Analyzing the Impact of Macro Environment on Vodafone's Business Strategy

This report analyzes the impact of macro environment on Vodafone's business strategy using appropriate frameworks like PESTLE analysis, McKinsey 7S Model, and Porter's Five Forces model. It also includes a SWOT analysis and stakeholder analysis of the company. The report provides insights into the internal and external environment factors of Vodafone that can affect the business and its strategies.

Business
Strategy

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
P1 : Applying appropriate frameworks analyse the impact and influence of the macro
environment on a given organisation and its strategies..............................................................1
P2 : Analyse the internal environment and capabilities of a given organisation using
appropriate frameworks..............................................................................................................5
P3 : Applying Porter’s Five Forces model evaluate the competitive forces of a given market
sector for an organisation............................................................................................................7
P4 : Applying a range of theories, concepts and models, interpret and devise strategic
planning for a given organisation................................................................................................8
Strategic Management Plan.......................................................................................................10
CONCLUSION..............................................................................................................................11
References:.....................................................................................................................................12

INTRODUCTION
Business strategy plan is an essential part of the business growth. It refers to process of
defining organisation's vision and identify the organisation's future goals and objectives. It
require a good research and analysation of the business environment internally as well as
externally. It generally specifies the mid term goal of the organisation with a span of three to five
years (Abd, Abbas and Khudair, 2019). With a good business strategic plan, an organisation can
grow and expand faster. A business plan can be modified or changed during the process
considering the changing trends and changing environment. This report is made on the context of
Vodafone company which is an leading technology communication company, headquartered in
Newbury, United Kingdom. This report includes internal and external environment factors of the
organisation which can affect the business and impact of macro environment on the company
and company's strategies (Agwu, 2018).
MAIN BODY
P1 : Applying appropriate frameworks analyse the impact and influence of the macro
environment on a given organisation and its strategies.
PESTLE analysis is the the framework or set of tools used by companies or organisations
to examine or analyse macro environment in which a company commences its business.
Political Factors – These factors refers to the political or government interference in the
business operations of an organisation. Many global companies wants to stay out of the politics
but Vodafone Company actively takes part in the government meetings and important groups.
Company have their relations with the European Round table of Industrialists (ERT) and also
involved in taxation policies in Italy. Government interference has been increased as the telecom
industry also have grown from past few years. Vodafone is also facing pressure due to the
increased government control (Antipov and et. al., 2019).
Economic Factors – These are the factors related to the finance of an organisation.
Vodafone company has global presence and contribute its share in the world economy. Demand
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for data and mobile services has grown tremendously in the relevant industry but also new
players has came into the market which is also a threat to the company (Barbosa, Castañeda-
Ayarza and Ferreira, 2020). Brexit has also created many problems for the Vodafone company in
the UK markets. Sales of the company has also affected from the recent years.
Social Factors – Many large and small companies understood the socio cultural factors
as it also important for the business. Habits and preferences of the customers has changed due to
the changing trends and lifestyles. People are shifting towards more online work which is a great
opportunity for the company to avail. Also people are spending a lot of time on the
entertainment. Vodafone should analyse these parts and develop a plan to compete and grow in
the market.
Technological Factors – Technological factors refers to the advanced technology used
by the company. Many companies are providing various facilities to their customers. Vodafone
is also using digital technology and offer various facilities to their customers. Company has
launched their app and website on which their customers can easily access to the range of
services provided by the company. Company is also using digital platforms for promotion and
branding.
Legal Factors – These factors refers to the interference of law and rules in the operations
of a business of an organisation. Vodafone company operates in many countries which makes it
difficult for the company to abide by the rules and regulations of every country. Taxation
policies of every country makes it difficult for the Vodafone company to grow in the market of
such countries. Countries have made law enforcement agencies which sees the functions of
companies which are operating in the relevant countries market.
