Analyzing Macro Environment and Strategic Management Decisions of Vodafone

This report analyzes the macro environment and its influence on strategic management decisions of Vodafone. It also evaluates the internal environment and capabilities of the organization. The report includes a SWOT analysis and discusses growth options for Vodafone.

Business strategy
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TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................4
TASK 1............................................................................................................................................4
Analysing the way macro environment and the way it determines Vodafone strategic
management decisions............................................................................................................4
TASK 2............................................................................................................................................8
Critically evaluating the organisation internal environment and its capabilities...................8
TASK 3..........................................................................................................................................11
Devising some appropriate strategies for improving the companies competitive edge in the
market...................................................................................................................................11
TASK 4..........................................................................................................................................13
Producing a strategic management plan for an organisation................................................13
CONCLUSION..............................................................................................................................14
REFERENCES..............................................................................................................................15
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INTRODUCTION
Business strategy is defined as a plan which is created by manger in an organisation for
achieving the set goals and objectives. In other term, it can also refer to as long term planning.
The objective of business strategy is to set overall objectives for company and create a plan for
achieving the target. Formulation of strategy, assist in smooth functioning of business. Strategic
planning has great importance in services sector such telecommunication industry. An effective
strategic plans supports n organization in delivering quality services to customers. Strategic
planning also helps firm in gaining competitive advantage. It helps an enterprise in providing
inappropriate response to changes in business environment.
The report will include critical analysis of macro environment. It will have focus on
determining the changes in external factors influence management decisions. There will various
models such as PESTLE and SWOT analysis will be used for addressing the changes which
might takes place internally or externally.
TASK 1
Analysing the way macro environment and the way it determines Vodafone strategic
management decisions.
Vodafone is a British multinational company which has its headquarter in London. Business
entity has achieved fourth position in context of number of customers. An organisation has its
own networks in more than 25 countries. Vodafone company provides both telecommunication
as well as It related services in 150 countries.
Mission, Vision and Objectives of Vodafone company.
Missions: Vodafone mission is to deliver high value to its customers. It also intends to provide
high return to shareholders. The mission of an organisation is to enhance lives of customers by
providing them unique power of mobile communication services. Business entity mission is to
gain customer loyalty.
Vision: The vision of an enterprise is to achieve leadership position in telecommunication
industry.
Objectives: primary objective of Vodafone is to earn high profit. Other purpose of an enterprise
is to expand business operations globally.
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Definition of strategy
Strategy can be defined as plan of action which is designed to achieve long term business
goals or objectives. It can also refer to as direction set for an organisation to accomplish desired
state in the future. Manager in Critically evaluating the organisation internal environment and its
capabilities (Grant and et.al., 2014 ). Manager in Vodafone organization should formulate an
effective strategy as this will assist them in dealing with uncertain situations.
Role of strategy to achieve business objectives:
Strategies plays crucial role in driving firm towards achievement of desired objectives.
An effective strategy supports business entity in eliminating the barriers which might occur in
accomplishing desired targets. It helps in identifying the activities which are required to be
executed in order to achieve desired targets. Planning of strategy also assist management in
determining the amount of resources which will be required for executing various activities. It
also helps in ensuring proper utilisation of resources.
The characteristics of strategic decizions , directions of your chosen
company.
The important characteristics is that all the decisions are made by the manager
considering the market as well as changes in external factors in business environment. Strategic
decisions taken by the management has assisted an organisation in improving performance.
Companies strategic objectives are clean, an organisation intends to cater the needs of customers.
Strategic approach of company is completed based on the to issues like privacy and content
builds trust and grows our customer base in mature markets. In addition to this, This strategy is
based on our assessment of the key CR-related opportunities and risks for business.
