Business Strategy Analysis of British Telecom (BT) - A Comprehensive Study

This comprehensive study delves into the business strategy of British Telecom (BT), a leading telecommunications service provider in the UK and globally. It analyzes the impact of the macro environment on BT's strategic decisions using PESTLE analysis and Ansoff's growth vector matrix. The study further examines BT's internal capabilities and strengths through VRIO/VRIN analysis and SWOT analysis. 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. Finally, the study proposes a strategic management plan for BT with tangible and tactical priorities and objectives.

Business Strategy

Contents
Introduction......................................................................................................................................1
Task 1...............................................................................................................................................2
P1 Analyze the impact and influence the macro environment has on your chosen organization
and its business strategies............................................................................................................2
Brief introduction of BT..............................................................................................................2
M1 critically analysis the macro environment and how it determines your chosen
organization’s strategic management decisions...........................................................................7
Task 2...............................................................................................................................................9
P2 Conduct an assessment of the organization’s internal environment and its capabilities........9
M2 critical evaluation of the strengths and weaknesses of an organization’s internal
capabilities, structure and skill set.............................................................................................14
Task 3.............................................................................................................................................16
P3 Evaluate the competitiveness of UK’s telecommunications sector using Porter’s five forces
model.........................................................................................................................................16
M3 devising appropriate strategies............................................................................................18
Task 4.............................................................................................................................................19
P4 Using Bowman’s strategy clock model, analyze the strategic direction and options
available for chosen organization..............................................................................................19
M4 Produce a strategic management plan that has tangible and tactical strategic priorities and
objectives...................................................................................................................................21
Conclusion.....................................................................................................................................23
References......................................................................................................................................24

Introduction
Technology is growing everyday with new inventions and innovations and these technological
advancements create lots of challenges for the businesses. The businesses which are capable
enough to tackle these challenges by its strategic capability can run or can sustain for long run. In
case the businesses are not capable enough to handle the challenges they face difficulties to
survive. Businesses need to frame a business strategy which works as tool to give potential or
strength to overcome the challenges and to make stand in increasing competition. The present
study would be focussing on the different aspects of business strategy with respect to British
Telecom which is one of the leading market players in United Kingdom.
1

Task 1
P1 Analyze the impact and influence the macro environment has on your chosen organization
and its business strategies.
Brief introduction of BT
British Telecom is a multinational telecommunications service provider company that deals with
fibre, fixed and mobile and TV in UK and across 180 countries worldwide. This company has
established in 1969 and now working globally with its 102,000 employees. In terms of revenue
generation the last year revenue was about 24,062 pounds million (About BT, 2018).
At Glance;
Parent company BT group plc
Category Mobile service provider
Sector Telecommunications
Slogan Connected world; Bring it all together
Unique selling point Oldest telecommunications organisation in world
2

PESTLE model for environmental analysis
PESTLE analysis represents the macro environment factors influence on the business;
Figure 1: Pestle Analysis
(Source: Author)
Following is the PESTLE analysis for BT:
Political: British telecommunication industry is highly regulated industry and it needs to comply
according to the government rules & regulations such as Brexit is beneficial for BT because the
higher interest rates helpful in reducing its pension ability (Irwin, 2015).
Economical: Economical decision as synergy through acquisition of EE really helps for
improving cost efficiencies and low churn rate. Telecom industry is increasing its scope by the
economic decision of the government it has many opportunities for merger & acquisition (Irwin,
2015).
Social: The free bundling of products for broadband consumers is providing product
differentiation at superior level. Increased growth of living styles of people gives growth to smart
phones, wearable and smart devices gives customers a connected mind set.
3

Technological: Technological advancement works as wonder for telecommunication sector if
applied positively as a result it provides investment in high speed network and various alliances
for 5G development (Iden and Methlie, 2012). Keeping capitalization on cloud of clouds service
by BT global services division would be helpful for BT for attaining economies of scale.
Legal: There is legality in every sector of business as it is necessary to operate fairly; ruling by
Ofcom, the regulation of UK is providing a path to be separate of Open reach from BT.
Environmental: Every organisation has to work in a way as not to hamper the ecological
environment and that is why BT has taken initiative for reducing carbon emissions.
The other initiative is taken as switching to 100% renewable energy.
4

