Vodafone PESTLE Analysis and Strategic Recommendations

The assignment includes a PESTLE analysis of Vodafone based on the macro environmental factors in the UK. It employs Ansoff's model to assess the level of competitiveness in the mobile telecommunication industry in the UK. The VRIN framework is used to understand Vodafone's strategic capabilities, and its strengths and weaknesses are critically presented. Additionally, Porter's five forces model and Bowman's strategy clock model are implemented to provide a comprehensive view of Vodafone's strategic situation.

BUSINESS STRATEGY
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Table of Contents
Introduction......................................................................................................................................3
Task 1: The external environment...................................................................................................4
i. PESTLE analysis......................................................................................................................4
ii. Ansoff’s Growth vector matrix to analyse the strategic position of Vodafone.......................6
Task 2: The internal environment and organizational capabilities................................................10
i. Meaning of strategic capabilities............................................................................................10
ii. Determining the capabilities through VRIO/VRIN...............................................................10
iii. Strengths and weaknesses of the organization.....................................................................12
Task 3: Analysing the telecommunication sector..........................................................................14
Task 4: Understanding and interpreting strategic direction...........................................................16
Bowman’s Strategy clock model for analyzing the direction and options available.....................16
Conclusion.....................................................................................................................................18
References......................................................................................................................................19
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Introduction
The assignment includes the analysis of the of the different types of tools that are used for the
analysis of the different macro environmental factors, internal factors and others that is evident
to determine the business strategies which are developed by the marketing and the other
departments of the organisation. The competitive market of mobile telecommunication of UK
has been chosen in relation to the analysis of the significance of business strategy that again
influences the success story of any organisation. The organisation that is chosen for this purpose
includes the Vodafone telecommunication organisation based in UK.
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Task 1: The external environment
i. PESTLE analysis
The Pestle analysis is an analytical framework that help in the identification of the identification
of the external macro factors which are impacts the growth and sustainability of any
organisation. It is very important to keep the business strategy well aligned with that of the
external factors in order to achieve the most potentiality through the implication of the business
strategy that is evident to provide success to the organisation.
Political: The political factors includes the political suitability and suitability of the business to
the mobile telecommunication industry. This is because the re persist no as such big and
affecting issues regarding the ruling party or any other type that will impact the business of
Vodafone (Le, 2017). The phenomenon of Brexit took place that lead to the changes in the
governmental legislation which is has brought some changes in terms of legal and economic
condition but no issues as such affecting to Vodafone is found. However, it is important to
consider that the organisational policies and regulations must be well aligned with that of the
several trade regulations in UK.
Economical: This is one of the most important factor that determines execution o the operations
of any organisation as well as provides the necessary support which is crucial for the growth of
the organisation. The economic condition is well supportive of the mobile telecommunication
industry in UK which is why a considerable growth has been found in this industry. However,
there are other factors that have changed which impacts the sustainability of the organisation.
These include the changes in the foreign exchange rate, the changes in rate of inflation after
Brexit. Moreover, after the Brexit, there have changes in the regulations of trade as well which
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ha economically affected the telecommunication industry (Le, 2017). However, the impact is not
very high and the expected growth rate of this industry by the financial year 2020 is expected to
be even more developed. The rate of interest in the banks have been rising but it is not very high.
It is the reason that the sustainability of the organisation prevails in terms of economic factors.
Social: The social factors impacts in any business in terms of influencing the purchase intention
of the consumer of the products and services of organisation. The lifestyle, income pattern are
the factors that are well supportive of the telecommunication industry in UK. This is because the
telecommunication industry serves the purpose of connecting people irrespective of happy or sad
phases. Moreover, no cases of any kind of socially negative activity has been found that can
affect the business of Vodafone or the whole telecommunication industry within UK (Le, 2017).
Technological: The use of technology in the telecommunication industry is the competitive
factors that need to be achieved by every organisation. The more the organisation in
telecommunication industry is innovative and capable of providing high level of quality services
through the employment of technology the more the organisation dominates the
telecommunication industry. Since, UK is developed country the expectation of Vodafone in
terms of the use of technology based services that are must be competitive in relation to the
industry. The huge competition is based on the technological aspects hat externally influences
any organisation and Vodafone is no exception (Atsuet al. 2014).
Legal: This is yet another factor that has to be considered by the organisation while planning the
business strategies for the organisation. The regulations regarding the employment , import
export, workplace safety, Data protection of the consumers has to be considered in order to
avoid the legal issues that is external and threatening not on to the bushiness growth but to the
sustainability of the organisation as well. After Brexit, amendments have been evident in
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legislation and legal system of the organisation that has facilitate changes in the business world
as well (Atsuet al. 2014). As per the changes the organisation needs to go for the improvisations
within the organisational policies and business relations as well.
