Business Strategy: A Comprehensive Analysis of British Telecom

This assignment delves into the strategic landscape of British Telecom, a leading telecommunications company in the UK. It utilizes a comprehensive framework, including PESTLE analysis, Ansoff's growth vector matrix, VRIO/VRIN model, Porter's Five Forces, and Bowman's strategy clock, to assess the company's internal and external environment, identify its strengths and weaknesses, and analyze its competitive positioning. The analysis provides insights into BT's strategic capabilities, potential opportunities for growth, and challenges it faces in the dynamic telecommunications industry.

Business Strategy

Table of Contents
Introduction...................................................................................................................3
Task 1...........................................................................................................................3
TASK 2..........................................................................................................................9
TASK 3........................................................................................................................13
TASK 4........................................................................................................................16
Conclusion..................................................................................................................20
Reference List.............................................................................................................21
2

Introduction
Business strategy is a strategy that is developed in order to maintain and control
business activities and earn profit. The aim of the assignment is to develop
awareness of different kind of strategies that can be possible tactical, operational or
strategic in nature within an organisation. It will help in assessing the macro and
macro environmental factors by addressing the key concepts of business strategies.
Various kinds of theories, models and concepts will be postulated that help in
enhancing the level of understanding and knowledge for support the organisation’s
strategic choice and direction. The sector that is being chosen for conducting this
assignment is mobile telecommunication sector in UK specifically focusing of British
telecoms.
Company’s Profile
British Telecom is a multinational telecommunications service that deals with TV,
fibre, fixed and mobile that primarily operates in UK. On a global basis, it is operating
in 180 countries in the world. The company is established in 1969 and
headquartered is located in London, UK. There are around 102000 employees as
per the report of 2016. In initial times, it was named as the General Post Office in
1981 afterward it became independent and was known as British
Telecommunications and its trade name became British Telecoms. BT is featured in
both New York Stock exchange and London Stock Exchange and is a part of Footsie
(Home.bt.com, 2018).
3

Task 1
PESTLE Analysis of BT
Political Factors According to Morton and Nesi(2018),
political factors are considered to play a
significant role in determination of
factors are responsible for having an
impact on BT’s long-term profitability in
the market. BT is operating in
telecommunication sector in UK and
other countries. Thus, it is noted that the
exposure of different political situation
and system risk is associated with it. In
order to achieve success in this
dynamic telecommunication industry,
the company need to diversify the
system risk present in political
environment. For closely analysing the
factors that BT is operating at, it is
important to address certain factors that
include political stability that affect the
economy of the country, risk associated
with military invasion, level of
corruption, legal framework of the
country and IPR. Other factors also
have an impact on the political
environment are trade regulations of
different countries, trading partners,
pricing regulations on
telecommunications, mandatory
employee benefits, wage legislation and
taxation.
Economic Factors The economic factors that affect BT are
4

inflation rate, interest rate, savings rate,
economic cycle, foreign exchange rate.
These are responsible for determination
of aggregate demand and investment in
term of economy. The competition level
of each country is responsible for
gaining competitive impact of the firm.
BT utilise economic factors are growth
rate, inflation and economic indicators.
Other factors that affect this aspect are
infrastructure quality for
telecommunication industry, education
level, labour cost, skill of workforce,
efficiency in financial markets and
government intervention.
Social Factors In accordance to Morton (2017), social
culture and the ways have an impact on
the culture of the company. Attitude and
shared belief of the population of the
country is found to play an important
role for marketers at BT for
understanding the customers of each
market and thus, design marketing
message for each Telecommunication
industry in different countries. The
social factors that are help for BT in this
context are:
 Skill level
 Demographic factors
 Education level
 Leisure interest
 Culture
 Attitudes
5

