Vodafone Strategic Management Report

The report is a comprehensive analysis of Vodafone's strategic management, covering external factors such as political, economic, social, technological, legal, and environmental (PESTLE) influences, as well as internal factors like competition, new entrants, and Porter's five forces. The Ansoff's matrix is also applied to determine the company's business strategy. The report aims to provide insights into Vodafone's strategic direction and its ability to achieve competitive advantages in the global market.

Business Strategy:
Telecommunication Sector (UK)

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Influence of external environment on Vodafone's business strategy................................1
Ansoff Matrix.........................................................................................................................4
TASK 2............................................................................................................................................5
P2 Vodafone's internal environment and its capabilities........................................................5
Strategic capabilities using VRIO model ..............................................................................6
TASK 3 ...........................................................................................................................................8
P.3 Competitiveness of UK's telecommunication sector by using Porter's Five Force model8
TASK 4..........................................................................................................................................10
P4 Strategic directions and alternatives for Vodafone ........................................................10
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
Telecommunication is one of the fastest growing industry within global business market,
it is a major source of communication or interaction that helps to people to connect and transfer
important information among themselves. The present report is in context to a leading
telecommunication company Vodafone that operates its business in various countries all around
the world. The assignment will include analysis of internal and external environment using
various analytical tools, the various strategic capabilities will be also determined in the following
report. In addition to this the analysis of competitiveness of UK's telecommunication sector will
be also included in this assignment. Furthermore, the report will also include understanding and
interpretation of strategic direction with regards to Vodafone.
TASK 1
P1 Influence of external environment on Vodafone's business strategy
External or macro environment greatly influences the business strategies of organisation.
In order to sustain in market environment of United Kingdom, management of Vodafone has
devised effective strategies and implemented it in efficient manner so that company's growth and
development can be made (Munandar, 2017). External environment factors include political,
social, economic, environmental, technological and legal factors. In order to analyse the
influence of macro environment factors PESTLE analysis tool will be used which is described
below:
PESTLE analysis
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PESTLE stands for Political, Economic, Social, Technological, Legal and Environment.
It is considered as one of the optimum framework to assess the influence of external factors on
business strategies. Political Factors: Political factors includes the policies formulated by governments
regarding business practices, funding, grants and initiatives, elections and political trends,
internal political issues, etc (Alghazi, Shen and Fosso, 2017). The major political factors
influencing Vodafone in UK includes the Roaming Regulation which aims to reduce
charges for usage of mobile phones abroad by 70 per cent. Furthermore, transformation
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Illustration 1: PESTLE Analysis (Source: Pestle analysis – Vodafone, 2017)