Different strategic planning techniques
Strategic planning can be defined as a procedure of establishing mission, objectives and
then formulating as well as implementing strategies to achieve desired targets. Strategic
planning techniques supports management in making suitable business decisions. The different
types of strategic planning tools and techniques are:
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Market research: It is defined as procedure of accumulating information about specific market
such as demands of customers, presence of competitors etc. Manager in Vodafone company
should execute research at regular interval of time, as this strategy will assist business entity in
exploring the growth opportunities. It will also help organisation in providing high level of
satisfaction tri customer (Heyden Kavadis and Neuman, 2017). Utilisation of technique will
assist manager in an organisation in taking decisions related to product development.
Cost benefit analysis: it is considered to be as decision making tool which is used by manager
in an enterprise for assessing the costs as well as benefits associated with taking specific actions.
The purpose of this analysis is to support management in selecting an appropriate course of
action. It is required by manager in Vodafone company to use this tool for assessing the cost or
benefit associated with selecting particular project for investment’s this technique will support
business entity in gaining high rate of return on investment.
1. PESTLE analysis: It is considered to be as effective techniques which is used by an
organisation for analysing the way different factor in internal and external environment
influence strategic plan. Manager in Vodafone should conduct PESTLE analysis, as this
activity will assist company in making an appropriate plan for dealing with changes.
2. Political factors: It includes rules and regulation, political situation in the country etc.
Changes in political factors have direct effect on the decision made by top level
management in a company. For instance, Brexit has negative effect on telecom industry.
Political parties have restricted the exports which has led to decline in sales and
profitability of companies operating in telecom sector. This factor has great effect on the
business strategy and expansion plan. Analysis of Changes in political factor has
encouraged manager in Vodafone to identify new ways of increasing sales as well as
profitability in domestic market.
3. Economic factors: Changes in the economic factors such as exchange rate, increase in
tax rate, inflation in process of products or services have direct influence on the
management decisions. It is required by manager in Vodafone to keep update themselves
with such types of changes in economic components, as this will assist management in
making an appropriate decision. Analysis of Changes in this variables supports
management in determining the new ways through which new sources of revenue can be
generated or profitability can be increased.
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4. Social factors: It includes changes in trends, taste and preference of customers in the
market. Manger in Vodafone should require to have knowledge about such types of
changes, as this strategy will support management in making an appropriate decision
related to product development. Social changes have direct as well as significant
influence on product planning and also on other operational decisions as well as
activities. Analysis of changes in this factor will support Vodafone in identifying the
target market as well as customer group (Dayan, Heisi and Matos, 2017).
5. Technological factors: This is considered to be as supporting variable which assist an
organisation in improving quality of products and enables business entity to deliver
additional services to customers. It is required by manager in Vodafone company to take
decision related to embraced smartphone app development, as this strategy will help firm
in gaining competitive advantage in the market.
6. Legal factors: Changes in laws and regulations has direct as well as significant effect on
human resource management decisions and practices. Changes in employment law helps
management in determining the salaries and wages of workers.
7. Environmental factors: It include climate change, increase in competition in an industry
etc. This factors have direct effect on business plan and strategies adopted by
management for dealing with intense competition. It also supports management in
identifying the level of competition.
Business Growth options:
Ansoff’s growth vector matrix: It is considered to be as an effective strategy which can
be used by manager in Vodafone company for exploring growth opportunities. Ansoff’s growth
vector matrix helps management in determining the marketing strategy which an enterprise must
use to foster growth. It profits firm a road map which will help business entity in fostering
growth (Leonidou and et.al., 2017). There are mainly four strategies which can be used by
Vodafone company these are:
Market penetration: This strategy is adopted by an organisation for promoting existing goods
or services in new way. Market penetration strategy involves low risk. This strategy has been
suggested to Vodafone as it will help business entity in increasing market share. It will also help
an organisation in improving promotional activities.
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Market development: By utilising this strategy, Vodafone can enter into new marking with its
existing products or services. It is required by manager in Vodafone to align an organisation core
competency with products rather than the markets.
Product development: This strategy can be used by Vodafone for launching new products or
services in existing market. It is considered to be as an effective strategy for attracting new
customers.
