Macro Environment Impact on British Telecom Industry

Business strategy INTRODUCTION 1 TASK 11 P1 Impact of Macro Environment on British Telecom 1 TASK 24 P2 Conduct an assessment of organisation's internal environment and its capabilities 4 TASK 38 P3 Analyse the competitiveness in telecommunication sector 8 TASK 410 P4 Understanding and interpreting strategic direction 10 CONCLUSION 12 REFERENCES 13 INTRODUCTION In the present business scenario, every corporate association is tend to acquire an effective strategy or policy so as to compete with all environmental factors which has

Business strategy

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Impact of Macro Environment on British Telecom ..............................................................1
TASK 2............................................................................................................................................4
P2 Conduct an assessment of organisation's internal environment and its capabilities..............4
TASK 3............................................................................................................................................8
P3 Analyse the competitiveness in telecommunication sector...................................................8
TASK 4..........................................................................................................................................10
P4 Understanding and interpreting strategic direction..............................................................10
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
In the present business scenario, every corporate association is tend to acquire an
effective strategy or policy so as to compete with all environmental factors which has a vast
impact on firm's market position. Business strategy is a long term action plan which is designed
in order accomplish specific goals and objectives. In other words, its a management policy which
strengthen the performance level of entire business organisation. Along with this, business
strategy is a core management function which ensure firm's growth and success at marketplace.
Apart from this, telecommunication sector is rapidly growing but also faces higher market
competition (Ackermann and Audretsch, 2013). Every firm faces these kind of challenges so as
to manage its market position over the world. According to the survey, mobile technology has
generated £3.8bn revenues in 2017; the sector also contributes 5 Billion Euros in UK's economy.
The present assignment is based upon BT group; its a one of the largest telecommunication
company which renders networking and IT services to multinational companies. BT group is
operating in 180 countries by having an aim to connect all people through a single chain of
network. The report enlighten influence of macro environment on business organisation and its
strategies. Readers will also come to know about nature of competitiveness in
telecommunication industry.
TASK 1
P1 Impact of Macro Environment on British Telecom
While formulating any business strategy, firms are required to conduct an external
environmental analysis so as to recognise those factors which affect its market position. In UK,
telecommunication sector has been developed from the early days of telegraphs to modern
broadband and mobile phones networks with internet services. Here, telecom market is largest in
Europe which defined by intense competition in mobile and broadband sectors.
Telecommunication industry of the nation involves several companies in which British Telecom
is a leading networking service provider company which operates in 180 countries. Main
services of the firm are – subscription television, broadband, fixed line services and IT related
services (Annabi and McGann, 2013). The overall revenues of BT are - £24.062 billion whereas
its current operating income is £4.135 billion; there are over 106,400 employees are presently
working it. The prime objective of the company is to provide better quality services to its clients
so as to satisfy their needs and wants in the best possible manner. Due to its global market
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presence, business operations and activities of BT group get affected by several external factors
in positive and negative manner. Below is defined numerous factors which turns out successful
evaluation of firm's business strategy, such as -
Political factors – These factors has a significant role in order to identify those political
factors which can hinder long term success or profitability of BT group in UK. The firm is
operating numerous countries and expose itself to diverse nature of political environment as well
as risks which occurs due to political system. British government has set a framework for
telecommunication industry, it involves fibre access, net neutrality, spectrum, expansion of green
ICT. Another government policy is – the Digital Agenda which confirms high speed network
over the world (Auzair, 2011). Along with this, strategic political relationship between UK and
BT group are strong which helps company to diversify political risks and uncertainties.
Economic factors – It encompasses with saving rates, interest rates, inflation rates,
foreign exchange rates and economic cycle so as to identify actual demand and investment of an
economy. Economic factors like – fierce competition affects defensible advantages of the nation.
On the other hand, globalization has raised up transformation of business economics, now firms
are trying to enter into international arena; this can increases efficient communication and new
products. There is discussed several economic factors BT group should consider, such as –
recognise the type of economic system in operating country, intervention of government in free
telecommunication markets, exchange rates and stability of host country currency etc.