 Entrepreneurship opportunities
Technological Factors Technological development is rapidly
evolving and had caused disruption in
various industries in the board. For
example transportation industry, that
depicts this factor. In the past 5 years, it
is seen that telecommunication industry
is evolving at a rapid speed and thus,
did not have any chance to other layers
to cope up with the chances. Various
companies such as Vodafone, Virgin
have dominated in this sector and are
fast moving in nature. The technological
development not only allowed the sector
to gain advantage in UK but also in
various other countries. As per the
viewpoint of Morton (2017), a firm need
to analyse technological aspect as well
as speed that the technology has been
able to disrupt the industry. It is seen
that if the speed is slow there will be
more time required and vice versa. This
is required for coping up and gaining
profitable by a company.
Legal Factors It is seen that there are number of
countries where the legal framework is
not robust in nature thus, there is no
provision of protecting IPR of the
company. It is important for the
company to carefully assess before
entering into the market and gain
competitive edge. The factors that BT
need to consider before entering into a
6

new markets are:
 Anti-trust for telecommunication
industry of a country
 IPR
 Discrimination law
 Data protection
 Employment law
 Health and safety law
Environmental Factors According to Marino (2017), different
market has different environment norms
and laws that affect the profitability of an
organisation within the context of a
market. It is seen that within a country
there are various states that have
different laws and standards in respect
to environment. Thus, various European
countries have giving healthy tax break
to number of companies for operating in
a renewable manner. Thus, for starting
a business, BT needs to evaluate the
environmental standards that help in
operating in the market.
Ansoff’s growth vector Matrix for analysis of BT’s strategic position
The Ansoff Matrix mainly uses their respective product portfolio that helps to analyse
the necessary risk that are associated with four elements. As said by Mitra et al.
(2014), the four elements are market development, diversification, market
penetration and product development. Each time the products moves to new
quadrant the number of risk increases.
Market Penetration
 The British telecoms are building
new fibre optic to penetrate in the
Market Development
 The company British Telecom has
announced about 20,000 towns in
7

new market.
 The British Telecom are investing
about 3 billion pounds for the
extension of the cable network for
providing more faster internet
speed.
 The company aiming to deliver a
speed for about 76 mbps
 The company will put fibre directly
to the building like the other major
competitors.
UK.
 The British Telecom will provide
more outsourcing operation to
provide better service to their
customers.
 As said by Grout and Houlden
(2014), the British Telecom had
able to undertake the nationwide
commercial roll out for the
conferencing mobile.
 More new internet packages and
contract system for the
Smartphone
Product Development
 The British Telecom will launch
4G and 5G service for both pre-
paid and post-paid plan.
 The BT will offer more
comprehensive international and
national long distance voice, data
and video network services in
more integrated scalable platform.
 More comprehensive portfolio for
the enterprise of data, video,
voice, IT infrastructure and
internet
.
Diversification
 The new services for the British
Telecom will offer more unique
and value added products for
large, medium and small
enterprise for the respective IT
infrastructure, networking and
communications.
 The British Telecom will launch
nationwide satellite TV service.
 The fibre optics will produce more
better service and new opportunity
for the company.
8

TASK 2
Explain what strategic capability means
Alongside the various external factors that play a major role in the functioning of a
business, the internal factors too have their significance and impact. For any
organization, the internal environment consist of various components such as the
employees of the organization, the organizational culture and structure they follow
and bring into their working and the shareholders of the company. In the case of
British Telecom, the scenario is no different. The United Kingdom based organization
must employ and implement various strategies that shall help the company to
establish, maintain and develop its internal environment. It has to be noted that for
any company or organization, only when it manages to maintain and improve its
internal environment, shall it succeed to achieve its short term as well as long term
goals.
For any firm, Strategic Capability refers to the ability and capability of an
organization to successfully bring in and employ certain strategies that shall help it to
not only create a market for itself, but also maintain it and bring in improvements to
enhance it (Ghezzi et al., 2015). In the case of British Telecom, it has to be
highlighted that the company that has to face immense competition from the likes of
Vodafone, Virgin and others who have created a name for themselves in not only the
local and regional market, but have also established themselves in the global
market. Hence for a company like British Telecom, it has to mentioned that it has to
come up with certain competitive advantages that shall make it easy for the
consumers to choose the brand over its competitors. In today’s world of fierce
competition and infinite substitutes, it has to be understood by the companies that in
order to survive and prosper in the market, they must comprise of certain
advantages and uniqueness in its business. Only when the company manages to
point out its Unique Selling Propositions (USPs), shall it be able to differentiate itself
from its competitors.
A unique component of the Strategic capability of a firm lies in the fact that it cannot
be measured by the companies. The main advantage of assessing the strategic
capability of a firm lies in the fact that with it, the companies are able to figure out the
9