in policies and regulations regarding business has been drastically changed in UK after
BREXIT. The management of Vodafone considering these factors formulates strategies
so that growth and development of company cannot be stopped. Economic Factor: Economic factors includes economic policies and structures which
impact on the business strategies. These policies include taxation, inflation, interest,
economy trends, international trade and international exchange rates. In United Kingdom,
Vodafone has to deal with fluctuating inflation rates, interest rates and exchange rates.
After BREXT, the economic conditions of UK has been tarnished greatly and
management have to deal with diminishing subscribers. Social Factors: Social factors are those factors which are related with societal tastes and
preferences. Customers tastes are dynamic in nature and it keeps on changing with the
change in trends. With the increase in different organisation in telecommunication sector
of UK and cheap internet accessibility, Vodafone's competition has been increased. In
order to satisfy the needs and expectation of customers the management of Vodafone
formulated strategies where they change the plan and rates through market analysis. Technological Factors: Technological factors relates to the technological aspects,
innovations, barriers and incentives, and to what degree these impact the business. With
the increase in technological development in telecommunication sector in UK, the
business strategies of Vodafone has been greatly influences. Management is working
diligently in order to provide 5G internet in United Kingdom. Vodafone is determined to
provide 5G internet as part of its business strategy by 2020 in United Kingdom (Moseley,
2017). Legal Factors: Legal factors relates to the laws, regulation and legislation that will affect
the way the business operates. In order to prevent legal uncertainties, it is essential and
important for the management of Vodafone to follow all the laws and legislation such as
Environmental Protection Act, Employment Rights Act, Companies Act, Consumer
Health and Safety Law, etc. As a part of their strategy management frequently make
transformations in their corporate governance and policies so that laws and legislation
can be followed efficiently.
 Environmental Factor: Environmental factors relates to the ecological and
environmental aspects that will affect the demand for a company's products and how that
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business operates. Vodafone as a part of their CSR strategy work in order to protect the
environment. Furthermore, green technologies are used by the management in order to
reduce the carbon emission generated in the environment.
Ansoff Matrix
Ansoff Matrix is used by the strategic thinkers for providing right direction to the
organisation. In this context, the Ansoff matrix for Vodafone is described below: Market Penetration: Market penetration is where the firm in order to increase the market
share penetrate in the market with existing product. In this strategy, management of
Vodafone needs to enhance its marketing tactics and focuses on increasing the attraction
of customers. It is often considered as low risk strategy where management needs to
focus only on marketing and promotional tactics. Market Development: Market development is the strategy where firm enter new markets
with existing product. This can only be done if the firms earn immense goodwill in
previous market. Vodafone has immense reputation in UK and other countries thus, they
can implement this strategy to enhance their profitability (Halpern, 2018). Product Development: Product development is the strategy where firms enter existing
market with new product. Vodafone's management launch new product in UK in order to
enhance its productivity and profitability.
 Diversification: It is most risky strategy where firms enter whole new market with new
product. In order to sustain in the market, the management of Vodafone needs to conduct
extensive research so that adequate information can be acquired thoroughly.
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TASK 2
P2 Vodafone's internal environment and its capabilities
Internal environment is composed of elements within the organisation including current
employees, management and especially corporate culture. In this context, the following part will
discuss about the internal strategic capabilities of the Vodafone.
Definition of strategic capabilities
Strategic capabilities means the ability of business to efficiently implement competitive
strategy which helps them in sustaining in the competitive environment and increases the value
of firm over time. Strategic capabilities takes into account of the strategies a business uses, it
concentrates on the company's assets resources and market position which helps them in
anticipating about the outcomes of the strategies implemented by the management of
organisation. The competitive position of the organisation is assimilated by its ability to perform
efficiently in differentiated ways. The purpose of strategic capability is to deliver the mission
directly from the company's strategy. In order to sustain in present dynamic and competitive
environment it is essential and important for the management of business organisation to have
robust strategic capabilities. This will prosper the growth and development of the organisation
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Illustration 2: Ansoff's Matrix (Source : Ansoff's matrix, 2016)

