Table of Contents INTRODUCTION...........................................................................................................................1 TASK 1............................................................................................................................................1 P1: Impact and influence of macro environmental.................................................................1 TASK 2............................................................................................................................................4 P2: Analyse internal capabilities of an organisation..............................................................4 TASK 3............................................................................................................................................7 P3: Application of Porters five force model to evaluate competitive....................................7 TASK 4............................................................................................................................................9 P4: Applying a range of theories, concepts and models, interpret and devise strategic planning for a given organisation..........................................................................................................9 CONCLUSION..............................................................................................................................11 REFERENCES..............................................................................................................................12
INTRODUCTION The set of decision and course of action which helps an organization to achieve its goal is known as business strategy. Strategy helps a business to extract higher profits. An organization can survive longer and can attain competitive advantage via business strategy(Lehmann, 2016). The management which is the brain of firm is responsible to form plan, policies and action plan in order to formulate effective strategy which results in success and growth of an organization. To better understand this concept BT has been chosen, which is a Telecom Company of United Kingdom. This report discuss about various topics such as: to knowtheimpact&influenceofmacroenvironmentfactors,toconsider organization’s internal environment & capabilities, porter's five force models to analyse competitive forces. Also various theories are discussed which are helpful for an organization for their strategic development TASK 1 P1: Impact and influence of macro environmental Political factors: includes factors such as regulations related to trade tariff political stability intellectual property protection right and so on. BT has branches in various countries so it is very significant for them to analyze the political scenario of the country.In simple words this helps the company to identify the diversifiable risk associated with political environment of different region. Positive impact, with advancement in services associated with internet connection has catered the reach for majority of the customer due to which government restrict their regulation in telecommunication sector therefore this gives the benefit to the company to expand their reach. Negative impact, if company perform its operation in developing market then it can gain good revenue from that market but 8 there r some risk associated with the diversification of business in developing country as in developing country 1
e the government control is high as well as they may suffer political instability that hampers the operation of business Economic factors: includes both macro as well as micro environment factors such as interest rate, aggregate demand, inflation and so on that directly affect the operations of business(Meckling, 2015).It is significant for the organization to look after these factors before they expand their business in any new market. Positive impact, there is a huge growth opportunityin telecommunication sector as majority of the businesses individual user depends on the Internet Services as well as on mobile phone due to which BT has expanded its operation which can helps the company to strengthen their relationship with the existing customers. Negative impact, there are various economic faces such as recession that decline the profitability of company along with that inflation face restrict the expenditure of customer that finally affect the existence of company. Social factor:include the attitude, shared culture, believe, Ethics of people which makes it essential for BT to understand the requirement of customer significantly before running their operations in particular geographical area. Positivefactor,withtheincreaseinuseofinternetconnectionand dependency on smart phones for any electronic devices gifted power to the telecommunication company including BT to charge the prices premium prices for the services they are offering to the customer. Negative factor, it is expensive as well as difficult for the company to expand their operations in rural areas or in emerging economy because there income is low due to which they cannot make huge expenditure on the services related to internet connection this perhaps restrict the growth of company in developing areas. 2
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Technological factors:it is essential for a company to be updated with the technology they are using, it is significant for BT to speed up their Technology to remain ahead of the competitors Positive factor, BT has acquired large number of customers because they keeponbringinginnovativeproductsbyimprovingtheirTechnologyand experience in relation to their competitors. Negative factor, company has to Incurred huge expense while adopting to the latest technology along with the cost even training the intern and employee. Legal:BT has considered various factors such as intellectual property right, discriminationandemploymentlawbeforestartingtheiroperationstogain competitive advantage over competitors. Positive:They have always tried to maintain its image in front of its customer by providing them best suited offer. Negative:BT in its growth phase has faced legal pressure for not paying much remuneration to its employees. This increased the turnover and absenteeism rate of company. Environmental factor:the purpose of each country is to protect the interest of natural resources as well as society does organization make sure they should perform their operation without hampering the external resources on Environment Positive factor BT has make precautions against the pollution of against the pollution of environment by avoiding the activities such as with the requirement Negative factor, it can lead to restriction on using natural resource of any country which may result in increased cost. Ansoff matrix: Market Penetration:BT has adopted this strategy by setting the price strategy based on their rivals. Thus, respective telecom industry makes sure they leverage 3