strengths of its resources and have the exact idea of its market value. Further, it
helps companies to understand whether they have the ability to undertake and
implement certain strategies.
Apply the ‘VRIO/VRIN’ model to determine the strategic capabilities possessed
by your chosen organisation
The VRIO is a conceptual framework that comprises of and tabulates a set of four
questions that helps an organization to design its strategic capability and to have a
clear understanding of its resources and current market value. The four questions
that from an integral part of the model are:
The question related to the resource’s valuable quotient. It analyses whether or not a
particular resource is valuable
 The second question analyses whether or not these resources are imitable by
the rival companies
 The third question assesses whether or not the resources are substitutable
 The final question deals with the rareness of the resources of the company
Resource Nature of the
strategic resourceEnhanced
Customer
Service
Usage of optical fibre Enhanced HRM
software system
Yes Yes Yes Valuable
Yes Yes Yes Imitable
No Yes Yes Non Substitutable
No No No Rare
In the case of British Telecom, three of the main resources of the company has been
chosen for the VRIO analysis. They are:
 Enhanced Customer Service
 Usage of optical fibre
 Enhanced Human Resource software systems
10

From the above-created table, it can be stated that for the company that is one of the
key players in the United Kingdom’s telecom market, there remains a lot of work and
tasks for them to achieve. It can be viewed that the company has the provision of
providing its customers with enhanced services. Not only this, but it also has the
financial strength and capacity to employ the usage of optical fibre in order to provide
the consumers with faster and more efficient communication ways. In addition, it has
understood that the company has been implementing an enhanced HRM software to
maintain its daily business activities in the most optimum manner possible.
Even though these resources are valuable and integral for the company, none of
them fulfil the rarity criteria. This implies that British Telecom needs to build up and
maintain certain USPs that shall help the company to have certain components,
which are unique to the company and not present among the competitors (Morton
and Nesi, 2018).
Identify the organisation’s strengths and weaknesses
In order to conduct its businesses in the most efficient manner, it becomes a must for
a company like British Telecom to have a detailed idea and concept of its own
strengths and weaknesses. If any organization has idea related to its strengths and
awareness about its weaknesses, it helps them in various ways. By having a clear
perception about one’s own strengths and weaknesses, it becomes possible for the
companies like British Telecom to focus and build up on its strengths (Marino, 2017).
In addition, it also makes it possible for them to work on their weaknesses and
eliminate them ultimately. In the case of British Telecom, the key strengths and
weaknesses of the organization are as follows:
Organization: British Telecom
Strengths Weaknesses
Strong consumer base in the United
Kingdom
Not much awareness in the global market
Provision of enhanced consumer service Has been involved in scams that has
brought down the brand value of the
company
11

Extensive and wide range of products Bowing down to competitors due to lack of
strategies
It can be stated that in the case of British Telecom, the brand’s main strength lies in
its enhanced brand value in the United Kingdom market. Apart from that, the
services it provides to its consumers also contribute towards its success. On the
contrary, the main weakness of the company is the fact that it lacks strategies
required for its effective functioning (Btplc.com, 2018).
12