Environmental Factors – These factors plays an important role because changing
environment can be a threat as well as opportunity for an organisation. Vodafone company wants
to achieve sustainability in the organisation for which company has taken various steps such as
company reuses and recycles electronic waste which is made because of the business operations.
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Also company has an excellent management systems to place and manage its waste and also
manages its water consumption (BERTEA and et. al., 2021).
Stakeholder Analysis (Power Interest Grid)
It is a technique to identify the important people who have interest or influence in the
organisation. People with high power are important and by their support an organisation can
achieve its objectives (Bhattacharyya, 2020). These are divided into following parts -
 High power, High interest – It includes board of directors of the Vodafone company
which have the authority to make any decision related to the success of the company.
They have huge impact on the operations of the company.
 High power, Low interest – These people are referred as working employees of the
Vodafone company and have a great influence and high power as they are the person who
is running the company but they have low interest because they are not interested in
company's growth. They care about personal satisfaction only.
 Low power, High interest – It includes Vodafone company's customers who do not have
much influence and power in the decision making and business operations of the
company. But they have high interest in the company as they are using the services and
products of the company and company's growth results in better facilities for the
customers.
 Low power, Low interest – It includes government and media as they do not have much
interest in the business operations and growth of the company. They are not also the
people related to the business.
SWOT Analysis
SWOT Analysis examines both internal and external environment and analyse the
favourable and unfavourable conditions and helps to prepare a strategy for the future
(Chugumbaev and et. al., 2020).
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Strengths
 Brand equity plays an important role in
for business and Vodafone have a strong
brand name across the world and gained
customer's trust in the field of telecom
industry.
 Vodafone company offers a large
variety of products and services like
mobile and fixed service to their
customers. Company operates in many
countries mainly in Asia Pacific and
Europe.
Weakness
 Vodafone largely focuses on
technological innovation, despite that
fact Vodafone sales has been affected
due to the decline in its customers.
Also competition has grown in the
industry and new players entered in the
market.
 Vodafone is loosing its position in the
UK markets despite the fact of strong
brand name and technological
infrastructure which have an adverse
effect on the company.
Opportunities
 Digital marketing is nowadays very
popular and effective way of growing
faster. Vodafone can take help of this
facility to grow and overcome in the
required areas.
 Technological innovations are must in
telecom industry. Many companies are
innovating new products and services to
capture the market and make their name
in the market. Vodafone should invest in
this area in order to grow and increase
their market share.
Threats
 The biggest threat to the Vodafone
company is the increased competition
in the telecom industry. Various
companies have entered in the market
and cutting the market share of the
company. Company should focus on to
grow their customer base and market
share.
 Another threat for the company is high
level of rules and regulations in the
telecom industry. It is the main
problem in the way of the growth of a
company. It also results in driving up
the operational cost mainly for big
brands like Vodafone.
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P2 : Analyse the internal environment and capabilities of a given organisation using appropriate
frameworks.
McKinsey 7S Model
This model refers to a tool which analyses the different factors related to the design of an
organisation. It shows the way of achieving effectiveness through seven key elements (Ebrahimi
and et. al., 2020).
 Structure – Vodafone should focus on their structure as pandemics like Covid – 19
should not affect the structure and company's supply chain. Company should pre[are
itself for the future uncertainties and should not rely on the existing suppliers. They
should make and improve supply chains geographically to avoid climate, geopolitical and
other uncertainties.
 Strategy – Strategy making is a key element for the growth of the organisation.
Customer needs value for money products from Vodafone company. Company should
focus on making strategy related to the savings of cost. By decreasing the costs of the
products and services, company can enjoy healthy profits by also giving high quality of
products and services to the customers. Vodafone company can also focus on better
delivery or giving of services as it is a main factor of their business.
 Systems – Company can focus on different systems such as risk management. It is an
necessary part of the business systems for maintaining the smooth flow of business and
remain for longer period of time. Also company should focus on the customer
relationship management, so customers can get a great and smooth experience of solving
their problems (Falqueto and et. al., 2020).
 Skills – Skills is an important requirement of the employees working in an organisation.
