Analysis of Business Strategy and Human Resource Management

The given assignment requires students to analyze the concept of business strategy and its relationship with human resource management. It involves studying various sources, including academic papers, books, and online resources, to provide a comprehensive understanding of how businesses can adopt sustainable strategies and manage their human resources effectively. The assignment also touches upon the importance of corporate parenting as a core competence in making corporate strategy work. It includes references from journals like Journal of Business Strategy and Journal of Business Ethics, which demonstrate the significance of business strategy in improving organizational performance.

Business Strategy

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1. Determine the impact and influence of external environment has on Virgin Company.......1
TASK 2............................................................................................................................................3
P2. Internal environment and its capabilities of Virgin Company..............................................3
TASK 3............................................................................................................................................6
P3. Evaluate competitiveness of Virgin telecommunication company.......................................6
TASK 4............................................................................................................................................8
P4. Using Bowman-strategy-clock Model, evaluate the strategic directions and option
available for Virgin.....................................................................................................................8
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Business strategy is the summary of how company succeeds and perceives the
perceptions the expectations of consumers. Company starts its business for achieving the goals
successfully. Making strategy for business makes a good impression with customers. Company
makes many strategies to become unique and best among others, compete for profit,
development and growth strategy. It is the most important instrument in the business. Effective
business strategies lead to success. In this assessment, Virgin Telecommunication Company is
selected. It was found in year 1999 by Richard Branson. The headquarters of company are
located in Swansea, Wales and United Kingdom. The net income of Virgin is around £66 million
in 2006. Virgin provides mobile packages, broadband services and prepay mobile services. The
report will introduce pestle model as well as Ansoff Matrix to analyse the impact of external
environment on Virgin. Further, this report will also include VRIO model and SWOT for
company and Porter's five forces as well. Moreover, assessment will also introduce Bowman-
strategy-clock model to understand and interpret the strategic direction of company.
TASK 1
P1. Impact and influence of external environment on Virgin
PESTLE Model
Pestle analysis is a concept which defined principles of marketing. It is a strategic tool of
companies which help in tracking the external environment that influenced an activity of
business (Ostos, Hinderer and Bravo, 2017). When company is going for launching new products
and services in the market. Pestle has six factors which are like political, economic, social,
technological, legal and environmental.
Political factors- Political factors have a great influence on the business of Virgin.
Political factors consist of laws and regulations which come up frequently in the environment
which affect the functional activities of Virgin and the taxes or duties imposed on the revenue of
the company as well. Sometimes, it becomes very difficult for company to handle all these
affairs. Internet is the day-to-day concern of life. People wishing to make internet as a capital
human rights. In the world of modernization, there is need of internet. But there is always
conflicts grow among government and service providers. Virgin has ability and has capableness
to overcome all the political factors.
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Economic factors- Economic factors have a great influence on the functional activities of
company. The performance of economy that directly affects company and have resonant long
effects on the operation of company. The cost of the infrastructure of telecommunication is an
expensive as building towers and furnishing resources in remote and rural areas are very costly.
People living in remote and rural areas are largely affected the price of services and products of
company which directly influence the purchasing power of customers. For example, rise in the
rate of inflation in UK affect greatly affect cost of product or services and purchasing power of
customer as well.
Social factor- Social factors have great influence the operation of company as it is very
important for each and every sector to work as per the norms and legislation of the country.
Virgin is functioning effectively and efficiently in the social environment. In telecommunication
sector there is limited growth in horizontal way as because it difficult and expensive too. In
telecommunication industry there are monopolies in the environment as they are coverage of
both internet and mobile phones (Galpin, 2018). For average person, telecommunication has
become the main need of life. Virgin is encouraging more innovative products in the market in
order to attract more consumers.
Technological factors- Inventions and innovation has become the most crucial things for
telecommunication industries to compete and sustain in the market. In the world of
modernization, people wants more innovative products and services in order to make their life
more comforts and luxurious. Telecommunication sector has become wireless and smart phones
has become more compact. Virgin is investing and contributing huge funds on innovations.
Virgin is providing internet facility to stations, cafe, airports, hotels and many other places.
Legal factor- Legal factors also have huge impact on telecommunication sector as it is largely
affected the laws and legislation issues. Specially issues with government, monopolies and
consumers (Yuliansyah, Gurd and Mohamed, 2017). Telecommunication industries allows
import and export of services like smartphones, laptops and many other wireless devices are
exporting and importing from countries. Virgin company is also trade with many countries by
that there is immense development and growth of the company.
Environmental factors- Telecommunication industries are largely affected by the
climatic changes and global warming. It is big state of affairs for Virgin to scope up the networks
to its consumers in environmental conditions and climatic changes. Services or goods come and
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goes frequently sometime renew from the environment, which is very essential duty of Virgin to
struggle and improve. Virgin company is working in advance according to the changes and
demand of Consumers.