Social factors – Cultural of a society and way of doing things also affects the cultural of
a business association. There are visible social changes influence telecommunication industry
and enhancement in earning capabilities of people due to lifestyle changes. Behaviour and shared
beliefs of population plays a crucial role in understanding customers' preferences and desires to
British telecommunication in the given target market. Accordingly, telecom companies will be
able to produce its marketing strategies so as to grow and diversify themselves in target market
(Azar, 2011). Following are some social factors which must be taken into account: -
demographics and skills level of generation, leisure interest, attitudes (health, consciousness,
environmental), entrepreneurial spirit of society, cultural aspects and so on.
Technological factors – In the era of technology, several industries are trying to expand
their functional areas over the world so as to gain high competitive edge and attain market
growth in a certain time period. There are numerous technological developments are being done
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by BT group so as to compete with its competitors. Technology also put a great impact on
product's offerings in terms of improving their efficiency and effectiveness. It helps in
advancement the needs and demands of telecom services. BT group install fibre wire in its
creations over copper now, mobiles phones are becoming more compact and moves towards
wireless networking services.
Legal factors – Issues with laws and regulations are being come up with frequently. As
BT group operates worldwide, thus it faces several issues regrading monopolies, government
and customers. For example- regulatory bodies of some nations has retained strict laws and
legislation on importing and exporting through which telecommunication firms cannot expand its
services in those areas. Thus, it is essential for BT group to consider some legislations while
enter into new markets; it will lead to secure organisation's secret sauce (Bharadwaj and et. al.,
2013). Different laws should be taken into account while entering into new markets, such as-
discrimination law, anti-trust law, copyrights, patents, e-commerce and consumer protection law,
healthy and safety law, data protection law etc.
Environmental factors – Every country and organisation has its own environmental
standards which affects its profitability and revenues. Due to changes in climate and weather,
telecommunication services also get hampered because people cannot get proper networking into
their cellphones. Apart from this, laws should be also regulated for environmental pollution,
wastage and development of ecological products.
Strategy to analyse organisation's strategic position: -
Ansoff's growth matrix -
It is known as product or market grid by considering four strategies in order to develop
new goods to enter into new markets. Ansoff matrix supports to enlighten future market risks
which are associated with specific growth strategy. Along with this, future strategic position of
telecommunication sector involves different aspects, i.e. diverse nature of environment and
internal factors. Although, the positioning strategy of BT group clearly expressed its strength and
weaknesses which aids to develop better marketing strategy for attaining strong marketplace over
rivals. This has put a positive influence on profits and growth of the firm (Bucolo and Matthews,
2011). Following is defined four strategies which entails in Ansoff matrix, such as -
 Market penetration – BT group has entered in broadband and fixed product line market.
It also provides IT services so as to increase market area. For this purpose, organisation
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needs to search better and innovative ways to improve customers' trust or loyalty ; it will
develop consumers' lifetime value. Market penetration aids BT group to grab better
market opportunities and driven up market goodwill in Europe market. Basically, the
strategy helps to make necessary adjustments which improves long term appeal of firm's
offerings.
 Market development – British Telecommunication is now looking towards overseas
markets, the firm already has made its presence in developed countries, i.e. US, Australia
etc. Thus, market development is one of the best approach which supports a firm to attain
new customers towards existing offerings. New consumers are defined through
geographical location and a specific region (Grover and Kohli, 2013). Although, risk in
market development strategy is also higher because there is required vast amount of
investment while entering into new markets.
 Product development – Creation of IPLC products can be a good example of product
development. This marketing strategy focuses on generating new products for existing
markets so as to attain and retain customers for long term period. In this case,
telecommunication firms will attempt to raise its profitability by launching new and
innovative products which are able to satisfy customers needs' in the best possible
manner. After launching 5G networks, BT group also starts working on 6G and 7G
networks so as to provide fastest data speed to customers.
 Diversification – BT group is now outsourcing sum of its services, like customer
services with IBM. The firm has also entered into IT services so as to fulfil needs of
target audiences in an imperative manner. In addition to this, diversification strategy can
be acquired by firm when it wants to enter into new markets by having new products. It
can be attempted while a firm sees new opportunities of market expansions and have
enough funds to enter into markets.