their existing resources or capabilities to attain long term growth(Ansoff matrix, 2019). Market Development:BT has made the use of economies of scale so that to be exposed to untapped market. Thus, company is expecting huge revenue due to market development. Product Development:BT always try to come with new plans. Like, initially people use to look for plans to make phone calls but now with change in technology and innovation people are keen on internet services. Diversification:BT is expanding their operation in UK they are also looking to act globally which is their weakness currently TASK 2 P2: Analyse internal capabilities of an organisation VRIO model:the motive of BT is to achieve sustainable development that too for a long period of time, for the same BT is following VRIO model. Valuable: The important assets of the organization which can help them to achieve their goal comes under this. Thus, the valuable factors of BT are: Global presence:As BT operate in multiple countries which leads to strong presence and recognition by customer. Intellectual property right: It is valuable for the company to enjoy the monopoly rights of the product. Financial resources:Financial resources owned by the company gives them advantage over rivel firms. Rare: Rare means the resources or capabilities of an organization which are rare as compare to organization competitors(Habiband Hasan,2017). In relation to BT the 4
financial resources are not rare because the major telecom industry have plenty of financial resources. Some of the rare resources which BT has are: Globalpresence:ThoughBTcompetitorslistishugewhichinclude Vodafone, Virgin and so on. But also have a huge share of worldwide presence which is an advantage. Intellectual property right: BT have its rare intellectual property right and it also minimize the chances of competition. Imitate: Imitating means copying someone, here it means when the resources of the companycanbecopiedbytherivalfirm(Orna,2017).Herein,thefinancial resources of BT are imitable as the competitor can easily imitate the resource as they also have surplus capital to do so. Global presence:due to economies of scale other companies can imitate their resources. Intellectual property right: The risk of imitating intellectual property right is extremely low. This helps the company to leverage all its capital and resources in its favor. Financial resources:the competitor of BT are also financially sound due to which such factor is an imitable factor. Organization competencies and capabilities: A competency of an organization helps to attain success by expanding its capability with the passage of time. In relation to BT its global presence as well as intellectualpropertyrighthelpsthecompanytooverpowercompetitorsby achieving long term sustainable development. Globalpresence:Asselectedcompanyhassystematicarrangedin operations in multiple countries due to which it gets long term competitive advantage. Intellectual property right:These rights give the advantage to company to provide competitive advantage over competitors. 5
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Financial resources:Though Respective companies financial position is sustainable but it does not give competitive advantage to company as the risk of imitation is always there(Pisano, 2015). FactorsValuableRarityImitableOrganizedWhat is the result? Global presence YesYesYesYesCompetitive Advantage Intellectual property right YesYeslowYesStrong competitive advantage Financial resources YesNoYesYesTemporary or short term competitive advantage Strength and weaknesses of the organisation Strength:Strongfinancialconditionasrespectedcompanyhashuge customer base in United Kingdom due to which it generate huge amount of capital from the services it is offering to the customer, this result in healthy balance sheet as well as strong cash flow operation of company(Prajogo, 2016). Therefore this helps the company to take the advantage of its economy of scale and overpower the competitors Wide market share as British Telecom enhances the quality of their services aspertherequirementofcustomersduetowhichselectedcompanyhas experienced strong loyal customer base(Schaltegger,Hanseand Lüdeke-Freund, 2016). For instance it has the fastest broadband internet connection along with that BT provides call protect services from nuisance or any spam call which not only help the company to gain large market share but help customer as well to get premium quality e of services at desirable prices Company offers by spectrum of innovative product and services within UK there are several independent units of BT that provide wide range of services to the 6
customer for instance respected company is the largest provider of broadband services as well as fixed line telephony moreover they are the second largest provider of Technology such as Pay-TV Sports channel. Therefore this depict that BT is the leading network within national as well as International market. Weaknesses:No worldwidepresence although company generate huge amount of capital but still it has Limited presence in comparison to its other competitive such as Vodafone. Thus, company should tap into the emerging economy such as Asian market from where company can generate huge revenue that will further help to built the strategy against the competitors of company. TASK 3 P3: Application of Porters five force model to evaluate competitive Porter's five force model: Under this various external forces which affect the organization are analyzed properly so that the profitability level of firm can be increased. By the proper analysis BT can take proper action to eliminate its threats(Uhland Gollenia, 2016). Effective strategies are formed via this model, so that business of company can sustain for a long run and it can earn higher profits.Therefore, external factor in context to BT that can affect its business process are defined below: Threat of new Entrant:BT experience low pressure of threat of new entrant as telecommunications industry require huge capital as company has to invest in promotional tool, licensing,service management as well as developing infrastructure. And innovations in telecom industry happens frequently, it is tough for a new entrant to upgrade regularly(Evans and et.al., 2017). Hence, respective company has not only adopted technology but also maintained its regulation in order to provide use maximum level of efficiency. Threat of substitute:The threat of substitution for BT is high as there are other competitors which comparatively sell services at low price in comparison to selected company. Though BT is doing well in UK but still there is large number of substitute for them. 7