Ansoff Growth Vector Matrix
Ansoff's matrix is a strategic instrument of communication which helps to analyze the
growth of organization. It is the marketing strategy for product with four dimensions of growth
areas which are like market penetration, market development, product development and
diversification.
Market Penetration- It is the first dimension in Ansoff matrix. This dimension is adopted
when organization has an existing product with the best-known market and requires a growth
strategy within market. In telecommunication sector, market penetration is the best dimension.
Virgin is trying to increase the market share by up-rising and improvement in the quality of
products or services.
Market development- It is the second dimension in Ansoff's matrix. This dimension is
used when company uses its existing products for targeting new market. This dimension of
matrix is used when company has brand royalty in the market. There are many companies which
target international market by their existing products. Virgin Telecommunication Company is
also developing its products in international market and has perfect market penetration.
Product Development- It is the third dimension in Ansoff matrix. This dimension is used by
company when it wants to introduce new product in market. Company has main intention to
expand their business (Lozano, 2018.). When company's existing products have good customer
base than company try's to expand more in order to increase the market share.
Diversification- It is the last dimension in Ansoff's matrix. It is implemented by company when
the product is completely new and it is launched in the new market. There are many companies
which began with small trading company than expand its business into various sectors. Virgin
started its business from small telecommunication company and expand its business into various
sectors.
TASK 2
P2. Internal environment and its capabilities of Virgin Company.
Strategic capabilities of Virgin
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The competitive advantage and structural capabilities are the strength of Virgin
Company. Virgin has various kinds of capabilities like real-time, global market and open
platform for consumers. In order increase the value of consumers company is using basic line
strategy. Virgin company is scattering its business not only in urban areas but also expanding its
services in rural and remote area. Company is contributing towards the welfare of the society.
The effect of negative environment is also controlled and manage by the management of Virgin.
Virgin also have power to control the impact of external environment on the business. Company
is making strategies with the procedure and step to achieve the targeted goals of the organization
like implementing the plan, control of plans and evaluation of plans. Virgin is the best suppliers
of services in telecommunication to consumers. Competitive reward, resources based schemes
and organizational capabilities are the different plan of actions of Virgin. In order to create value
to the customers Virgin is using basic line strategy (Linder and Williander, 2017). Virgin is also
providing online services to serve all the small scale industries and merger with more companies
to elaborate its business in international level. In telecommunication industries there is immense
competition in the market, Virgin is overcoming all the threats of competition by furnish quality
of services to the customers at nominal rate. Virgin has make its goodwill in the market which
has become the most powerful and strong capability and ability of company.
VRIO Model
VRIO model is an instrument for an organization to determine the company's resources
and internal capabilities of an organization and thus the competitive advantage. It is developed
by Jay B. this model determine how to evaluate the resources of an organization. It also helps in
evaluating the weaknesses of company. VRIO model is the opposite of Pestle analysis as this
identify macro environment but VRIO model helps in identify the internal situations inside an
organization. The dimensions of VRIO are Value, Rareness, Imitability, organizational.
Question of Value- The first question in VRIO model, is the resources of an organization
is capable enough to the firm or not. Resources such as human resources, financial resources are
the capabilities and strength of a company (Walsh and Reid, 2017). Resources are not unlimited,
they are limited elements. Wastage of resources will not be better for company, it decreases the
efficiency of productivity. Resource of company can remove and reduce the effect of threat in
the business. Virgin are best utilizing their resources in order to enhance and increase its
productivity.
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Question of Rareness- Rarity of virgin company is the area of network served by them.
The quality of network is best among all the telecommunication companies. The products of
Virgin are also different and advance in technologies. Customers are more and more attracted
towards the company. Rarity in network area is the biggest strength of the business and
competitive plus point.
Question of imitability- there are two different ways of imitation of company which are
submission and duplication. In order to increase or maintain the market share of company, Virgin
Company is having high imitation cost. High imitation cost lead to high profitability margin for
company.
Question of organization- This is the final step of VRIO model. This stage only comes
when there are resources has passed all above steps. It is very important for all the department of
the company to utilize the resources in most efficient way. But it is the responsibility of company
to organize all the resources available in the organization (Moseley, 2017). This model assist in
managing and controlling all the resources accordingly.
Strength and Weaknesses of Virgin Company
Virgin is the brand known company in the world. There are various types of features of
strength and weaknesses of company which take birth from external and internal environment.
Strength and weakness of Virgin company can be analysis by SWOT analysis.