Environmental: The environmental awareness has led to yet another impacting external factors
which mandates that the business operations of the companies and the organisations has to be
equipped in relation to minimize or reduce the execution of the operations that may impact the
environment of the country or globally. There are different regulations and standards set by the
UK government which has to be followed by the telecommunication industry since, the operation
may affect the environment (Atsuet al. 2014). These have to be standardized within the
organisation so that the company does not face any challenge which is potential of marrying the
reputation of the organisation as well.
ii. Ansoff’s Growth vector matrix to analyse the strategic position of Vodafone
In order to analyse the strategic position of the Vodafone, the Ansoff’s Growth matrix is
employed for the identification of the different ways through which the organisation is going to
identify the growth factors as per which the marketing department of the organisation can device
new plans in relation to the four factors of growth. The following factors are presented hereafter
in terms and table and further analysed:
Existing product New product
Existing market Market Penetration Product development
New market Market Development Diversification
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Table 1: Ansoff’s Growth Matrix
(Sources: Created by author)
Market penetration: This particular channel of growth strategy includes the promotion and
delivery of existing products or services within the already existing market. This is how market
penetration is possible. The strategies that is crucial for market penetration includes the
following:
● Pricing strategy that makes the use of the service of Vodafone accessible to all.
● Integration with the services and offers with the leading mobile brands
● Promotion of the existing services through mew marketing strategies.
● More coverage of the high speed network in more locations including rural areas
(Zeschkyet al. 2014)
Product Development: This includes the devising of new products by the marketing department
of the organisation but it is marketed in the existing market. This is referred to as the product
development strategy of organisation. The product development strategy of Vodafone includes
the following:
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● The first and foremost strategy that is crucial for the growth of the organisation includes
the introduction of 4G connection and service provider in which the organisation
pioneered in UK.
● The organisation has to offer convenience in recharging and payment that are hassle free
like that of online payments (Zeschkyet al. 2014)
● Smart connection gadgets or services is introduced that is crucial for product
development which may include 4G station mobile, Wi-Fi and others
● Developing new mobile applications that enhances the customers’ satisfaction in using
the service. For instance, NFRC and others if any.
● Integrating the services and the various newly developed routes is yet another factor that
are remarkable product development (Zeschkyet al. 2014).
Market Development: The market development is done through the introduction of the existing
products that is introduced in the new market where the products or services were not marketed
earlier. The factors that are crucial for the market development of the organisation includes the
following:
● The locations in UK that are yet deprived of internet connection like the rural locations of
UK. This is going to be a potential market of the organisation.
● The existing products like that of the Vodafone Web box, M-Peda must be introduced to
the new markets where these are not available or not provided by any other organisation
(Bonelli, 2017).
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● Identification of the new locations that are potential markets in the developing countries
where telecommunication is still not well developed
● Making various browsers available for the organisation
Diversification: This growth strategy includes the development of new products and launching
them in the new market as well. This is known as diversification which is considered as very
risky growth strategy but potential of benefits as well. The following growth strategies are
remarkable diversification strategies:
● Diversification in different types of services other communication. This may include
internet services from device to device, smart metering, mobile apps and others.
● Merging with the new launching mobile phones for the sale of the services in new
markets must be done as well (Bonelli, 2017).
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Task 2: The internal environment and organizational capabilities
i. Meaning of strategic capabilities
The capability of any organisation in executing the competitive strategies that are crucial for the
growth as well as survival of the particular organisation is referred to as the strategic capabilities
of any company. This again refers to the managerial capability of the managers of the
organisation in efficiently utilising the resources of the company with the aim to achieve the
marketing objectives that are competitive (Kuruczet al. 2017). The strategic capabilities of any
organisation is highly crucial for maintaining the financial viability of the company in spite of
the active presence of the competitors within the market. The strategic capability of any
organisation is referred to by the investors before investing and the employees as well in order to
identify the stability of the company (Kuruczet al. 2017).
ii. Determining the capabilities through VRIO/VRIN
The VRIN/VRIO framework is employed here in order to evaluate the potentiality of the
resources of Vodafone UK that will help in the anticipation of the potential growth of the
organisation as per which business strategies can be developed.
● Value: If the resources are capable of bringing the competitive advantage, then it is
valuable resource to the organisation. The value of Vodafone is thus presented through
the framework.
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● Rareness: This indicates that if the resource are easily available within the market then
there is no rareness of the services of Vodafone which is again evaluated through the
following framework (Chatzoglouet al. 2017)
● Imitability: The resources of the organisation that cannot be easily imitated by the
competitors is a significant resource of the company (Chatzoglouet al. 2017).