Organisations focus on developing and improving the skills of their employees for the
better efficiency and productivity. Vodafone should build a training program for their
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employees to guide the employees in skill development. Company can also hire new and
creative talent as they will bring new ideas and methods of working.
 Style – Vodafone uses democratic style of leadership in which every group member's
thoughts and strategies are considered in making the decisions. Vodafone should also
focus on the facility of work from home for employees in order to attain the efficiency in
the business.
 Staff – Nowadays companies are focusing on digital interactions for employees
interactions and meetings. Vodafone company should also focus on the digital platforms
for better interactions between the employees even from different cities.
 Shared Values – Vodafone company is focusing on making the environment of the
business moire sustainable and have taken a lot of different steps for the sustainable
development such as reuse and recycling of electronic waste. Investors and top level
managements are also taking care of making sustainability in the organisation.
VRIO Analysis:-
VRIO analysis is a framework to analyse a company's valuable resources that may not be
available to its existing competitors in the market which gives the organisation a competitive
advantage over other organisations. In reference with Vodafone, it has a lot of resources that they
avail which is harder for other competitors to access them allowing Vodafone a competitive
advantage over others.
VRIO Analysis:-
Resources Valuable Rare Imitable Organisation
Employees Yes No No Yes
Patents Yes Yes Yes Yes
Distribution
Network
Yes Yes Yes Yes
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 Valuable :- Valuables refers to the important needs or something which is precious for
the organisation. In the context of Vodafone company, many of its resources are
valuable such as its highly skilled employees, patents and licensees distribution network
etc. as they are the important factors for the smooth flow of the operations and company's
growth.
 Rare :- It refers to the availability of the resources of the company whether the resources
are easily accessible to the organisation's competition or it is difficult for them to avail
the resources. Resources like patents and distribution channel is rare and important for
the Vodafone company and can not be easily available to use for the competitors.
 Imitable :- It refers to the rare resources of a company and whether these resources are
accessible easily by the company's competitors or it is difficult for them to access the
resources. In Vodafone company resources like patents and distribution network is
imitable while employees are not imitable.
 Organisation :- It refers to internal environment of the business organisation. It means
how a business operates and structure by which an organisation can achieve success and
make a competitive advantage.
P3 : Applying Porter’s Five Forces model evaluate the competitive forces of a given market
sector for an organisation.
Porter's Five Forces :- Porter's five forces is a strategic model to analyse a company's
competitive environment in the industry. In reference with Vodafone, the firm's five forces
model is discussed below as:-
1. Threat of new entrants :- Entry of new players in an industry can cause difficulties for
the existing players as they will have something unique (USP) in their business which
will attract the existing customers of a particular organisation or existing competitors. In
case of Vodafone company, threat from new entrants is low as Vodafone is well
established company operating in many countries and have the knowledge of the
industry and experience which will make it difficult for the new players to give
competition to the company (Fonseca, Abreu and Silvestre, 2021).
2. Threat of substitutes :- Vodafone company offers many products and services like
internet facility, mobile phones which do not have any substitute as these are needs in
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today's generation. So threat from substitutes is low. However, there are many other
companies which are providing same facilities which can be threat for the company.
3. Bargaining power of customers :- It refers to the power of the customers to influence
the prices of a company's products and services. Bargaining power of the customers of
the Vodafone company is high as there is minimal switching costs in the relevant
industry. Also the customers can change their service provider operator without
changing the contact number which gives a great flexibility to the customers.
4. Power of suppliers :- It refers to the power of suppliers in order to change the prices of
raw materials. In context of the Vodafone company bargaining power of the suppliers is
moderate because company does not depend on some suppliers they have a number of
suppliers for raw materials in different countries which makes an excellent supply chain
of the company and suppliers can not dominate the company.
5. Competitive Rivalry :- There are many similar companies which are providing same
facilities in telecom industry. So the competition for Vodafone company is higher
because of the high competition among the competitors. As the switching cost for the
customers is also minimum which makes it more difficult for the company to retain their
market share in the industry.
