Impact of Business Strategies on Company Performance

This report provides an analysis of the impact of business strategies on a company's performance. It discusses the importance of business strategies in achieving company goals and targets, as well as their influence on macro environmental factors. The report also highlights the strengths and weaknesses of business strategies and their relationship with service failures and financial performance. The analysis is supported by references to various studies and publications on business strategy and management.

BUSINESS STRATEGY

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P.1. Analysing the impact and influence of macro environment on Vodafone..........................1
TASK 2...........................................................................................................................................3
P.2. Assessment of Vodafone's internal environment and its capabilities..................................3
TASK 3............................................................................................................................................6
P.3. Analysis Of Competitiveness Of Vodafone Using Porter's Five Forces Model..................6
TASK 4............................................................................................................................................7
P.4. Analysis the strategic direction of Vodafone......................................................................7
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Business strategy is the organisation's plans of working in order to achieve their vision,
goals, objectives, successful competition and to optimize financial performance with their
business model. It is high level of plan to reach specific goals and objectives of business. It helps
company in leading competitive position and powerful financial performance (Parast and et.al,
2018). In order to build healthy and a strong image in front of their customers, company makes
business strategies. This is the most essential instrument of all companies. In this present report,
Vodafone Telecommunication Company has been chosen. It is a multinational
telecommunication company which is the second largest firm cross world. It's headquartering is
in London and net income of the firm is about £6.297 billion in 2017. This assignment will
analyse the impact of external environment by doing Pestle and Ansoff's growth matrix.
Furthermore, this will also include strategic capabilities, VRIO model as well as strengths and
weaknesses of company. Besides this, Porters-five-forces model will also be discussed in this
assessment.
TASK 1
P.1. Analysing the impact and influence of macro environment on Vodafone
a) Pestle Analysis
Pestle analysis is a framework that defines the principles of marketing. It is the strategic
instrument of company which aids in tracking external environment that has a large impact on
the operations and functions of business. It is also known as Pest analysis. Company when going
to introduce or launch new product in the market make use this tool in order to track the
environment. There are so many factors which have a great impact on the strategic planning of
business such as new laws, trade barriers, demographic change and changes in taxation. These
are the factors which are not controlled by company. It stands for Political, Economic, Social,
Technological, Legal and Environmental. Vodafone is global company that are certain external
factors that need to be considers to evaluate the success of the company (Du Plessis and et.al
2017).
Political Factor - It relates to the opportunities and pressure which is brought by political
institutions and degree of government policies impact the functions and operations of company.
Vodafone is also largely affected by the political change in which country is operating. For
example- instability in political conditions of country in recent era.
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Economic Factor- This is the one of essential attribute of company such as Vodafone.
With the development in the economic condition of country, there maximum are the chances of
company to spread out and introduce its new units in the newly developed areas. Country with
better GDP means people has high income. Higher income will be results in increasing and
adapting the latest technology of communication. Profit of company will be increase if economic
condition of company is good. Moreover, in opposite way, if there is economic crisis than impact
largely company like Vodafone.
Social Factor- This is the factor that is entirely based on culture and local belief of the
people where company is functioning. This is the factor that leads to success of the company. In
order to reach and achieve strategic position in the market, they should show flexibility in there
rules, policies and regulations concerning to local culture. Vodafone is working in very much
impressive way as well as according to the preferences and needs of society (Matt and et.al,
2015).
Technological Factor- Vodafone is one of the largest as well as popular in the world in
the field of innovation and creation. Vodafone is always running fast than other
telecommunication company in technological advancement. They have major focus on latest
trends of technology.
Legal Factor- Vodafone is very much alert about the legal issues such as copy and other
plagiarist issues. They are always been aware of legal issues like employment law, labour laws,
health and safety laws and many more but still Vodafone has to pay penalties. They are in the
news that they are not paying salary and wages to their employees, so there are many employees
who left the company and joint there competitive company.
Environment Factor- In the world of globalization, people have become more ethical.
Consumers has expectation from their brand to always be social responsible. In order to sustain
the market, company has to work for the betterment and welfare of the society. By contributing
more to the environment, company will attract more and more people towards them.
b) Ansoff's Growth Matrix
Ansoff's matrix is a plan of action of company for communication which aids to study the
growth of administration (Pisano, 2017). It is the marketing scheme for goods with four
attributes of growth areas which are like market penetration, market development, product
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development and diversification. Vodafone is using Ansoff's Matrix use this strategy to take
right decision for the growth and development of market as well as products.