TASK 2
P2 Conduct an assessment of organisation's internal environment and its capabilities
As an organisation compete with another so as to raise the number of customers,
revenues and market share; they employ diverse tactics as per the nature of business. The term
strategic capabilities entails with a firm's ability to effectively implement marketing strategies
which permits them to allow to survive for long term period at marketplace (Jocovic and et. al.,
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2014). It shows that management should emphasis on organisation's resources, assets and market
position. Competitive position of every business association enables its ability to perform at
maximum level in several ways; strategic success of firms can be distinctive through its abilities.
In today’s dynamic world, organisation's face ongoing need in order to identify and develop new
capabilities to respond to changing customer demands or competitive threats. Failing to do so
can put an organization at risk of becoming obsolete. In addition to this, procedure of shaping
strategies and implement them into action is the responsibility of every business.
Application of VIRO/ VRIN model: -
The analysis is an analytical tool which is used for evaluation of firm's resources, thus
higher competitive edge can be attained. VIRO model comprises four aspects, such as – value,
rareness, imitability and organisation. In a business association, there are several resources, i.e.
financial, human, material and non-material resources; all these resources must be considered
while implementing any business strategy. By considering BT group, the firm is financially
strong and having well qualified workforce. There is mentioned VRIO analysis of British
Telecommunication: - Value – Resources are most valuable aspect for every business organisation. Business
resources are valuable until they creates or enhance competitive position for the
companies. Although, resources and strategic capabilities of BT group called valuable as
they developed its market growth by implement effective strategies which are able to
exploit firm's opportunities and minimise its threats; in turn expansion of entire
performance level of the company. In context of financial resources, BT group has strong
financial and human resources as it is able to invest in new technologies (Kalyani and
Sahoo, 2011). Beside there, more than 100000 people are presently working with it by
who possess different skills or competencies. The firm also invest in providing training
and development to its workforce as people at BT group are treated as most valuable
resources. Rareness – Resources which are not valued for firms should be unique because a
valuable resource is treated as rare while it ain't possessed by numerous firms. In context
of BT group, the firm has global market presence which makes new comers of UK
recognised that the brand's instantly, higher specialised stuff for unified mobile services.
Any firm cannot ignore its resources which are valuable but common in nature, thus
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losing such resources may be affect firm's in adverse manner as it is fundamental to stay
for long run at marketplace. Imitability – Finance is not valuable but not a rare resource for BT group. Some of
business strategies are related to manage its financial position more imitable. Many of
firms in telecommunication sector imitate its financial resources whereas training
programmes for human resources also get imitate. In addition to this, imitation can be
occurred from three reasons, such as – historical conditions, causal ambiguity and social
complexity.
 Organisation – Managing real issues is major problem for firms rather than scarcity of
resources. British Telecommunication has valuable and rare resources but they cannot be
imitate. Resources which are not well organised in order to capture value for firm,
cannot deliver any competitive advantage. British Telecommunication is required to
manage its administration system, policies, processes, working style as well as cultural so
as to identifying its potentials (Klettner, Clarke and Boersma, 2014). Only this, firm will
sustain long term market appeal. Additionally, firms manage its resources in a systematic
way so as to reduce extra operating costs.
Strength and weaknesses of BT group -
BT Group is a telecommunication solution firm which offers data and voice services to
people across the world. The firm's product portfolio involves fixed voice and data, IT services,
mobility and broadband facilities. Along with this, British telecommunication also provides fibre
and copper connections to people; the organisation offers its services to corporate clients, small
and medium size companies, public organisations, wholesale customers etc. Their USP is its
legacy which shows that BT is a leading telecom company. Although, the firm has faced several
challenges at the time of its movement in public sector and in global markets as well. It already
has been identified that BT group is gaining high defensible edge rather than other brands, like –
Vodafone Plc and EE Ltd., etc.
SWOT analysis of BT group -
STRENGTHEN WEAKNESSES
 BT group is known is one of the largest
telecom and internet service provider in
UK. It also offers fixed line
 The main weaknesses of BT group is
underdeveloped business of mobile
phones and there is lack of fixed mobile
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telecommunication solutions to people.
 The firm is having global market
presence as it operates more than 180
countries; it is the reason that BT group
has high market share. BT group also
participates in New York and London
stock exchange as well as listed in
FTSE 100 index.