Competitive rivalries: Recently, because of the huge competition BT is trying to bring attractive offers for their customer so that to overcome competition. They need to be very careful in pricing as high pricing as compare to competitor can lead to switch of users. On other side if they offer low price in comparison to its competitors then company will experience loss. Thus, competitor analyzes each other strategy on order to operate smoothly. Bargaining power of buyer: In term of telecommunications industry within UK the purchasing power of customer is high. Along with that they various alternatives from which they have to choose and at very reasonable rates. This depict that the trend of switching from one company to another is high. Thus, BT understands the need of people and provides them premium quality services at nominal rates. Further, as the bargaining power of buyer is relatively high, selected company motive is not only to attract new buyer but also to retain existing ones in order to gain competition edge over the competitors(Teece,2018). Bargainingpowerofsupplier:Thevariouscompetitorsoftelecom industry within UK such as Virgin, Vodafone etc experience high profit this lead to high bargaining power of supplier. The company to remain in the competition has to provide services on a reasonable rate. Furthermore, due to high bargaining power or demand of suppliers the company profit is in stake. This lead in high cost services of customer care, network maintainer, marketing and so on. Balanced Scorecard: This technique is followed by the company to achieve the main or high objective of the organization. It helps the organization to know that if they are achieving their important objective on time or not. Various initiatives are taken so thatthe goals ofthe organization can be achieved(Wirtz and et.al., 2016). Balanced Scorecard can be prepared by using excel, Google sheets or PowerPoint. So, balance Scorecard is an effective tool to keep the team on a same page while forming strategy and it also help in focusing in the main objective ofthe organization. 8
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TASK 4 P4: Applying a range of theories, concepts and models, interpret and devise strategic planning for a given organisation Bowman's Strategic Clock model is helpful in strategic planning and it emphasis on how a product should be positioned in the market which can build relation with the customer which can help company for a long run(Yuliansyah, Gurd and Mohamed, 2017). The model is mainly based on two parameters which are price & perceived value. It is a marketing model which is used by BT to analyze its position in relation to the position of its competitors. A company can achieve competitive advantage after following this model. It has 8 component, they are as follows: Low price and low value added:This strategy is not beneficial for the company because in this product is not differentiated & consumer’s perceives very little value, despite a low price. Low price:If the company wants competitive advantage than it have to reduce the price of its products and to emphasis on economies of scale so that company can generate higher profits. Hybrid:As hybrid position includes some elements of low price but also some product differentiation. As BT should provide attractive plans to its customer and with that better network coverage too, it can help the company to gain more 9
customers. So this strategic planning is helpful for the company to get the advantage of competitiveness. Differentiation:To make differentiation it is important for BT to offer highest level of perceived value to the consumers. Focused differentiation:As per this strategic planning it is important for the organization to provide high perceived value and position a product at highest price level. BT can launch 5G services in UK to make differentiation. They can become first mover by that they will get competitive advantage for a period of time. They can charge premium price in that period of time. Risky High margin:under this the company can earn profit for a short run but not for a long run. As customer will switch to a company who are proving better value at lower rates. Monopoly pricing:Monopoly is a situation in which there is single seller and many buyers and company can charge higher price for its products. If BT can be a first mover to provide 5G services then they can afford to charge higher prices for a period of time. Loss of market share:It is the situation when company provides its products at high price with low perceived value. If BT provides 2G services at higher rates, customer will switch to other options. Company need to study properly what customer wants and serve them accordingly. Porter's Generic Strategic:This model has emphasis towards mainly two factors such as: low cost and differentiation. LowCost strategic: cost minimization is a motive of firm so that sales can increased and via that increase in profits(Chen,Eshlemanand Soileau, 2016). So BT should follow this strategy as the competitors are doing well in the market. Reducing price will lead to increase demand so BT should focus on that to sustain competition and survive for a long period. 10
Differentiationstrategy:ithelpsinprovidingqualityproducttothe organization.It is helpful to get competitive advantage. Providing 5G services for the first time in the market is motive of BT. They can charge premium prices then for the quality and services they are providing(Akterand et.al., 2016). CONCLUSION The report focus on strategic planning so that the company can sustain in the market for a long period and it can also grow. For the business growth it is require to analyze the internal capabilities so that better plans can be formulated which can lead to success. As porter's five force model and PESTLE is helpful to evaluate competitive forces and external environment. Bowman's strategy clock model and Porter'sgenericstrategieshelpsBTincorporationtotakethebenefitof competitiveness by providing value to the consumers. 11
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Meckling, J., 2015. Oppose, support, or hedge? Distributional effects, regulatory pressure, and business strategy in environmental politics.Global Environmental Politics. 15(2). pp.19-37. Orna, E., 2017. Information strategy in practice. Routledge. Pisano,G.P.,2015.Youneedaninnovationstrategy.HarvardBusiness Review,93(6), pp.44-54. Prajogo, D.I., 2016. The strategic fit between innovation strategies and business environmentindeliveringbusinessperformance.InternationalJournalof Production Economics,171, pp.241-249. Schaltegger, S., Hansen, E.G. and Lüdeke-Freund, F., 2016. Business models for sustainability: Origins, present research, and future avenues. Teece,D.J.,2018.Businessmodelsanddynamiccapabilities.LongRange Planning,51(1), pp.40-49. Uhl, A. and Gollenia, L.A. eds., 2016.A handbook of business transformation management methodology. Routledge. Wirtz, B.W., Pistoia, A., Ullrich, S. and Göttel, V., 2016. Business models: Origin, development and future research perspectives.Long range planning,49(1), pp.36- 54. Yuliansyah, Y., Gurd, B. and Mohamed, N., 2017. The significant of business strategy in improving organizational performance.Humanomics,33(1), pp.56-74. Online Ansoff matrix .2019. [Onlne]. Available through: <https://www.ukessays.com/essays/marketing/a-marketing-strategy-analysis-of- vodafone-marketing-essay.php> 13