Market Penetration- Market penetration is adopted by company to when they have an
existing product in the hope of increasing market share in the market. This is less risky strategy
as this strategy is adopted by maximum companies. Vodafone is also adopting this strategies by
still advertising its current Zoo-zoo with its promotional tool for enhancing there presence in the
market.
Market Development- Market development strategies are used by company when they
seek to enlarge or expand their business in new market with the existing product. This strategy is
only suitable for those companies who have capabilities and resources in order to enter in the
new market. It is much more risky than market penetration as it is not easy for companies to
enter into new market especially for telecommunication firm (Grover, 2017).
Product Development- Product development strategy is utilized by company when they
seek to introduce or launch new products in the existing market. This strategy is suitable for
those companies which have established their name and have good brand image in the market.
Diversification- Diversification is the high level strategy as well as very risky strategy
from others. When company introduces or launches its new products in new market,
diversification happens. In this strategy, company either fails or become successful leader in the
market.
TASK 2
P.2. Assessment of Vodafone's internal environment and its capabilities.
a) Strategic Capability of Vodafone.
The strategic capability of Vodafone is its competitive position and its structural abilities
in the market. Strategic capabilities of Vodafone is a major factor in remaining financial viable
and flourishing despite the existence of rivals in a free market (Buckley and et.al 2016).
Vodafone company is well-known operator of mobile network in the world. It is one of the
largest telecommunication company across the world. It is the leading player in the industry of
telecommunication. Its operation is in about 26 nations in present. It has about 70000 staff and
175 million users and shareholders. Rea time, global market and open platform for users are the
capabilities of Vodafone. Basic line schemes are also introduced by company to bring worth and
value to there users and subscribers. The strong and powerful capability of Vodafone is its
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network coverage range which is not limited to urban area but it is also has its coverage in rural
and remote areas. Company is also concern about the society where they have there operation as
they are contributing large in the betterment and welfare of the community (Spender, 2014).
Company also has strength to control and manage both internal and external forces. In the area of
innovation and creations, Vodafone is one of the largest company in adopting and advancing
there technologies. The management of company is making effective strategies that directly
assist company in achieving targeted goals and objectives of company. Vodafone is also
providing online services to serve all the small scale business and merger with more companies
to expand its business in international level.
b) VRIO Model.
VRIO analysis is an analytical technique which is used for the evaluation of resources of
the company as well competitive advantage. This model was proposed by Jay B. Addition to this
model will also evaluate the weaknesses of company. It is an internal analysis tool which
company adopts to evaluate the available resources in a company. It has four criteria which
company consider are as follows- Value, Rarity, Imitability and Organisation. Vodafone is also
using this model in order to get perfect evaluation of the resources of company. It considers each
and every type of resources that company requires. It is an opposite of PEST analysis as Pest
analysis is used for evaluating macro environment while VRIO is used for evaluating internal
situation of company.
Value- This is the first question in the VRIO model that whether resources of company is
capable enough to the industries or not. Resources are the most valuable thing for each and every
business as without resources, no work can be accomplish. To increase the perceived value of
consumers, it is very important for company to have adequate resources in the organisation.
Company should make understand there all employees that resources are limited, optimum
utilization of resources should be there (Mellat-Parast and et.al 2017).
Rare- This is question of rare in the VRIO model which can only be acquired by few
companies who are considered rare. Rare and valuable resources provide temporary competitive
benefit. Vodafone company also has rarity elements which is its network coverage area. It has
impressive range of network which other does not have. Customers are more attracted towards
the company only because of its rarity factor.
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Imitability- An uncommon and hard to acquire resources ensured hard to imitate which
provides competitive benefit. It is up to company whether to utilize the power and create
opportunities or they can invalidate the effect of threat. In a business, imitation is everywhere.
When competitors of Vodafone observe that company is getting success, competitors will
immediately work towards imitation and make product as close as possible.
Organization- This is last question in VRIO model is question of organisation. In this
company should structured in such a way that company can compete with there challengers. If
the resources of company is passed than company should have structured and managed system,
rules and regulation, policies and cultured in order to optimum utilization of resources. It is very
essential for all the departments of company to use the resources.
c) Strength and Weakness of Vodafone.
Strength- Vodafone is well-known as well as brand known across the world. It is one of
the biggest company in the telecommunication sector. It has massive market coverage across the
world. According to the Forbes magazine, Vodafone is ranked 395th among the world top 2000
brands. Vodafone is better-known for its coverage of network and broad distribution. It has its
operation in more than 25 nations.