Diversification: Vodafone can use this strategy for launching innovative product or services in
new market. This strategy involves high risk.
 Show results for example: impact, market share, profitability,
what do customers value most, market share of the company in
the market industry.
Vodafone has capture approx., 21 percent of market share. Change in the legislations
have great effect on the business of Vodafone. In addition to this , environmental variables have
great influence on the services provided by Vodafone. Business entity in Indian market has
generated profit of approx. 9805 crorer During the financial year 2017-2018. In addition to
this,Vodafone India with 211 million and Idea Cellular with 196.2 million users will become the
largest telecom operator when they officially combine their operations in 2018. Employees are
dedicated towards their work and they are provided training related to the way they should
behave with clients.
TASK 2
Critically evaluating the organisation internal environment and its capabilities.
Strategic capabilities
1. VRIN analysis: It is considered to be as an effective tool which can be used for analysing
the internal capabilities of an organisation. Internal capabilities are required for dealing
with competitions and providing an appropriate response to changes in external
environment.
Value; Vodafone company have limited, valuable as well an expensive resource which
has enabled business entity to exploit an environmental opportunity. These valuable
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resources have supported an organization in reducing the negative effect of changes in
external factors on business operations (Raghunath and Rose, 2017).
Rarity: As the Vodafone has expensive resources, it is not rare, as most of its
competitors have same resources. All the resources used by Vodafone are imported from
other countries. Resources used by Vodafone of high quality a unique.
Imitability: Resources used by Vodafone has assisted firm in gaining the cost advantage.
It has helped enterprise in bringing improvement in quality of products and services. These
resources have enabled business entity to produce innovative products and helped an
organization in delivering high value as well as satisfaction to customer in their market.
Financial resources: Vodafone raise financial resources by selling its own securities.
Business entity can also raise funds from external sources, as they have good brand name and
credit rating in the market.
Physical assets: Example of these types of resources are building, plants, equipment and
machineries. As Vodafone company is operating business at international level, business
entity has offices and retail outlets at different locations. Vodafone is considered to be as one
of the largest mobile operators in the world, as firm has 263,400 mobile base stations.
Intangible resources:
Human resource: Vodafone main objective is to provide high level of satisfaction to its
employees. An organist ion offers development opportunities to all its workers. Human resource
management in Vodafone consists of highly talented and skilled employees.
Brand: Vodafone company has valuable brand name. Company has been successful in generating
brad awareness both domestically and globally.
Vodafone has been successful in reducing the cost of operations. The
standardization strategy has assisted an organization in minimizing the cost and ensuring
an effective as well as efficient utilization of resources. Vodafone in order to reduce cost
has entered into different infrastructure sharing contracts with other organization
operating in same industry, as this strategy will support business an enterprise in
minimizing cost (Madsen and Walker, 2015). Business entity is adopting technology for
increasing working efficiency. In addition to this Vodafone company has innovation
skills which has enabled an enterprise to differentiate their product or services from that
of competitors. Innovation strategy has helped Vodafone in achieving leading position
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and helped company in gaining competitive advantage in the market (Rai, 2018.).
Successful Launch of the mobile money transfer solution has enabled business entity to
become market leader.
2. Swot analysis: It is considered to be an effective tool which can be used by manager for
analyzing the strength, weakness, opportunities and threats.
Strengths:
Wide market coverage: Vodafone company
has wide distribution network. Business
entity has been ranked as second largest
telecom operator. An organist ion operates
business in more than 25 countries.
Marketing: Vodafone has adopted the unique
marketing strategy which has assisted
business entity in differentiating themselves
from competitors.
Subscriber base: Vodafone has wide
customer base. An effective business
strategy has supported firm in retaining their
profitable customers.
Strong network: Vodafone provides high
quality voice call and data network to its
customers. An organization has more than
two lakh sixty thousand base stations
worldwide. Company also utilizes latest
technology which has assisted firm in
improving efficiency of networks.