● Non-suitability: The Resource of the organisation that cannot be substituted by the
competitors owing to its uniqueness is known as the non-suitability resource.
Value Rare Costly to
imitate
Organised Competitive
advantage
Brand Yes Yes Yes Yes Sustained
competitive
advantage
Financial
base
Yes No Yes Yes Temporary
competitive
advantage
Human
resource
Yes No No Yes Unused
competitive
advantage
Table 2: VRIO framework application of Vodafone (UK)
(Sources: Self-created)
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From the above framework, it is clear that competitive advantage of the organisation is moderate
with performance indicator of the company being above normal. This reveals that the
competitive edge of the organisation is considerably satisfactory however, this counts for the
more diversification in order to gain competitive advantage. Sustained level of competition is
derived from brand. Financial base exhibits temporary competitive advantage because it is not
rare but costly to imitate. Human resource exerts unused level of competition because it is
neither rare nor costly to imitate.
iii. Strengths and weaknesses of the organization
In order to know about the strength and weakness of Vodafone Company it's very important to
conduct a SWOT analysis of the company which dictates its strength and weakness as well as
future opportunities and threat which are available to the company. The Swot Analysis of the
company are as follows:
Strength
● High end technology
● Diversified range of revenue and
global presence
Weakness
● Market competition
● Workforce up gradation
Opportunity
● To grow in underdeveloped and
developing countries
● To increase operational size of the
company through introduction inew
Threat
● Threat of new entrant
● Technological obsolescence
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market segment
Strength: Vodafone PLC is one of the most upgraded and technologically advanced companies
in the global telecommunication market. The company is well developed in sense of technology
and has a high-end technology that gives the company an edge over other in the market. The
company also has diversified range of presence in the global market that ensures that the
company’s revenue is diversified and is collected through different sources of income. It can be
said that the company has huge market capital that shows the financial size of the firm in the UK
market.
Weakness: The Company has huge rivals in the market with companies like O2, Three UK and
EE Limited that have huge market presence and divide the consumer base in the country. It can
be said that as the company has huge competition this decreases the profit of the firm and divides
the consumer base. On the other hand, it can be said that the workforce of the company is a bit in
efficient to cope up with present of future consumer demand that can affect the operational
activities of the firm. Although it can be said, that up gradation of workforce will help the
company to achieve sustainable growth in near future (Elias et al. 2018).
Opportunity: The company is also doing well in terms of its current operation hence their future
opportunity which awaits the company to develop a better future. One of them was the growth of
the country in some underdeveloped country as well developing countries like countries in
Africa. The other opportunity that the company has is expanding in phone manufacturing market
that will enhance the division of the revenue generated by the company in an annual year.
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Threat: The threat of new entrant in the market prevails over the firm as this will divide the
market share of the firm and will attract consumer of the firm through attractive deals which can
affect the revenue and profitability of the firm. The second threat that is over the company is that
technology is being upgraded every now and then hence there are chances that the company face
technical obsolescence in its near future.
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Task 3: Analysing the telecommunication sector
Porter’s Five-force model is one of the most significant models that a company can use for their
operation. It can be said that through use of this the Telecommunication industry and market of
UK can be analyzed to see the significance of Vodafone in the market. The Porter Five Force
Analysis will be discussed below to shred light of industry in which Vodafone is working in.
Rivalry or competition: As it can be said that Vodafone has huge competitors in the market that
have the capacity to gain competitive advantage and dominate the market in near future. It can be
said that companies like O2, EE limited and Three UK are companies that can dominate the
market through effect strategies. It can be said that Rivalry in the market is high and there are
new competitors that will enter the market that will have a detrimental effects on the market
share of the company. This can affect the company's operation and the consumer base of the
company in the market. This shows that competition of the industry is high are there are rivals
which look to overtake each other in the market.
Bargain Power of buyer: Through the analysis of the country's telecommunication market it
can be said that Bargain Power of Buyer is high in the market. The cost derivation and
differentiation is also high which affects the buying intention of the consumers in the market. As
it can be said that there are many companies in the market the consumer decides on which
company is able to fulfil their satisfaction the highest based on which purchase is done.
Therefore, there is a option of choice of the better in this market which increase the bargain
power of the buyers in the market. It can be said that as the buyer bargain power is high the
companies have to formulate the market strategies based on consumer demands and expectation
which agent increases the competition in the market. It can also be said that buyers are huge in
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the market hence they have major impact on the approach of companies in the market to attract
customer by setting lower prices and rendering high quality services (Stamford, 2015).
