PESTLE Model for Environmental Analysis of Vodafone

BUSINESS STRATEGY

Table of Contents
INTRODUCTION...........................................................................................................................1
Task 1...............................................................................................................................................1
i. PESTLE model for environmental analysis........................................................................1
ii. Ansoff's growth vector matrix-..........................................................................................3
Task 2...............................................................................................................................................6
i. VRIN/VRIO Model:............................................................................................................6
ii. Strength and weakness:......................................................................................................8
TASK 3 .........................................................................................................................................10
Analysing the telecommunication sector by using different models of analysis.................10
TASK 4..........................................................................................................................................13
Understanding and interpreting strategic direction..............................................................13
CONCLUSION..............................................................................................................................16
REFERENCES..............................................................................................................................17

INTRODUCTION
Business strategy is defined as the high-level plan of firm for reaching business
objectives. It is the master plan of the management used to secure a competitive position in
market, carries its operations for achieve the desired ends of the business (Akter and et.al., 2016).
This is a set of competitive moves and actions that use by business to attract customers, compete
successfully and achieve organizational goals. Present study is based on the “Vodafone” which is
a public limited company that is founded on 16 September 1991 in London. It is the
telecommunication industry and its products includes mobile phones, broadband digital
television etc. Vodafone owns and operate networks in 25 countries and has partner network in
47 further countries. This study lays emphasis on the analysis of external and internal
environment and its affect to strategic management decision of the organization. Report will also
highlight the tools and models to improve the competitive edge in market. It will also understand
and interpret strategic direction.
Task 1
i. PESTLE model for environmental analysis
Pestle Analysis
A pestle is a framework or tool which is used by the marketer to analysis the macro
environmental factor which is affected to business. It is an acronym of the various factors such as
political, economic, social, technological, environmental and legal factor.
Pestle analysis on Vodafone telecom company
Vodafone is one of the best telecom company in the world. It made place of enterprise at
the global level. As it is global company, there are various factors which need to be considered to
determine the success rate of the company (Adhikari, 2017.).
Political factor
This factor plays a significant role in determining the factor that can impact to Vodafone.
This factor includes risk of military invasion, intellectual property protection, wages legislation
and taxation. For example: if government increase the tax rate. That is affect to Vodafone
negativity. Then company have to pay extra tax amount. In that case, extra amount of tax affect
to net profit of company. Moreover, any government intervention through legislation that affect
market of Vodafone. But if tax rates are reduced by government then it can lay positive impact
on companies' growth and extension.
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Economical factor
The macro environment factor such as inflation rate, saving rate, interest rate and foreign
exchange rate. Macro environment factors such as competition impact the competitive advantage
of the Vodafone. Economic condition of country always affects to the business. For example: the
GDP of country means that the people has good income and will more in adapting the latest
technology. GDP rate increase gives positive impact on the Vodafone. In that case overall profit
of the company increased and help stable position in the marketplace.
Social factor
Social factor also affects to the Vodafone such as changing in work patterns, test of
customer, style etc. for example: if customer go with Vodafone, suddenly they change their
brand by any other company. That is not got for growth of the company. It gives negative effect
on the company. That affect to profit of Vodafone. Thus, the social factor also affects to the
brand as well s its product. If firm is engaged in not understanding the social values of
consumer's or employees then it can lay negative impact on there growth.
Technological factor
Technology also affect to the company specially to telecommunication sector. A
technological innovation in communication and emergence of alternative means of
communication such as online etc. for example: new technology come into the market.
Customers want that in their product. In that case Vodafone has to do some changes according to
the new technology and make innovative product for the customer. Meanwhile, this factor also
affects to the Vodafone. It also affects in positive way by new technology uses by Vodafone that
means customer attract towards the company. This good for the Vodafone. If company is not
making use of advancing technology then it can lay negative impact on companies' growth.
Environmental factor
Different market has different norms or environmental standard which can impact the
profitability of the organization in market. Some factors of environmental factor that is weather,
climate change and recycling etc. For example: weather is not same every time. In that case,
Vodafone has to maintain the market and expend the network. That give positive effect on the
company and Customer attract towards it. Meanwhile, it’s give negative impact on the Vodafone
weather condition not good in that customer faces problem about network. (Doulgeroglou,
2015).
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Legal factor
Legal factors are effect to the business. Legal factors such as the copyright, patent and
employment law etc. for example: legal issues like copy and other pirated issues. State has
blames the Vodafone for the legal issues pertaining of infrastructure. In this case company faces
many penalties. That affect to negatively. Whereas, Vodafone should always stay by the legal
issues of the domain in order to increase the customer and to maintain a positive image in the
market which is help to gain trust of the customer. That is good for the Vodafone.
ii. Ansoff's growth vector matrix-
Ansoff's Matrix tool is strategic planning tool which deliver a framework to help
executives, senior managers, and marketers design tactics for future development (Buckley and
Ghauri, 2015). It is named after Russian American Igor Ansoff, the one who created the theory.
Ansoff's matrix provides four different strategies of growth: Market development, Market
penetration, Diversification and Product development.
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 Market Development- In this strategy the company tries to explore into new markets
sections (geographies, countries etc.) by targeting its existing products.
 Market Penetration- In market penetration strategy the company attempts to grow in
terms of products and services in existing market segments (Chang, 2016). It attempts to
enhance the market share within existing market segments in current market outline.
 Product development- In product development strategy the company try to design new
product and services for customers intended to attain growth in existing market
segments.
 Diversification- Diversification strategy enhance by enlarging its business by
introducing new offerings in market. It is a high-risk strategy because both the product
and service enhancement is mandatory.
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Illustration 1: Ansoff's Matrix
(Source: ANSOFF'S Model, 2017)