and ultimately the management of company will be able to accomplish their desire goals and
objectives. In short, strategic capabilities refers to the ability of the organisation to perform high
level so that it can survive in market.
Strategic capabilities using VRIO model
Strategic capabilities is the ability of business for meeting competitive strategies which
helps them in sustaining and increasing their effectiveness and value. Strategic capability focus
on taking most significant strategic decisions and manage the organisation's resources, assets and
market position. A business strategic capability is very important and significant factor which
help a business to remain financially sound and effective despite the existence of various
competitors. The strategic capability can be referred to the procedure of using business
resources, assets, skills and abilities in most appropriate manner which can support the
achievement of business goals and objectives.
Application of VRIO model for analysing Vodafone's strategic capabilities
The VRIO model is a highly effective framework or approach which assist to analyse
various internal capabilities of a business or organisation. In order to determine Vodafone's
internal strategic capabilities VRIO model is applied and describes as below -
1. Value – There are many kinds of resources which are utilized by Vodafone's
management for example human resources, physical resources, Technological resource
and financial resources. The resources utilized by Vodafone are huge valuable which
assists them in obtaining competitive advantages. The mobile telecommunication market
is booming in United Kingdom, and various new businesses or organizations that are
emerging in the business environment. The management of Vodafone requires utilizing
valuable resources for sustaining competitive advantages.
2. Rareness – The mobile telecommunication market is growing with a high rate therefore
it is not easy to develop rarity of the resources utilized by the management of Vodafone,
According to the diagnosis of the business, it can be determined that it is very difficult
that the management uses their own technological resources and patent information that
assists them to obtain competitive advantages within the market. There are many
mechanical and technological resources which are used by Vodafone as well as its
competitors such as BT, Giff Gaff and O2.
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3. Imitability – Vodafone's management generally uses the resources and information
which can not be copied or imitated by any other companies or organizations. The
adequate manpower and robust infrastructure allows the organisation to sustain within the
highly competitive environment in United Kingdom (Padmanabhan, 2018).
4. Organized – The Vodafone's management exploits its resources in an effective and
efficient way which can support in sustaining within the market with intense competition.
Each and every resources within the business or organization are important to be
managed and organized with a suitable manner in order to provide competitive advantage
to the organisation.
Strength and weaknesses of Vodafone
1. Strengths – Vodafone is globally expanding its business and has achieved a huge
customer base. Its advance network help to provide a high quality network to its
customers, it has developed brand recognition and a strong workforce working in various
offices all around the world.
2. Weaknesses – The major weakness of Vodafone is its reducing subscribers within United
States, UK and Europe. The company also faced a great challenge in India due to
different network issues, other weaknesses includes increased competition, Increased cost
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and decline in brand value due to increased number of substitutes in the market. These
weaknesses negatively affect the overall growth and development of the company.
Strengths Weaknesses
 Diversified Business
 World's second largest
telecommunication service provider
 Tremendous Customer Base
 Big staff support
 Formulated and advanced network
 Strong Brand recognition
 Poor economic state in Europe.
 Stiff competition
 Decreasing subscriber rates in UK
 Decreasing brand valuation
TASK 3
P.3 Competitiveness of UK's telecommunication sector by using Porter's Five Force model
This is one of the most important part to improve current market sector to increase
overall development in future conditions of organisation. In telecommunication sector is to be
used some model to improve current market performance as per the need of overall development
of competitive market. With the help of Porter's Five Force model increase number of customer
and profitability must increase in overall development in work place. This is a tool to analyse the
level of competition in market share. In this context, different factor must be inculcated in
Porter's Five Force models are as follows : Bargaining power of buyers(High) : In this context, consumer power is high due to the
increase in number of service provides with respect to telecommunication sector.
Consumers have a wide range of options and choices available which enables them to
switch organisation or service provides as per their wish and need. Due to the high
bargaining power of the buyers' organisation needs to focus developing new strategies for
attracting or retaining customers in the market. Vodafone requires devising their pricing
and organisation strategies as well focus on proving high quality network to the
customers.
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 Bargaining Power of suppliers (Low) -The suppliers are known as resource providers for
a company or organisation. Telecommunication companies such as Vodafone collaborate
with significant suppliers in order to avoid any barriers within the supply chain of the
business. The resources are necessary to develop a product or service which can be
offered to customers in order to fulfil their demands or needs. Telecommunication sector
not get much affected by suppliers but they need to maintain good relationship with them
so that the companies can enhance or expand their services within the market (Gans,
2017). Threat of new entrants (Moderate) -Due to the Brexit referendum threats of new entrants
has become moderate in United Kingdom. The telecommunication industry is growing
rapidly with regards to development in technology, increase in consumers, agile
government legislations and stable political conditions. There are huge number of
organisation which are entering into the telecommunication sector to earn profit and
revenue. Vodafone needs to develop competitive strategies to sustain in the industry, the
main leaders of telecommunication sector in UK are Gaff, Giff and BT. Threats of Substitutes (Low) – Threats of substitutes are comparatively low within
telecom industry, due to similar services like internet, communication, networks etc the
companies can not offer any other innovative service to their customers therefore this
force has minimum impact on the telecommunication companies such as Vodafone. The
management of Vodafone can create new websites, application and provide discounts to
the customers for attracting them and avoiding threats of substitutes (Yuliansyah, Gurd
and Mohamed, 2017).
 Rivalry within the market (High) – The competition in the global market is very high in
each and every industry or business. Due to increase in the number of customers various
new organisations or companies are entering into the market. This is increasing the
rivalry or competition within the market, every company or organisation is focusing on
increasing their sales, customer base and profit. Various organisations such as Giff, Gaff,
02 etc are giving a tough competition to Vodafone, in order to sustain in the market the
company needs to make appropriate changes in their organisational strategies, pricing and
quality of products.
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TASK 4
P4 Strategic directions and alternatives for Vodafone
There are various forces that affect the strategic direction as well as functioning of
Vodafone as identified by using Porter's five forces analysis. It is essential for the company to
focus on the managing and controlling these factors for gaining competitive advantages as well
as easily achieve the organization's goals. It is very difficult to obtain competitive advantages in
present market condition due to huge number of competitors. The Strategic direction of
Vodafone can be determined as below -
1. Cost Leadership - In this system, associations focuses around cost by diminishing the
cost of products and administrations keeping in mind the end goal to increase upper
hands. With this procedure, the goal of association is to wind up most minimal cost
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Illustration 3: Porter's five forces
(Source: Porter's five forces on Vodafone, 2017)