Bargain Power of suppliers: The bargain power supplier in the market is low as there are low
number of companies and high rate of suppliers which positive sign for the company efficient
operation. The supplier are in huge number in the country which render product and services at
different cost so the company has option to choose the best supplier in the market which again is
in the benefit of the company. It can also be said that through effective use of this choosing
option the company can choose supplier that sell product at lower rates and have good quality
products as this will decrease the operational cost of the firm and will increase the profitability of
the firm.
Threat of new entrant: As the telecommunication market in the country is very diversifies there
is always a chance of new entrant in the market. Although the the chances of this are low as the
company is already dominated by some firm which will motivate companies for investing in this
sector (Kuruczet al. 2017). This the reason why the threat of new entrant in the sector is low but
there is always a possibility of new entrant that may divide the market share and consumer of
existing companies from the market.
Threat of substitute product and services: There are low chances that people would stop use
telecommunication medium as they render all type of service needed for daily user. So the threat
of substitute in terms of product and services are not likely to affect the existing industry in the
market. Telecommunication industry has low risk of subsist as there are now technology which
can replace the following the near future.
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Task 4: Understanding and interpreting strategic direction
Bowman’s Strategy clock model for analyzing the direction and options available
Figure 1: Bowman's Strategy clock
(Source: Stamford, 2015)
Bowman's Strategy model for is process through which a company can design its marketing
strategy to analyze its current competitive status in comparison to other competitors. The image
above is shows the relationship between consumers value and price of the product which core
bedrock based on which the follow models is setup. The model mainly defines that there three
ways in which a company can compete in the market and render service to customer satisfaction
in better price than the competitors (Kuruczet al. 2017). In the case of Vodafone the current
position of the company is that it is one of the world largest telecommunication company and is
well established in European as well as UK market. It can be said that that as seen in the
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PESTLE, SWOT and five forces analysis it has been very evident that currently there are very
less negative trait that will tend to affect the operational activities of the business.
Therefore, in the near future of the company it should be said that it should to look to expand in
every aspect of their activities. It should expand in the market in underdeveloped and developing
countries(Gujarathi and Comerford, 2016). It should increase their financial size by increase
profitability and decrease cost. It can be said that as the company has huge market capital it
should consider to invest the following capital in various aspect of the company's operation so as
to develop their workforce which will help the company to achieve future success and
sustainable development of the company in the near future. It can also be said that the company
should be cost leader in the market through the use of effective pricing strategies which increases
the affordability of the company's products and services. It can also be said that through use of
effective technology the company will be able increase their market shares and the consumer
base of the firm.
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Conclusion
The assignment will include the PESTLE analysis of the company based on the macro
environmental factors of UK. Further, Ansoff’s model will be employed in order to have clear
view of the level of competitiveness within the mobile telecommunication industry of UK.
Understanding the strategic capabilities of the organisation has been done through the
employment of the VRIN framework on the company. The strengths and the weaknesses of
Vodafone have critically presented within this assignment as well so as to get a clear view of the
capability and potentialities of the organisation as per which the business strategies will be taken.
The Porter’s five forces model is yet another tool that is employed here. Finally, the Bowman’s
strategy clock model has been implemented within the assignment based on the organisation.
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References
Atsu, F., Agyei, C., PhanuelDarbi, W. and Adjei-Mensah, S., 2014. The impact of
telecommunication revenue on economic growth: evidence from Ghana. African Journal of
Economic and Management Studies, 5(2), pp.195-208.
Bonelli, M., 2017. Leadership Within Strategic Management: Measuring Corporate Equity
Value Using Igor Ansoff's Strategic Posture Analysis (Doctoral dissertation, Alliant International
University).
Chatzoglou, P.D., Chatzoudes, D., Sarigiannidis, L. and Theriou, G., 2017. The role of firm-
specific factors in the strategy-performance relationship: revisiting the resource-based view of
the firm and the VRIO framework. Management Research Review, (just-accepted), pp.00-00.
Elias, J., Martignon, F., Mangili, M. and Capone, A., 2018, April. Optimal Planning of Virtual
Mobile Networks. In IEEE Wireless Communications and Networking Conference (WCNC
2018) (pp. 1-6).
Gujarathi, M.R. and Comerford, D.R., 2016. Acquisition of Hutchison Essar (India) by Vodafone
(UK): A Case in International Taxation of Indirect Transfer of Shares. Issues in Accounting
Education, 32(2), pp.83-93.
Kurucz, E.C., Colbert, B.A., Luedeke-Freund, F., Upward, A. and Willard, B., 2017. Relational
leadership for strategic sustainability: practices and capabilities to advance the design and
assessment of sustainable business models. Journal of cleaner production, 140, pp.189-204.
Le, Q.A.N., 2017. Master of Business Administration.
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