TASK 3
Five Force Porter’s Analysis
The Porter's Five Force analysis is the tool mainly used for analysing and identifying
the competition of an organization’s business. The model is mainly drawn with the
help of the industrial organization economics for deriving five forces or elements. IT
mainly determines the intensity of the competition in the respective market. As said
by Gillespie and Goddard (2017), the Five force Porter’s model also helps to
determine the necessary profitability for attractiveness. The industry is unattractive
because the effects of five forces have lowered the amount of profitability. The five
forces are bargaining power of suppliers, bargaining power of buyers, threat of
substitutes, threat of new entrants and industry rivalry. The researcher will be going
to discuss the scenario of the British Telecom in the telecom industry with the help of
the Five Force Porter’s analysis.
Threat of new entrants The threat of new entrants’ possibilities is
very low. This is because there is the
requirement of the huge amount of
money to enter a telecom industry. There
is the huge requirement of legal
documents for starting a telecom
industry. As said by Lu et al.(2014), the
companies British Telecom has lower
pricing strategy, providing new value and
reduce cost propositions for the
customers. The telecom industry needs
to manage the necessary challenges
involved and constructs a proper barrier
for safeguarding the edge of the
competition.
Threat of substitutes The new services or product must need
the similar base of customers in different
ways. The threat of substitute product is
very high for the telecom industry. IT can
13

be high if any other company provides
high offers with more value proposition
that are different from the recent offerings
of the respective industry.
Bargaining power of suppliers The company has the numerous number
of suppliers. The bargaining power of the
suppliers is very high. This is because
the British Telecom is one of the most
popular telecoms industries known by the
world and mainly in the UK. They have
great power for negotiation for extracting
higher prices from their respective firms
who are in diversified communication
services. THE British Telecom has great
control over the supply chain with their
respective suppliers.
Bargaining power of buyers There are huge demand among the
buyers in telecom industry. The people
want to buy one of the best packages.
The buyers look for great offers at the low
price. This had provided great pressure
on the British Telecommunications for
long-run profitability. The British telecom
has powerful base of the customer and
they have more abilities for seeking
increase in the offer and discounts for
their customers.
Industry Rivals There are many rivalries between the
companies British Telecom. There is
major telecom company is Vodafone,
Airtel, T mobile, Orange, Telecom Italia
etc. The company must provide attractive
packages for attracting the necessary
14

customers. The company must provide
the proper value proposition for their
customers.
Summary of Porter’s five force analysis
The company British Telecom is trying to produce new types of services and
products. New kinds of products can gain new kinds of customers and retaining new
kind of customers for buying British Telecom products. The company is targeting to
build the scale of economies that can lower fixed cost per unit. As said by Almana et
al. (2014), the company British Telecom is spending money and building capacities
on the researcher and development department. The company British Telecom is
experimenting with the design of the product with the help of the different materials.
Developments of dedicated suppliers are the major helper for the sustainability of the
company. The British Telecom are building the large base of customers. This will
reduce the necessary power of buyers. This will provide a great opportunity for the
firm to streamline its production and sales process. The company is continuing rapid
innovation of new products. This is because the customers search for attractive
offerings and discounts for the established products. The new products will help to
lower the defection of existing consumers of the British Telecom industry. The
company is more of a service-oriented than product oriented. Understanding the
core requirements of the customers is very important for the company British
Telecom to gain competitive advantage. The company must build a sustainable
differentiation in their services. They must collaborate with other competitors for
increasing the size of the market than competing with small markets.
15

TASK 4
The Bowman’s strategy clock is mainly a model that is used in the marketing for
identifying and analysing the competitive position of the company with other
company. IT is done according to the offerings of the competitors. Bowman model
was able to consider the necessary competitive advantage with the relation with cost
advantage or the differentiation in the cost. As said by Alam and Rubel (2014), the
Bowman’s strategy clock mainly represents eight possibilities. The eight possibilities
are being shown with the help of the four quadrants. The four quadrants are mainly
defined as the perceived added value and axes of the price. The star shape is mainly
the reminiscent of the clock face.
Figure 1: Bowman’s strategy clock Model
(Source: https://www.tutor2u.net/business/reference/strategic-positioning-bowmans-
strategy-clock)
Position 1 Low added value / low price
This segment is mainly the bargain basement. Majority of the company like British
Telecom does not want to be part of this position. THE British Telecom industry
chose this position when their services and products or packages lack proper
differentiated value. The company who are in this position does not able to win the
16