Strength of company are-
1. High coverage area
2. High revenue generated
3. Growth and development of market strategy
4. cost of products and services are nominal
5. brand valuation
6. good record with the quality of phone
7. customers are satisfied
8. Effective forecasting of demands of customers
9. Flexible to changes
10. Healthy balance sheet
11. Strong financial position
12. Wide area of networking
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Weaknesses of company are-
1. loss of money in specific area (remote and rural areas)
2. Unsound cable lines
3. Slow services
4. lustreless sales
5. lack of coverage in fixed mobiles
6. underdeveloped operation in mobile phones
7. lack of business-strategies
8. customer services are not up to the mark
9. fund management crisis
10. liquidity of cash is limited
11. Promotional tools are not good
TASK 3
P3. Evaluate competitiveness of Virgin telecommunication company.
Porters-five-forces Model
This is the most essential instruments for any company which helps to understand the
competition of a business (Maniora, 2018). This model will help in analysing the competitive
position and strength of the business. It is a structure which shows the competitive volume and
quality of market. Virgin is using this model to analysis its competitive position among the
competitors in the market. Even all telecommunication company in United Kingdom using
porters-five-forces as the competitive position and strength of business.
Bargaining power of Buyers- - Porter's five forces of buyer means to the pressure exercise on
telecommunication company by buyers to provide them advanced quality, healthier customer
services and lower cost. As per the Porter's five Model- power of buyer is one of the main forces
that shapes the competitor structure of Virgin company (Cubas‐Díaz and Martínez, 2018). There
are number of user's but still the bargaining powers of buyer of Virgin is powerful as because of
immense competition in the market. The buyer's of Virgin is muscular which cut down the price
of services and products. In order to manage and control the bargaining powers of buyer virgin is
ensuring the profit above the competitors in the telecommunication industry to endure in the
market. Virgin is applying this porter's model which investigate the competition diffusing in the
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marketplace which influenced the cost and quality of services or products of company.
Sometimes, Buyers also bargains for heighten the services of products in same price.
Bargaining power of suppliers- In the suppliers point of view, the porters-five-forces model
refers to the pressure exercise by suppliers on company that how they increase their cost of
materials. The suppliers of Virgin is also bargains in supplying different trade good like SIM,
mobile phones, fibre optical cables etc. For controlling the powers of suppliers, Virgin has
maintained relationship with number of suppliers, which results in controlling the bargaining
powers of suppliers. By maintaining relationship with numerous suppliers helps in controlling
the bargaining powers of suppliers which determines that if they increase the cost, company will
move to other. Suppliers bargaining power is accepted when there is differentiation and
uniqueness in the product of him otherwise company switch to other. Virgin have to ensure the
bargain powers of suppliers because if they increase the prices, the cost of product increases
which in turn reduces the market share.
Threat of new entry- In telecommunication sector the first impact is the threat of new entry. In
telecommunication sector the threat of new entrants is not high because to develop the
infrastructure and maintaining that is not an easy task, it I s very expensive. Virgin has
maintained its market share so that they are able to fight with new entrant. But if people are
moving to other that Virgin has lower down its prices so that customers will not move to others.
In telecommunication industry switching cost is very high. Another factor which become barriers
for other company to enter in telecommunication sector is high level of competition in the
market (Welford, 2018). There is high and intense competition in the telecommunication sector.
Virgin is facing immense level of competition in the market but the quality or service Virgin is
providing is the biggest advantage of company. Virgin do not minimize its price due to efficient
and healthy economic scale and powerful faith or belief of consumers. In some countries there
are some restrictions which become barriers in entry in the telecommunication sector like in
United Kingdom telecommunication company has to take license for Federal Communication
Commission (FCC) for approval to begin the business.
Threat of Substitutes- In telecommunication sector the rate of substitute is very high. Virgin is
facing intense competition in the market. The CDMA services and basic land line phones are
reduces with the invention or creation of Broadband services which are becoming the biggest
concern. Virgin does not need to pass down the cost of submission due to strong and powerful
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and effective scale of management. The services provided by the buyers of loves Virgin services
and its products, which can be identified by the coverage of market share in the
telecommunication sector. Social networking sites like Facebook, Instagram, Video calls, emails,
yahoo, Skype and many other services have taken place as substitute of mobile services.
Competitive Rivalry- Telecommunication industry is facing cut through competition in the
market. There are number of competitors in telecommunication sectors in United Kingdom.
There are so many companies working in the company (Brewster, 2017). Porters-five-forces
analyse the strength of competition presently in the market and also measure the capability to
overcome it. Rivalry competition is very advanced when there are just a few enterprises equally
selling goods or service. Virgin has to fix similar price what others telecommunication
companies in United Kingdom is charging in order to sustain the customers. The switching cost
is very high in telecommunication industries. Improvement and development in qualities of
products and services is essential but clients immediately take decision in respect to price when
there are lots of substitutes available.
TASK 4
P4. Using Bowman-strategy-clock Model, evaluate the strategic directions and option available
for Virgin.