 Due to its extensive service networks,
BT group has wide range of product
portfolio, such as – Mobile telephony,
fixed line telephony, IT services,
broadband internet, digital television
(Köseoglu and et. al., 2013).
 Recently, the firm has signed the
world’s largest renewable energy deal;
which helps it in making leading
market presence and improve market
growth as well.
 In order to gain high competitive edge,
the firm has extended communication
operations on global markets through
acquisition and re-branding of the
domestic and overseas businesses,
specifically: BT Infonet, 2005; BT
Radianz, 2006; Dabs.com, 2006;
PlusNet plc, 2007.
 It has made investment in new internet
protocol century network 21CN; which
increases efficiency and speed of data.
convergence.
 Improper formulation of business
strategy towards promotion of low rates
voice calls.
 Sometimes occurrence of payphone
issues cause of ineffective business
operations.
 British Telecommunication group also
get affected by general complaints from
customers regarding poor customer
services of the company; it affects
individual's trust and interest towards
the brand.
 The firm is having limited market
liquidity and higher dependency on UK
market affects its revenues and
profitability.
 Condemned for practices, i.e.
behavioural targeting.
 BT group possess with an associated
high executive management turnover,
since 2001 there has been several
changes in its management; it can
diluted strategic vision of the company.
 Network infrastructure carries out high
maintenance costs and there should be
constantly focused on innovation.
 British Telecommunication is
demanded for premium in several
countries so as to gain growth and
viability. It results, firm will be loss its
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 Due to globalization, there is growth of
telecommunication services because
firms of every industry wants to expand
their business worldwide; for this they
requires proper communication.
 British Telecommunication is highly
focused on various marketing activities
as it has acquired corporate
advertisements which shows the
effectiveness of BT''s networks.
 The firm has generated billions of
revenues in past years. In 2017, the
overall revenue of BT group was
£24.062 billion as it has ranked 100
companies in telecommunication sector
worldwide.
market position and market goodwill
(Murano and et. al., 2011).
 Due to intense market competition ,
brand value of the firm dropped down
because the subscription ratio also get
lowering down. In past decades, client
base and brand evaluation was strong.
It is treated as one of the major issue on
which BT group needs to look out in
global market scenario.
TASK 3
P3 Analyse the competitiveness in telecommunication sector
Competition in telecommunication sector occurs due to emergence of new markets. In
UK, telecommunication sector is not regulated monopoly; here private and public both sectors
are involved in providing telecom solutions to customers. The aura of telecommunication sector
in UK is quite competitive, several number of firms are executed at there by having great market
presence. The main competitors of British Telecommunication are – Verizon communication,
AT & T, Vodafone, EE Ltd., O2 etc. all these firms also have great market position. There are
several factors which can affect competitiveness of a business which are briefly explained as
under: -
Competitive Rivalry – In Europe market, there is more than 15 major players in
telecommunication industry, such as – Airtel, O2, Vodafone, EE Ltd., Verizon communication,
AT & T etc. itself captures more than 75% market share. The average revenue of per user is
around $110 to $120. Vodafone is a market leader, EE Ltd. and Giff-gaff are market challengers
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whereas O2 and Virgin are market followers; all these have a vast impact on market position of
British Telecommunication. In addition to this, all of these competitors of the company also
provides better and more efficient services to people (Oestreicher-Singer and Zalmanson, 2012).
Therefore, it can be said that mentioned firm is facing fierce kind of competition cause
customers' interest also drawn due to price war.
Bargaining power of suppliers – In telecom industry, suppliers power can be influenced
through profitability of the firm. Raises in bargaining power of suppliers will lead reductions in
revenues or proficiency; it also maximise the prices of end products as well. British
Telecommunication operates worldwide, thus the firm has wide range of suppliers. There is
occurred price war between various mobile operators, so that firms should chose their suppliers
carefully and do not drag down profitability of the firm. In context of BT, the firm has less
bargaining power, main suppliers of the company are – mobile tower companies, SIM cards and
mobile phone handsets.