Weaknesses:
Decrease in customer base: This is major
problem which is faced by Vodafone that
has negative effect on firm, business
performance.
Poor performance in Europe: The major
reason for an organist ion poor
performance in Europe is Brexit and
unfavorable economic condition of nation.
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Opportunities:
An organization has an opportunity to enter
into new market.
Vodafone can launch 4G network.
Business entity has an opportunity to
improve network coverage. As this strategy
will assist an organization in attracting more
number of customers.
Investment opportunities: company can
make large scale investment in ion
improving network infrastructure.
As business entity has good financial
performance and brand image company can
adopt acquisition strategy for expanding
business.
Threats:
Increase in competition: this factor has
significant impact on the profit margin of
company.
In telecommunication industry Mobile
number portability is the now the biggest
threat. Introduction of new plans at low
cost might lead to the decrease in customer
base of Vodafone company.
TASK 3
Devising some appropriate strategies for improving the companies competitive edge in the
market
Porters five forces model: It is considered to be as an effective tool which assist
management in analysing effectiveness of an industry in which company is operating. Porter five
force model also helps an organisation in analysing the way the different variables can affect
their profitability. Development of understanding about the components which might effect
business performance is important in context of developing an appropriate plan. In addition to
this porters five forces model also assists management in identifying suitable ways of gaining
competitive advantage in the market (Lasserre, 2017).
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Figure 1:Porters five force model
(Source: Porter’s Five Forces, 2016)
Threat of new entrant: As telecommunication is not big, small or big companies can
easily enter into market with innovative products or services. The launch of new products or
services by new companies can have negative effect in the sales and profitability of Vodafone. It
is required by Vodafone to adopt the low cost pricing strategy as this will help business entity in
reducing this threat. It required by Vodafone to make investment in research and development.
Vodafone should use its innovation skills for developing new product, s this strategy will help an
organisation in gaining competitive advantage in the market (Lee and Bach, 2017). It will also
support an organisation in attracting more number of customers. Competition is considered to be
as good for an organisation , as it encourages facilitating innovation.
Threat of rivalries among existing firm: There is intense competition in
telecommunication industry. The decrease in prices by rivalries firm can have negative effect on
profit margins of Vodafone. As business entity is operating business worldwide, Vodafone has to
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face intense competition from both domestic as well as international corporations. By building a
sustainable differentiation can reduce the impact of competition on its business operations. The
positive effect of this threat is that it positively influences an organization to bring improvement
in business system as well as procedure.
Threat of substitute: threat of substitute is high in telecom industry. Business entity need
to concentrate in delivering high value proposition, as this tactic will support firm in maintaining
its position in an industry. This strategy will also support an enterprise in making itself different
from competitors. It is required by Vodafone to adopt the service oriented approach (Fontana,
Sastre-Merino and Baca, 2017). This factor encourages firm to concentrate on the quality of
products as well as services.
Bargaining power of buyers: Companies and an individual are the two types of
customers those who buys products or services offered by firms in telecom sector. Bargaining
power of customers is largely based on switching cost which is further dependent on the nation
in which an individual is residing. Buying power of an individual customer is low. In addition to
this, bargaining power of corporate buyer is high (Jain and Ahuja, 2017). Losing a single
corporate buyer might have great as well as negative effect on sales as well as profitability of
company.
It is required by Vodafone company to concentrate on quality of products, as this strategy
will assist an enterprise in reducing bargaining power of customers. As people are ready to pay
high prices for good or premium quality products.
Bargaining power of suppliers: There has been decrease in the bargaining power of
suppliers. The negotiation power of Vodafone has strengthened by its centralized strategic
procurement unit. By building efficient supply chain with multiple supplier, Vodafone can
reduce this threat and can gain competitive advantage.