Ansoff growth vector matrix to analyze the BT’s strategic positioning
This matrix is a strategic planning tool which gives a framework to help executives, senior
managers and marketers devise strategy for growth.
Figure 2: Ansoff Matrix
(Source: Author)
Penetration
It is the strategy where the organisation tries to sell its products or services that are current to the
current customer. The BT use penetration strategy in various ways such as; by changing pricing,
by adding minor features, changing the packaging or highlighting alternative uses (Sveiby,
2001). This strategy usually adopted by the company when it wants growth strategy for an
existing market.
5

Product development
It is the strategy where an exactly new product or service is introduced by the organisation in
terms of sustaining in the market to overcome the competition. This kind of strategy is adapted
when company enjoys good market share in existing market and that is why it needs to introduce
new product for expansion purpose (Teece, 2010). BT is working with multi brand strategy as it
is offering TV, internet, mobile and landline services to the customer.
Market development
Introduction of current product in new market or in different market is very well known strategy
of the business to grow or to expand (Teece, 2010). The market can be national, international or
local to introduce the existing market. It is also a growth strategy as organisation wants to
increase its market share. BT’s acquisition of EE is part of its growth strategy that is big reason
for increased revenue.
Diversification
It is the strategy where an organisation introduces a very new product or services into new
market. BT has introduced its new customer handling services at new base in UK that is a part of
its growing strategy.
6

M1 critically analysis the macro environment and how it determines your chosen organization’s
strategic management decisions.
BT is operating in diverse external political environments at both local and international level.
The UK’s government maintains good relationship with both neighbours and the other countries
with the trade link or the other activities. The political power of UK wants stability and security
in terms of healthy relations with other countries and these kinds of political efforts provides
advantages to the BT but on the other hand the political issues that arises in the country affects
its relationship with other countries and the business of BT in negative manner (Irwin, 2015).
UK is developed economy and that is why the buying or purchasing power of the people here is
really high and that is why the prices of telecommunication sector is regulated which is good for
the customer. Transforming economies of business and globalisation helps BT to generate more
revenue and expanding its operations but it also increases competition and the other competitors
are also utilizing the economic benefits.
On social basis also BT is very much developed country and at least one gadget is available per
household, this social factor promotes BT to think in designing or introducing new product or
services so it can enjoy more customer base but with the more utilization it also creates some bad
influence in social terms as the youth are using more phones more negative influence can be
occurred and only a single incident can hamper the entire business of BT (Dollinger, 2008)
Technology is advancing day by day and this advancement enables BT to have new improvised
products and services with more effective technological changes but this advancement creates
more competition and competitors.
Legal environment includes the legal compliances which BT needs to follow such as usage of
phones and regulation regarding the telecommunication sector these compliances helps to reduce
negative incidents but these compliances also hamper the business as some policies does not
work in favour for BT.
7

Environmental factor works for protecting the environment from the waste as it puts some
regulation in order to have safe environment BT that is why has introduced many activities and
project regarding that but on other hand these issues can be the reason for stoppage of some
services which are profitable in terms of revenue but harmful for environment.
8

Task 2
P2 Conduct an assessment of the organization’s internal environment and its capabilities.
Explain what strategic capability means
A company’s competitive position is enabled by its capabilities for performing in differentiated
way at high level. These abilities allow organisation to apply or to implement strategies for
sustaining in the market for long run purpose.
BT’s strategic capabilities;
Workforce Technological CRM Data centres Unified
communication
Flexibility at
workplace is
very important
and BT has very
flexible
workplace
(Schuler, et.al.
2011)
It is very capable
to perform its
operation in
terms of usage of
advanced
technology.
BT has great
customer
relationship
management as it
has various
contact centres
which are
efficient in their
work.
It works for its
energy efficiency
improvement
program so can
perform in better
way.
BT
communicates in
unified way it
means it has one
voice that shows
unity at every
level and
locations.
.
It uses
conferences at
every level and
collective basis
that enhances the
creative thinking
BT is integrating
network and IT
services.
All the internal
people are very
well trained to
have smart
customer
interaction to
give positive
perception about
the organisation
(Raman, et.al,
2006).
It encourages
lower carbon
hosting and
storage.
It uses video
conferencing to
communicate
with every
location and
internal people
9