loyalty of the customer and it can able to sustain as long as it is one-step ahead of
the customers. As said by Adwan et al. (2014), the British Telecom sometimes
needs to gain this position to identify the necessary low price packages for mother
competitors. This provides the great advantage to them for understanding the
necessary needs of the customers. The prices of the British are highly attractive for
convincing the necessary customers for using their service.
Position 2: Low Price
The company mainly chose this position when their respective packages and
services are low-cost leaders. The company British Telecom will operate with the
help of the low price strategy. The company British highly follows this strategy for
their respective consumers. As said by Hardan and Shatnawi (2013), the company
British Telecom is a low-cost leader that had large enough volume and strong
position in the market. They can sustain the necessary approach and can gain
necessary benefit from their customer with the help of the lower price package. The
company can be convinced their suppliers and buyers for entering the low price
arena for assuring to gain high volumes in the market.
Position 3: Hybrid (Moderate differentiation and moderate price)
THE British Telecom also falls in this category because they offer services and
packages to their customers at the lower price. Their services have more perceived
value than the other low-cost competitors do. The strategy volume is some; time is a
great issue for the company BT to build a necessary reputation. This is done by
offering fair prices with reasonable services and packages. As said by Dalvi et al.
( 2016), with the help of this combination, the company can able to make proper
loyalty with their customers with the particular service or brand. The company British
Telecom use this position at the maximum rate.
Position 4: Differentiation
The differentiation is very important for the company British Telecom. This is
because there are many competitors in the telecom industry. For gaining the
necessary customers, the company British Telecom requires proper differentiation in
their service to gain new customers and retaining old customers. This is because the
services or products that are different from their competitors gain a proper
17

competitive edge in the market. The company uses this position to identify the
necessary attractive packages for their customers to provide necessary offers and
discounts to their customers. The internet packages play a very important role in this
position for the company British Telecom. The main differentiation the company
British Telecom needs to focus is the necessary charges and quality of service
provided to their customers.
Position 5: Focused Differentiation
In the focused differentiation, the company British telecom offers very high-
perceived products with value against the high prices packages. For this case, the
company mainly focus on the business-to-business model to gain the necessary
advantage in the competition. In this position, the customers or organization mainly
buy this service according to the perceived value. In the UK, the organization British
telecom has a greatly focused differentiation than other competitors on the basis of
their service. The company is targeting to provide fibre optical cable to the
consumers and business organization. This will provide faster internet to their
consumers.
Position 6: Increased price and standard product
In the UK the British Telecom has the power t increase the price of the packages and
not adding extra service with the price. This is because the British Telecom is one of
the most reputed telecom companies in the UK. For this reason, the increase in price
is accepted by the customers and the company British Telecom enjoys high
profitability. The company can able to adjust to their value according to the fall of the
market share to gain position in the competition again. This position cannot be used
for the long-term this is because it could create the huge problem if there are new
competitors who are offering the same service at lower price.
Position 7: High price/ Low value
The British Telecom does not utilize this position. This is because the telecom
industry is highly competitive. There is always change in the demands of the
customers. For this reason, the companies always have to change the necessary
strategy to retain their old customers and gain new customers. The company British
18

Telecom does not have a concern about the added value on their service and
product This position does not long for the telecom industry.
Position 8: Low value/Standard price
This is a very tough position for every company. This is because the company who
follows this strategy will lose the huge amount of market share. The company British
Telecom does not follow this strategy for gaining their customers. This is because
with low value and the standard price they are never able to gain the advantage in
the competition against the other competitors. In the telecom industry, the customers
mainly search for high service with low price.
19