Market penetration strategy is used by Vodafone. It is an effective strategy for develop
their planning and company. When This strategy is accomplished by company then it grows its
customers and establishing itself as industry lead. Product development works along with market
development support to provide the products that will attain the company objectives (Dawes,
2018). Every market penetration strategy has its advantage and disadvantages. During the
procedure of market development strategy company should make effective marketing strategies
for develop their product value in the market (Echchakoui, 2018). This strategy attracts the new
customers while on other side shows that it is highly expensive. Analysing the cost of
distribution technique will help to decide whether the strategy should be carried out or not. e.g.
one idea to distribute the information is through email marketing. Through the market
penetration strategy company can rise their customer and improve their productivity in the
market.
With this strategy company promote their product through internet which is proficient
through recommendations and by social media networks like twitter, Facebook, YouTube ads.
This strategy is help to develop their product fast and also help to improve productivity. This
can be attained by selling more products and services to existing customers along with by finding
new customers. The company seeks for expanded sales for existing products through promoting
and distributing the products. It is good strategy to develop product bust for that company have
to make effective strategy. That is less risky as it leverages the capabilities and existing resources
of company. When company enters the new market it is important for the company to use market
penetration strategy to efficiently use its product introduce the market as soon as possible and
acquire huge amount of market share. Its good is that it measures to decide whether the company
product or service is able to acquire the fix amount of percentage in market share. Meanwhile,
company not make effective presentation strategy, then they face problem. Frequently the
production of products becomes expensive for company while trying to lower the production of
and cost of the product (Echchakoui, 2018). It becomes complicated while competing with other
big companies. Under such conditions it will be difficult to focus on product packaging, market
campaign and public image. This strategy can be turn in advantage of the company if the
company focus more on definite customers instead of specific products. It’s good for that it can
influence company by introducing new product targeting the existing customers. It helps to
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Minimise the risk of loss, if one investment execution fails then there are other investments
which may perform good (Eyvrigh, 2016). It helps inn reaching long-term financial objectives
minimizing the risk of loss. Its most risky strategy among all four strategies of Ansoff's matrix as
it requires both the market and product enhancement.
Thus, Vodafone uses the market penetration strategy for develop their product in the
market. It is effective and good for the company to improve their productivity and profit.
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