Bowman-strategy-clock Model
Bowman-strategy-clock model is an instrument used to analysis the competitive position
of the company in the market place. It was developed by Cliff Bowman. This model help Virgin
to analysis the competitive position of the company among the competitors. By this model,
company helps in collecting and identifying the position of company in front of competitions.
Bowman has total eight competitive directions. Bowman model is the elaboration of Porters-
five-forces model.
Low Price and low value (Position 1)- This position will be adopted when there is compromise
in the quality with low price (Leonidou and et.al, 2017). Generally, telecommunication
companies do not use this position because the switching cost is very high and there is high
competition in the market.
Low price (Position 2)- This position is adopted by many companies when they enter in the new
market or introduce new products or service sin the market. In telecommunication sector, there
are many companies which come up with low cost leadership. Virgin also use this position when
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they introduce or launch new products in the market. This position leads to grab effective market
share.
Hybrid (Position 3)- In this position there is low cost with some differentiation in the quality and
appearance of the product or services. In this position the good will or reputation is build up in
the marketplace by charging reasonable and fair price to the consumers. Volume is the main
trouble in this position. Virgin also offer fair and reasonable price by offering discounts to the
customer on the same quality of the product or services.
Differentiation (Position 4)- In this position company falls when there is differentiation in the
products or services. Differentiation in the product will not remain for long time as after some
time there is substitute launched by other company (Cascio, 2018.). Differentiation in the product
leads to success of the company by earning high profit in the market. Differentiation also track to
monopoly in the market. Branding is the key role in differentiation.
Focused Differentiation (Position 5)- In this position the cost and price both are high. In this
position perception of consumers is enough because the products or services are highly valued by
customers (Virgin Australia Airlines, 2015). Highly targeted markets and high margins are the
style this organization last for. Virgin when launched its products in the market it also focused on
differentiation but as we know in telecommunication sector competition is cut-through.
Increased Price (Position 6)- In this position company takes advantages of market and
frequently increase their prices. But this position is very risky position because if it is not
accepted that company will loss its market share until company do adjustment in price the loss
continues which sometime lead to shut down. In opposite way, if the increased price is accepted
by consumer than company will get high profit and grab high market share in the market.
High Price or Low Value (Position 7)- This price is adopted by companies who have monopoly
in the market. Companies having monopoly are not concern about its adding more qualities as
because they know consumer will not move to other as there is no substitute available (Olson and
et.al, 2018.). In telecommunication company there is immense competition so this position is not
for telecommunication company.
Low Value or Standard Price (Position 8)- In this position the entire share of company will loss
as because the price of the product should be worth for what consumer is paying. Customer are
concern about the price and quality as well. Virgin do not adopt this position in its life span.
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CONCLUSION
From the above report it was summarized that business strategies are very essential for
each and every organization to prolong in the market. In order to earn high profit and
competitive advantages it is very necessary for company to make effective and efficient
strategies for achieving targeted objectives. Furthermore, Pestle analysis, Ansoff matrix, Porters-
five-forces model and Bowman-strategy-clock model is concluded in this report. Strength and
weaknesses of Virgin is also determined in this assessment. More over, the assessment also
determine different strategies that can be adopted by the company to achieve the targeted goals
and objectives.
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REFERENCES
Books and Journals
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Policy and practice in European human resource management (pp. 22-35). Routledge.
Cascio, W., 2018. Managing human resources. McGraw-Hill Education.
Cubas‐Díaz, M. and Martínez Sedano, M.Á., 2018. Measures for sustainable investment
decisions and business strategy–A triple bottom line approach. Business Strategy and the
Environment. 27(1). pp.16-38.
Galpin, T.J., 2018. Making Corporate Strategy Work-Focused Corporate Parenting as a Core
Competence. Journal of Business Strategy.
Leonidou, L.C, and et.al, 2017. Internal drivers and performance consequences of small firm
green business strategy: The moderating role of external forces. Journal of business ethics.
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Linder, M. and Williander, M., 2017. Circular business model innovation: inherent uncertainties.
Business Strategy and the Environment. 26(2). pp.182-196.
Lozano, R., 2018. Sustainable business models: Providing a more holistic perspective. Business
Strategy and the Environment.
Maniora, J., 2018. Mismanagement of Sustainability: What Business Strategy Makes the
Difference? Empirical Evidence from the USA. Journal of Business Ethics, pp.1-17.
Moseley III, G.B., 2017. Managing Health Care Business Strategy. Jones & Bartlett Learning.
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marketing organization: The impact on business and marketing strategy implementation.
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Ostos, J., Hinderer, H. and Bravo, E., 2017. Relationship between the Business Environment and
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Walsh, J. and Reid, D.M., 2017. The Role of Complexity Theory in International Business
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Welford, R., 2018. The launch of a new journal, Business Strategy and Development. Business
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Yuliansyah, Y., Gurd, B. and Mohamed, N., 2017. The significant of business strategy in
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