Conclusion
From the assignment, it can be concluded that BT is one of the leading
telecommunication players in UK as well as in other countries. The analysis of
external and internal environment had indicated that it had various opportunities and
potentially to expands in various other countries. It is seen that in many countries
accessibility of mobile telecommunication is poor in nature. Accessing such countries
will be an apt business strategies on behalf of BT. Along with this bowman strategy
had been implied in order to understand the strategic position of the company and
various options that are available for the company. These options are useful for
taking strategic decision by the management of the company.
20

Reference List
Adwan, O., Faris, H., Jaradat, K., Harfoushi, O. and Ghatasheh, N., 2014. Predicting
customer churn in telecom industry using multilayer preceptron neural networks:
Modeling and analysis. Life Science Journal, 11(3), pp.75-81.
Alam, N. and Rubel, A.K., 2014. Impacts of Corporate Social Responsibility on
Customer Satisfaction in Telecom Industry of Bangladesh. ABC Journal Of
Advanced Research, 3(2), pp.26-37.
Almana, A.M., Aksoy, M.S. and Alzahrani, R., 2014. A survey on data mining
techniques in customer churn analysis for telecom industry. International Journal of
Engineering Research and Applications, 45, pp.165-171.
Btplc.com. (2018). Innovation. [online] Available at:
https://www.btplc.com/Innovation/ [Accessed 23 Jun. 2018].
Dalvi, P.K., Khandge, S.K., Deomore, A., Bankar, A. and Kanade, V.A., 2016, March.
Analysis of customer churn prediction in telecom industry using decision trees and
logistic regression. In Colossal Data Analysis and Networking (CDAN), Symposium
on (pp. 1-4). IEEE.
Ghezzi, A., Cortimiglia, M.N. and Frank, A.G., 2015. Strategy and business model
design in dynamic telecommunications industries: A study on Italian mobile network
operators. Technological Forecasting and Social Change, 90, pp.346-354.
Gillespie, A.E. and Goddard, J.B., 2017. Advanced telecommunications and regional
economic development. In Managing the city (pp. 84-109). Routledge.
Grout, V. and Houlden, N., 2014. Taking computer science and programming into
schools: The Glyndŵr/BCS Turing project. Procedia-Social and Behavioral
Sciences, 141, pp.680-685.
Hardan, A.S. and Shatnawi, T.M., 2013. Impact of applying the ABC on improving
the financial performance in telecom companies. International Journal of Business
and Management, 8(12), p.48.
Home.bt.com. (2018). Fibre Broadband, TV Packages, BT Sport & Mobile Deals |
BT. [online] Available at: https://home.bt.com/ [Accessed 23 Jun. 2018].
21

Lu, N., Lin, H., Lu, J. and Zhang, G., 2014. A customer churn prediction model in
telecom industry using boosting. IEEE Transactions on Industrial Informatics, 10(2),
pp.1659-1665.
Marino, M.S., 2017. The Problems of the First Mover: The Case of British Telecom.
In The Privatisation of European Telecommunications (pp. 127-142). Routledge.
Marino, M.S., 2017. The Problems of the First Mover: The Case of British Telecom.
In The Privatisation of European Telecommunications (pp. 127-142). Routledge.
Mitra, A., Kar, S. and Lord, A., 2014, February. Effect of frequency granularity and
link margin at 100G and beyond flexgrid optical networks. In Communications
(NCC), 2014 Twentieth National Conference on (pp. 1-5). IEEE.
Morton, R. and Nesi, H., 2018. Institutional collaboration in the creation of digital
linguistic resources: the case of the British Telecom Correspondence Corpus. Policy
Press.
Morton, R. and Nesi, H., 2018. Institutional collaboration in the creation of digital
linguistic resources: the case of the British Telecom Correspondence Corpus. Policy
Press.
Morton, R., 2017. Public archives as a source of historical linguistic data: The
construction and analysis of the British Telecom Correspondence Corpus.
22