Workforce is
very active and
put efforts to get
quick solutions.
It enables IT
audit as
professional
service which
provides scope
and area for
further
improvements.
BT’s application
generally has low
carbon managed
system.
BT has unified
infrastructure
services so no
clashes can be
emerged because
of this (Dutrénit,
2000)
Field force
automation.
10

Apply the ‘VRIO/VRIN’ model to determine the strategic capabilities possessed by your chosen
organization
VRIO analysis is done to have a framework where organizations seek answers of some questions
regarding its resources and its capabilities to utilize those resources in an effective manner to
achieve value (Barney and Hesterly, 2010)
Figure 3: VRIN Framework
(Source: Author)
11

V – valuable If BT has very good resources such as financial, technical and
human which are capable enough to defend against the threats
or not.
YES it has.
R- rare The resources which are possessed by BT are really acquired by
only few companies or one or no one.
SOME of the resources can be identical with the few
companies.
I – imitate Can resources which are available to the BT be imitated by
others or not.
NO not exactly can be imitated such as Human Assets and the
culture.
O – organized to capture
value
If BT is capable enough to organize its resources for capturing
value or not.
YES BT has very effective management team, policies and
procedure for organizing the available resources.
12

Identify the organization’s strengths and weaknesses
Figure 4: SWOT Analysis
(Source: Author)
Strengths Weakness
 It always denotes a healthy balance
sheet with effective cash flow and
strong financials.
 Very strong customer base in UK by
having number of customers.
 BT has very wide spectrum in terms of
products and services.
 BT enjoys healthy relations with
customers by providing them good
experience with product and services.
 It depends on UK market very much as
it has limited presence in Asia Pacific
region high growth markets.
 Its separation from Openreach can be
generation factor for increasing cost
and branding loss.
 Its accounting scandal in Italian
business is really not good for business.
Opportunities Threats
 BT has strategic partnership with
Huawei & Nokia has given 5G
development.
 BT has exclusive rights for
broadcasting European football works
as strategy to develop customer base.
 Very competitive environment and
cheaper competitor offerings.
 Devaluation of British pound really
hurtful for profitability.
 Impact of Brexit.
 Government pressure and other
13

 Launching new product and EE
acquisition.
licensing issues.
M2 critical evaluation of the strengths and weaknesses of an organization’s internal capabilities,
structure and skill set.
Every organisation has its own set of culture, policies and qualities and organisation’s
capabilities, its structure and its resources makes its culture that is as potential as it can give a
strong competitive advantages over others so every company needs to set or needs to have its
strong culture in order to develop and to gain competitive advantages. The organisational
capabilities are defined as its ability to perform or to operate for business and when it is the case
of BT it can be seen from the various analyses that BT is capable enough to tackle the challenges
and problematic issues in competitive market. It has very well versed workforce who capable
enough to have smart interaction with the external people so its products and services can be
very popular among the customer (Wetherly, 2014)
BT follows a structure where everybody has their own area of power it means decentralized
structure so everybody can share their ideas which is further beneficial at the time of innovative
product demand arises. BT offers flexibility to workforce so basically it maintains a culture
where its workforce can enhances their skills and that is why it has really impactful manpower
that provide an effective and efficient skill set to BT such as technological skills, customer
handling skill and other strategic skills which works as strong strength for the BT but on the
other hand these capabilities, structure and skills set are not the stable facts because there can be
duplication and substitute for the technological and financial capabilities by the competitors and
the workforce can be trained towards the goal achieving things (Issa, et al, 2010). Its
decentralized structure and flexible structure can make the workforce lethargic and egoistic as
the decision making power can be misused and if it happens the all position and profit can be
hurt.
14

Apart from that it seen that because it offers BT has really huge customer base in UK as it has
wide spectrum of products and services that is very good as it enjoys a good amount of market
share in UK but at the same time its cons are also there because by only focusing in UK
customer base BT may lose its Overseas customer and it is happening because it’s not working
that much well in Asia Pacific region. Every organisation has both sides of coin like BT has so
BT needs to evaluate its all internal resources to focus on the strength as for further expansion
and seeking more growth whereas it needs to take care the negative sides for the improvements
aspects then only the firm can be sustain in long run at global level.
15