Mergers and Aquisitions
Vodafone has merged with Idea both telcos decided to merge themselves after their
existence was threatened by the newcomer Reliance Jio. Both companies are planning to to
change their positioning strategy for attracting more customers. In addition to this, Vodafone has
successfully acquire Kabel Deutschland for 7.7 billion Euros . In addition to this, an organisation
also has acquired Mannesmann in Germany for a record figure of £112bn.
Stakeholder analysis
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Stakeholder analysis is defined as the procedure of assessing system as well as changes.it
is considered to be as an important technique which assist management in identifying the key
stakeholders and their needs. It is very important for Vodafone to concentrate on fulfilling the
need of their employees as they are important stakeholders those who will drive firm towards
success and growth. Investors are also important people who will help an organisation in
expanding business. Both employees and investors are interested in knowing the revenue earned
by the company in specific financial year (Huang Huang and Hsieh,, 2017). As investors
decisions related to the continuity of investment is highly influenced by the financial
performance of an organisation. Customer are crucial for business, as it helps an enterprise in
generating profitability. It is required by Vodafone company to concentrate on meeting the
expectation of employees and to provide high level of satisfaction to customers, as this strategy
will assist organisation in increasing sustainability.
TASK 4
Producing a strategic management plan for an organisation
Applying porter’s generic strategies
Cost and price leadership: Vodafone can use this strategy as this will help an enterprise
in gaining competitive advantage. Business entity by offering products or services at low cost
can attract customers. This strategy will help an enterprise in increasing sales and profitability. It
is required by company to adopt the latest technology, as this strategy will support firm in
reducing the cost and will enable them to deliver products or service at lower price to customers.
Differentiation strategy: this strategy will help firm in gaining competitive advantage.
Vodafone is planning to develop new products such as new mobile application. It is also
planning to deliver unique combination of services to its customers.
Hybrid strategies: Vodafone company is planning for launching an IPTV service based
around a hybrid set-top box in Germany and Spain. Companies IPTV offering will lie on top of
this in the form of linear channels and video-on-demand. By adopting the hybrid strategy an
organization can enter into new market (Barman and Sengupta, 2017). This strategy will also
support an enterprise in reducing the effect of competition on its business performance.
Diversification: Vodafone company is planning to diversify its product line. An
organisation is planning to explore new fields such as IT and mobile payment. The purpose of an
organisation is top foster market growth.
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Vertical integration: Vodafone is planning to expand business operations in following
industries these are: hardware, telecoms, software and analytics, and professional services.
Business entity is planning to form strategic partnership with companies operating in these
sector, as this will help firm in gaining competitive advantage.
Bowman’s Strategies.
management plans and give some examples of
tangible./tactical/strategic priorities/objective that the firm has chosen
for the next 1, 2 years or more.
Hybrid strategy : Vodafone company is planning to launch hybrid set box mainly in
two market these are Germany and Spain. It is considered to be as Vodafone TV service
strategy.By introducing services oriented around a hybrid STB, Vodafone can enter a market
without the need to compete directly with incumbent operators. As this strategy will assist an
enterprise in expanding their broadband business.
Segment specific : Vodafone is planning to offer products or service to mass market,
specially to those customers group those who don't have children.
Cost leader :As per this strategy, Vodafone has planned to offer services at low cost to
only specific market segment. This strategy will assist an organisation in gaining competitive
advantage.
CONCLUSION
It has been concluded from the report that changes in internal as well as external factors
have direct and great influence on business operations. Study has also concluded that strategy act
as road map which supports an organization in accomplishing business goals and objectives. It
has been concluded from assignment is that strategic planning is important for smooth
functioning of business. Report has also concluded that innovation strategy can assist firm in
gaining the competitive advantage in the market. In addition to this, it has been concluded that
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valuable and huge amount of resources are required for formulating as well as implementing
strategies. Product and market development is considered to be an effective strategy which can
be used by an enterprise for fostering growth.
Some strategies have been suggested which can be used by an organization, as it will
assist business entity in improving competitive edge.
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