Vodafone is revenue generating company, it has dollars of income annually. In 2017 it
has net income about £6.297 billion. In the figure of sales, it has ranked 104 across the world. It
has international cable of submarine. More than 1000,000 plus employees are working globally
in Vodafone Company. The customer service of Vodafone is also very high as it satisfies their
users and customers.
Marketing tech-tics of Vodafone is legendary. Vodafone uses the smart criteria for
advertising like Zoo-zoo which is the impressive and adorable campaign which transfers many
subscribers to die heart fans of company as well as it makes company more popular (Jocovic,
and et.al 2017). While other telecommunication companies are penetrating the market, Vodafone
is distinguishing its services on a regular basis. Because of its marketing people are more
attracted to Vodafone.
The subscriber base of Vodafone is massive which retains effectively by them. In 2016
the total subscribers of Vodafone are 350 million across the world. Vodafone has high brand
visibility and powerful brand recall. Vodafone maintain diverse services of payment option like
m-pesa, mHealth etc. are furnished. It maintains highly efficient website that makes easy
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payment by online, online recharge. In 2017, Vodafone's brand valuation is about 32 billion
dollars. However, brand equity and brand recall of Vodafone is very high. Vodafone also ties up
with international sports such as FormulaOne and other sports events which are very popular.
Weaknesses- The first and primary weakness of Vodafone is its business in the market.
The base of customers or users of Vodafone is dropping in last five years which is the biggest
problem of Vodafone. It is very essential for company to strengthen its key values and make and
apply strategies to increase their market share as well as sustain their customers. The brad-
valuation is also falling day by day which is also big concern for company. It is very essential for
company to manage it otherwise, company will lose its existence.
In UK the market share of company is decreasing very fast. They are losing their
existence very fast. The performance of Vodafone is also become poor in its home country. Due
to Brexit and other economic crisis in Europe, Vodafone has bad performance in its home
country. It is also reported by the survey that about 45% of revenue is coming from India.
Vodafone is fighting immense level of competition in telecommunication sector like from
BSNL and MTNL. The Research and Development department of Vodafone is not effective as
they are not giving providing the latest information and are not able to analysis the needs and
wants of customers. The company does not have effective channels of distribution which are
lacks to furnish services and goods to the people living in distant areas. Vodafone is also affected
by the price wars with there competitors (Slack, 2015).
TASK 3
P.3. Analysis Of Competitiveness Of Vodafone Using Porter's Five Forces Model
Porter's Five Forces Model is a tool for competition analysis within an industry for a
business. It draws out five forces which derive competition intensity, attractiveness as well as the
profitability of operating within an industry. Porter's model analyse all the micro-environment as
well as macro-environment factors in order to make sure that the report reflects correct
judgement about the competition analysis and where our own company is placed.
Bargaining Power Of Buyers :- this force is considered very high when goods are of
retail nature. This means that people have many options available so in order to stand out
Vodafone needs to make sure that it is providing services at reasonable rates. This would result
in people not diverging to other brands and remain loyal to Vodafone. Buyer always have power
to shift and in this competitive era constant innovation has to be pulled of in order to retain them.
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Bargaining Power Of Suppliers :- it means that supplier has power to charge different
prices from different consumers at the same time. This happens only when there is a need for
particular product and the supply of it is limited. Vodafone can also charge different prices by
making groups of customers and give each of that group unique services and innovative plans in
order to attract a large volume of population (Bentley-Goode And et.al 2017). While doing this it
would ensure that is it exercising the power of supply without letting go of customers.
Threat Of New Entrants :- when the entry in industry is not difficult it results to the
threats posed by new entrants, but in telecom industry the entry part if surely difficult and
Vodafone can be rest assured that if it continues to take care of its current customer base no
major threat will be posed. There will surely be the current functioning companies such as O2,
Talk, BT, EE which can pose threat with innovative policies attracting the current customer base.
Threat Of Substitute :- there are enough substitute present which can cause threat to Vodafone,
it will always have to be very clear with its policies and structure of plans in order to combat the
threat of substitute. There are many substitutes in this industry and everyone needs to be taken
care of, obviously customers also have their choice and preferences, but they could be
manipulated and turned to one's favour through effective branding. Through effective branding
threat of substitute could be tackled.