Task 3
P3 Evaluate the competitiveness of UK’s telecommunications sector using Porter’s five forces
model.
Porter’s five forces
Figure 5: Porter five force analysis
New entrant’s threat – significant
This threat is significant because there is more potential growth is seen in this sector and others
factors are such as;
 Investment of huge capital amount needed
 Customer loyalty towards current brands
Substitute products threat – High
This threat is very high because there are so many similar products are present in the market.
Others factors such as;
 Low switching cost
 Easy product information
16

 Easy use of innovation and technology
Bargaining power of customer – significant
Customers are treated as king and enjoy really significant power to bargain. Other factors that
make customer king are;
 This industry has regulated nature
 Cut throat competition between rival companies
Bargaining power of suppliers – moderate
The suppliers enjoy only moderate power because these are also a firm like mobile operator.
Other factors such as;
 Technology infrastructure is required to set up mobile operations
 Mobile manufacturers are also treated as suppliers
 Large number of suppliers
Competitive rivalry – High
Very high intense competition can be seen in this sector because of technological growth. Other
reasons are;
 Use of both price & non price strategies for competitive advantages
 Level of budgetary allocations
 Marketing and promotion strategies
 Expenditure of research & development
17

M3 devising appropriate strategies
BT is really working very well and it is very well known brand in UK but its main focus is only
can be considered in UK market and it can be losing its focus on other global market so it should
adapt the strategy that encourages BT to operate in Global market.
Market development
New market development is really must for BT as UK has many competitors and now it is set in
UK with good brand image so now BT has to take advantage of this brand image and must offer
its product and services in Asian market also. Asian market is also full of competition and so
many competitors are there but of course by providing quality product and services BT can stand
in that competition with good position as it is already an established brand in UK and European
market (Pearce, et.al, 2000).
Strategic alliance
In terms of strategic alliances BT is a player as it has business partnerships by which it is
enjoying good profitable position so strategic alliance in global market can be very beneficial as
in Asian market there are certain player who are seeking for international brand tie-up so BT
needs to analyze the Asian market in intense manner and then can opt for strategic alliance with
the key player.
Criteria for adapting strategies;
 Suitability – these two suggested strategies are suitable as BT has very good human
resource and culture so it can lead the global market.
 Feasibility –for potential customer at global level it is very much required to go for global
strategic alliances and market development.
 Acceptability – BT is well known brand in UK so it has great scope and stakeholder
expectations.
18

Task 4
P4 Using Bowman’s strategy clock model, analyze the strategic direction and options available
for chosen organization.
Figure 6: Bowman’s Strategy Clock Model
(Source: YouTube, 2018)
Low price low added value: It is not very competitive position within this strategy clock as under
this the products and services are not differentiated and that is why very little value is perceived
by the consumers (Raman, et.al, 2006). Prices are gone low and basically having low price can
be the only strategy under this to compete with the superiors. BT cannot opt this as its products
and services are working well in market.
Low price: Large production is planned according this position with huge quantities and products
are also keep value but these are sold on low price that emerges the situation of low profit margin
on individual products. The price war situation is expected in this scenario usually because this
19

position mainly belongs to cheaper market leaders who have main focus on cost minimization,
fast and cheap producing and utilizing economies of scale.
Hybrid: This position deals with two main factors as product differentiation and focus on low
price, because of product differentiation its products are perceived high value by the customer
and because of the low price customer can convinced (Wetherly, 2014). So BT is actually
enjoying its Hybrid position in UK market as its products and services are really valued by the
customer with offered reasonable prices.
Differentiation: This situation allows organization to produce very quality product and offer
average price for that. Companies in this position want to offer its customer highest level of
perceived added value , company keeps great focus on branding, quality for making customer
sensitive towards quality products and brand and making them sensitive enough that they can
pay even more for products. For the other markets such as Asia Pacific region BT must offer this
position as it is very well known brand in UK and this strategy can work in other region and in
Asia Pacific.
Focused differentiation: Usually the luxury brands adapt this position as they offer high quality
products with high price. Actually these brands focus on target segmentation, promotion and
then distribution and deal with higher profit margin with same range of competitors. It is not
suitable for BT as telecommunication sector is not premium now as technological advancement
is increasing.
Risky high margin: It is called risky position because under this company deals with risk by
offering high price for the lower added value products. Customer cannot keep themselves
attached for much time as they have more option with high value and low price.
Monopoly pricing: This position is enjoyed by the company where the firm is the only business
offering the product in their segment so the company does not deal with any competition and
determines the price (Helms and Nixon, 2010). The customer is dependent on products only from
this company and this is the beneficial situation for it.
20