Bargaining power of customers - Customers in telecom sector generally classified into
two categories, such as – individual and enterprise customers, i.e. banks, IT firms etc. There is an
ample range of telecom service providers in Europe market by having large market portfolio and
lower rates. It will provides an opportunity to buyers to select best option among available
variances and thus the firm is facing large bargaining leverage (Scholes, 2015). Apart from this,
there is a cost that should be analysed by customers which forces them to switch up from one
brand to another. Due to its global market presence, British Telecommunication has wide market
presence in domestic and international markets the firm deals with several number of people. As
maximum number of buyers increase firm's potentiality.
Threats of substitutes – In this competitive era, there is number of substitutes are
available in market which can attract customers due to their unique nature or design. British
Telecommunication is a leading telecom service provider and in UK wide range of telecom
service providers which offers similar products and services. Thus, it can be said that BT is
facing threat of substitute products (Schaltegger and Wagner, 2011).
Threat of new entrants – Due to globalization, firms are allowed to enter into national
and international markets very easily. There is required minimal expenditure to enter into new
markets which affects market position and profits of companies who are already establishing at
there.
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TASK 4
P4 Understanding and interpreting strategic direction
Bowman's Strategic clock utilized by an organization while outlining
advertising system to examine its focused position in contrast with the
contributions of contenders. It is a diagrammatic portrayal which
demonstrates connection between client esteem and costs. In other words,
the strategy is used by firm in order to determine the competitive position
of the firm in comparison with its competitors and their offerings as well.
(Source: Bowman's Strategic Clock (Strategic Positioning), 2015)
Following are the main elements which involves in Bowmen's strategic
clock model, such as -
Position 1. Low price and low added value
This is a section particular alternative and organizations don't as a
rule contend in this classification. Organizations pick this position when
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Illustration 1: Bowmen's strategic clock model

their item needs separated esteem. British Telecommunication can apply
this through cost adequately offering volume, and by persistently drawing in
new and potential clients (Slack, 2015).
Position 2. Low price
A Company can choose this choice for their products when it will be
minimal effort pioneers. At the point when an organization will work under
this procedure (low costs) its overall revenue will turn out to be low so
organization need to deal high volume. On the off chance that an
organization which is minimal effort pioneer have sufficiently huge volume
or solid vital purposes behind its position, it can manage this approach and
turn into a capable power in the market.
Position 3. Hybrid
Hybrids are those which fascinating organizations that provides low
costs products to its customers. However offer products or services with a
higher range creates an incentive than its other ease rivals. In this
technique volume is an issue yet organizations manufacture a notoriety of
offering reasonable costs for sensible merchandise and ventures.
Position 4. Differentiation
In differentiation, business organization develops those products
which have unique features or properties that are esteemed by clients (Svee,
Giannoulis and Zdravkovic, 2011). At the point when an organization creates and
outlines of these products or items which separate it from contenders it
generally got an aggressive edge.
Position 5. Focused Differentiation -
In Focused Differentiation organizations offers products with high
apparent esteem against high costs. It isn't fundamental that items have
any genuine esteem, however the view of significant worth by the clients is
sufficient to charge expansive premiums.
Position 6. Risky high margins
An organization takes a risk in order to build their costs with no
expansion to the esteem side of the condition. In this case, cost
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maximisation is acknowledged by client, organization will appreciate higher
productivity and in the event that it isn't, their offer of the market fall, until
the point that organization make a change in accordance with their cost or
esteem.
Position 7. Monopoly Pricing
As a monopolist, organization don't need to be exceedingly worried
about including an incentive in their item or administrations in light of the
fact that, if clients require what organization offer, they will pay the value
organization set.
Position 8. Loss of market share
Business associations who seeks this sort of market technique will lose piece of the
overall industry. In the event that organization has a low esteem item or administrations, the
main way organization will offer it is on cost.
CONCLUSION
The above mentioned report has been carried out that formulation of business strategies
plays a vital role in growth and success of organisation by ensuring the accomplishment of their
goals and objectives in an effective manner. In order to analyse the influence of external market,
there is conducted PESTLE analysis, it involves several factors like – political, social,
economical, technological etc. Apart from this to recognise internal capabilities, SWOT and
VIRO analysis has been done; through which BT group will easily enhance its market position
and gain high competitive edge.
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Online
Bowman's Strategic Clock (Strategic Positioning), 2015. [Online]. Available through:
<https://www.tutor2u.net/business/reference/strategic-positioning-bowmans-strategy-
clock>.
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