Rivalry within the Market :- it refers to the strength of competition existing amongst the players
within an industry. Vodafone faces stiff competition from its rival in O2 , Talk Talk , BT, EE and
others. Although Vodafone enjoys the market share of more than 50% but these rivals pose a
constant threat. All the service provider are unique as some of them are specialized in one or two
things but Vodafone is the only brand known to provide all the services. This makes them
pioneer in this industry but to stay at the same position they need to keep an eye on the
innovation done by their rivals so that they are able to prepare counter strategies and this would
allow them always to stay ahead of competition.
TASK 4
P.4. Analysis the strategic direction of Vodafone.
Bowman-strategy-clock Model
Bowman-strategy-clock is a model used in marketing in order to analysis the competitive
position of a company in comparison to the offerings of competitors. This model was proposed
by Cliff Bowman and David Faulkner. This model is used by Vodafone which help company to
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analysis the competitive position of the company in the market. Bowman Model has two
dimension which are price and another is perceived value. As per Bowman, competitive benefit
is the more strong as a typical factor than cost benefit. There are eight steps in Bowman-strategy-
clock model are-
Position 1. Low price and Low added value- This is the most common position in this
model (Chen and Jermias, 2018). This position is used by many companies as in this position
quality of product is compromise with the low price. For a business this is not a very competitive
position. Customers perceived very little value in this position. Generally telecommunication
industries does not follow this position. Vodafone does not appear in this position as the quality
of there services are valued in terms of quality.
Position 2. Low Price- This position considers low cost leadership in the market. This
position is followed by many companies as a when company enters in new market, they used to
follow this position. Vodafone also used this position when they enter in new market.
Competition with low price among the businesses is usually intense. In this position profit
margin on each single products is low but overall profit is high in this position.
Position 3. Hybrid- This position involves those organisations which used differentiation
products. So there products are highly valued. Beside this, organisation used to focus on low
cost. This is position in Bowman model is very much effective than others. The main purpose of
this position is to persuade customers that there is great worth through the aggregation of a
sensible price and acceptable differentiation of product.
Position 4. Differentiation- This position is used by the companies who used strategies
of differentiation that offers as a high possible quality at an average rate. The Highest degree of
perceived value ids offered by company in this position. Vodafone also use this position when it
introduces new service or products in the market. Beside this, company not only focus on quality
of the products but they also focus on branding. These strategies lead to high profit as well as
company can able to sustain there customers.
Position 5. Risky High Margins- This is very risky position in Bowman model. In this
position company sets high prices without offering anything excess. The profit of company can
only be increases if customers used to buy there products. This position will either win the
market or out from the market (Sieger and et.al 2018). This position does not involve Vodafone
company.
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Position 6. Focused Differentiation- This position is concerns with luxury and exclusive
brands. In this position company use to offers high quality at high price. Targeted segmentation,
promotion and distribution are used by the company in this position which leads to higher
margin of profits. Challengers and rivalry are in similar segments, thus they used to support each
others prices very high.
Position 7. Monopoly Pricing- This is the position where company has monopoly in the
market, only a single manufacturer who is selling the product. Companies having monopoly does
not need to concerned about the customer perceived value. Monopoly of the products occurs
when there no option available for customers, as because there are no substitutes available. Price
set by companies is very high in this position. Vodafone does not fall in this position as there are
so many other telecommunication companies operating.
Position. 8. Loss of market Share- This is very enviable position for any company. This
is the position where company will able to offer goods or services that value for the customers.
Moreover, company set there prices too high that consumers do not use there services and
products, they used to stay away. Better option for company in order to manage and control the
market share by setting standard or low price for there products and services (Meckling, 2017).
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Illustration 1: Bowman-strategy-clock Model
(Source: Bowman-strategy-clock Model, 2017)
CONCLUSION
The above report states that business-strategies plays significant role in achieving the
goals and targeted of company. Furthermore, this report also makes understood the impact and
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influence of macro environment on Vodafone as well as strategic capabilities and strength and
weakness of company.
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REFERENCES
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small and medium-sized enterprises.
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Meckling, J., 2017. Oppose, support, or hedge? Distributional effects, regulatory pressure, and
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Sieger, P and et.al 2018. Journal of Family Business Strategy: Special Issue on Ownership,
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Chen, Y. and Jermias, J., 2018. Business strategy, executive compensation and firm
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Operations Management, 38, pp.14-24.
Pisano, G.P., 2017. You need an innovation strategy. Harvard Business Review, 93(6), pp.44-54.
Grover, V.M., 2017. Alignment of Business Strategy and Innovation Strategy: Strategic
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Online
Bowman-strategy-clock Model, 2017. [Online]. Accessed through:
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