Loss of market share: It is not good position where organization offers high price but customer
does not consider products valuable. Organizations in this position often go for a standard price
for its products for being bit of competitive.
M4 Produce a strategic management plan that has tangible and tactical strategic priorities and
objectives.
Strategic management can be defined as annual cycle of planning and executing into a
company’s culture (Helms and Nixon, 2010). It is the cycle where an organization gets its
mission, vision and objectives and estimation of the required resources and summary on how the
efforts should be fit for overall mission of the company.
Strategic management plan for BT;
Vision Mission Values
To be dedicated for helping
customers thrive in a changing
world.
To be leader in delivering
networked services.
 Trustworthy
 Helpful
 Inspiring
 Straightforward
 Heart
Objectives;
 Ensuring BT global services is a global leader.
 To be the best network provider
 To be responsible sustainable market leader
 Improving long term free cash flow
 Support pension scheme
Estimated resources;
 Financial resources
21

 Human resources
 Technological resources
Summary on how the resource or efforts will be fit for overall goal of the BT;
 BT can utilize its resources effectively by differentiating contents, services and
applications.
 With the help of technological resources it can give the best network services.
 With the collaborative efforts of all resources it can target to be fully converged service
provider
 With its effective strategy framing process it should lead the UK market.
 It should focus on global market especially in Asia Pacific region.
22

Conclusion
After this assignment it becomes very clear that a strategy framing is not just a task to plan
strategy but it needs a complete internal and external analysis of business because these analysis
such as SWOT, PESTLE, VRIN, Ansoff matrix and others provide a very clear picture of the
business so the company can frame the strategy accordingly to sustain in the ever increasing
competition apart from that these analysis can give the idea about the stronger and weaker area
so efforts can be made accordingly. As telecommunication is growing sector because of the
technological advancement this sector is chosen for study and BT is selected as case study so all
the analysis are given regarding BT to understand the Business Strategy in deep.
23

References
Books and Journals
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competitive advantage, pp.68-86.
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accumulation to strategic capabilities. Edward Elgar Publishing.
 Helms, M.M. and Nixon, J., 2010. Exploring SWOT analysis–where are we now? A
review of academic research from the last decade. Journal of strategy and management,
3(3), pp.215-251.
 Iden, J. and Methlie, L.B., 2012. The drivers of services on next-generation
networks. Telematics and Informatics, 29(2), pp.137-155.
 Irwin, G., 2015. BREXIT: the impact on the UK and the EU. London: Global Counsel,
p.44.
 Issa, T., Chang, V. and Issa, T., 2010. Sustainable business strategies and PESTEL
framework. GSTF International Journal on Computing, 1(1), pp.73-80.
 Joia, L.A., 2000. Measuring intangible corporate assets: linking business strategy with
intellectual capital. Journal of Intellectual capital, 1(1), pp.68-84.
 Pearce, J.A., Robinson, R.B. and Subramanian, R., 2000. Strategic management:
Formulation, implementation, and control. Columbus, OH: Irwin/McGraw-Hill.
 Raman, P., Wittmann, C.M. and Rauseo, N.A., 2006. Leveraging CRM for sales: the role
of organizational capabilities in successful CRM implementation. Journal of Personal
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 Schuler, R.S., Jackson, S.E. and Tarique, I., 2011. Global talent management and global
talent challenges: Strategic opportunities for IHRM. Journal of World Business, 46(4),
pp.506-516.
 Sveiby, K.E., 2001. A knowledge-based theory of the firm to guide in strategy
formulation. Journal of intellectual capital, 2(4), pp.344-358.
 Teece, D.J., 2010. Business models, business strategy and innovation. Long range
planning, 43(2-3), pp.172-194.
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 Wetherly, P., 2014. The business environment: themes and issues in a globalizing world.
Oxford University Press.
Online
 Youtube, 2018 [Online] [Assessed through] <https://www.youtube.com/watch?
v=fjWNEpin-4Q > [Accessed on 8th April, 2018]
 About BT, 2018 [Online] [Assessed through]
https://btplc.com/Thegroup/Ourcompany/Groupbusinesses/index.htm [Accessed on 8th
April, 2018]
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