT in the above assignment. In the last part, we have analysed the strategic
position of BT.
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References
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[Accessed: 20 May 2018]
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[Accessed: 20 May 2018]
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 Johnson, G., Whittington R., Scholes, K., Angwin, D., & Regner, P., 2014. Exploring
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