maker in the business. Cost initiative technique requires close collaboration between all
the practical regions of a business. (Olson and et.al., 2018).
2. Product Differentiation: Product Differentiation procedure is the technique used by the
associations where they give expanded products at premium cost to the clients. With
separation authority, the business targets substantially bigger markets and expects to
accomplish upper hand through separation over the entire of an industry. Here the
administration offers diverse sort of products to fragmented clients at premium value
which takes care of all the expense acquired in the advancement of product.
3. Cost and Product differentiation: This is most effective technique proposed by Porter.
In this the administration need to adjust both cost and product keeping in mind the end
goal to increase most extreme upper hand inside the business.
According to the discussion above it can be observed that the management of Vodafone
needs to consider its strategic direction and manage its strategies to achieve growth and
development in the market. The best option for Vodafone is to focus cost and product
differentiation to enhance its customer base which further support in increase profitability of the
company.
Bowman's Strategic clock model
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Illustration 4: Bowman's strategic clock model

1. Low cost and Low value– This is position isn't much aggressive for a business or
association such as Vodafone. The product isn't distributed and the customer sees little an
incentive in spite of a low cost.
2. Low Price – Organizations such as Vodafone are locating themselves at this situation to
be the minimal effort leaders inside a commercial focus. Adopting low price strategy can
help Vodafone to attract more customers.
3. Hybrid – This position incorporates some component of low cost and in addition some
separation in the products. The goal of this position is to demonstrate clients that there is
great esteem included through the mixture of adequate product separation and sensible
cost.
4. Differentiation – The point of separation position is to offer the most elevated amount of
apparent included esteem. Product quality and marking assumes a vital part in this
system.
5. Focused Differentiation – This method focus on situating a product at the most elevated
value levels, where customers buy the products because of high saw esteem.
6. Risky high margins – This is a situating process with high hazard that can prompt
disappointment in the end. The Vodafone can set high costs without offering anything
additional identified with apparent value.
7. Monopoly Pricing – There is just a single association offering the products in an
imposing business model market.
8. Loss of market share – This position incorporates a standard cost or focus range cost for a
product with low apparent esteem is probably not going to prevail upon numerous clients
who may have better alternatives or decisions.
CONCLUSION
The above report concluded that telecommunication is one of the fastest growing industry
in the world or global market. Vodafone has successfully achieved a leading position in the
industry by effective strategic management and business techniques. The report identified
various external factors and internal factors' which affect the business operations of the company
such as political factors, competition in the market, new entrants etc. The report included Pestle
and Porter;s five forces tools to determined the factors in micro and macro environment.
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Furthermore, The report included strategic direction of Vodafone which can support it to achieve
competitive advantages and increase its profit in the global market.
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REFERENCES
Books and Journals
Olson, E.M., Slater, S.F., Hult, G.T.M. and Olson, K.M., 2018. The application of human
resource management policies within the marketing organization: The impact on
business and marketing strategy implementation. Industrial Marketing Management, 69,
pp.62-73.
Gans, J., 2017. Editorial Statement—Business Strategy.Management Science, 63(11), pp.iv-iv.
Padmanabhan, V., 2018. Functional Strategy Implementation-Experimental Study on Agile
KANBAN. Sumedha Journal of Management, 7(2), pp.6-17.
Halpern, N., 2018. Airport business strategy. The Routledge Companion to Air Transport
Management, p.154.
Moseley III, G.B., 2017. Managing Health Care Business Strategy. Jones & Bartlett Learning.
Alghazi, A., Li, M., Shen, J. and Fosso Wamba, S., 2017. Aligning Business Strategy with IT
Strategy from Business Model to Enterprise in Saudi Arabia Public Sector.
Munandar, A., 2017. The Business Strategy and Management of Tourism Development for the
Growth of Tourist Visits.International Journal of Economic Perspectives, 11(1),
pp.1764-1774.
Yuliansyah, Y., Gurd, B. and Mohamed, N., 2017. The significant of business strategy in
improving organizational performance. Humanomics, 33(1), pp.56-74.
Pestle analysis – Vodafone, 2017 [Online]. Available through:<
http://marketingdawn.com/pestle-analysis-of-vodafone/>
Porter's five forces on Vodafone, 2017 [Online]. Available
through:<https://writepass.com/journal/2012/09/vodafone-group-plc-swot-analysis-and-porters-
five-forces/>
Ansoff's matrix, 2016 [Online]. Available through:< https://www.mbaskool.com/business-
concepts/marketing-and-strategy-terms/2550-ansoff-matrix.html>
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