P4 : Applying a range of theories, concepts and models, interpret and devise strategic planning
for a given organisation.
Porter's Generic Strategies :- This is a framework used by the companies to analyse
how they follow a competitive advantage over other rivalry firms existing in respective industry.
Herein Vodafone, the Porter's generic strategy model is discussed below as:-
 Cost Leadership : This strategy is related to the operating cost related to the product of
the organization in which organisation focuses on reducing the costs of the product to
create an advantage over the other competition in the industry and also it can enjoy the
healthy profits as well. Vodafone company should focus on their cost of the products and
research on reducing the costs of the product which will directly help the company in
financial gain.
 Differentiation Strategy : This strategy focuses on to differentiate its product from other
competitors in order to attract more customers to the firm. It is an important aspect for the
company to make an edge over the competitors and also attracts new customers which is
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an essential for a company in order to grow. Vodafone company should introduce some
new high quality products and services with an excellent customer satisfaction. Vodafone
is operating in multiple countries so they can also make and improve their supply chains
for smooth flow of business (Halachmi , 2019).
 Cost Focus : This strategy identifies on to focus on cost of products that are being
offered in focused market segment. In context to Vodafone, company should focus on
cost leadership strategy to make an excellent impact on the customers as well as in the
market.
 Differentiation Focus : This strategy refers to the differentiating the products of an
organisation's products from the competitors. Vodafone company should make strategies
related to product differentiation or make their existing chains more stable and strong.
Bowman's Strategy Clock :- It refers to a tool which is used for the analysation of
organisation's position in the industry. Bowman's strategy clock of the Vodafone company is -
1. Low price and low added value :- Vodafone company can use this strategy in order to
attract more customers by setting the prices of products and services low and offering
moderate or low value in the product or service.
2. Low Price :- It refers to decreasing the prices of the product or service which will help
in gaining the customers as well as retaining the existing customers. Vodafone is an well
known brand and popular in certain markets and by adopting this strategy they can
increase their market share.
3. Hybrid :- It involves the giving value added products and decreasing their operating
costs to recover the loss caused due to High value added product. Vodafone can also use
this strategy to capture the market.
4. Differentiation :- This strategy is based on differentiating products or services offered
by an organisation from other competitors. In context to Vodafone company can set an
innovative way to interact with their customers having problems.
5. Focused Differentiation :- This strategy is generally used for high quality products by
which an organisation can boost their profits (Kryvych and Goncharenko, 2021).
6. Risky high margin :- This technique can have an adverse effect on the Vodafone
company as it provides value for money products to their customers.
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7. Monopoly Pricing :- This strategy is not suitable for Vodafone company as telecom
industry does not allow any company to enjoy monopoly as this industry have many
companies competing and Vodafone is one of them.
8. Loss of market share :- This strategy means to charge higher prices for the products
they offer that don't stand up to customer's value. In reference with Vodafone, adopting
this strategy may not prove helpful to organisation as this may charge the firm with loss
of market share (Phillips and Moutinho, 2018).
Strategic Management Plan
 Background - Vodafone is a leading telecommunication company which was established
in 1982 in Newbury of United Kingdom. At present, company is operating at more than
22 countries with a partner network in 48 different countries. Company operates in Asia,
Africa, Europe and Oceania.
 Organisation structure - Vodafone company follows the Matrix type of structure in
which there are more than one manager who is supervising and managing the department
or group of employees. It results in the better productivity and high quality of work done
by the employees in the set time period.
 Vision - The vision of the Vodafone company is “ To be the new generation connectivity
and digital services provider. ”
 Mission - The mission statement of the company is “ To connect for a better future and
our expertise and scale gives us a unique opportunity to drive positive charge for society”
 Marketing mix -
◦ Product - Vodafone offers different products and telecommunication services
different countries. Services of Vodafone company includes voice and messaging
services, internet services and value added services. Company offer products such as
phones of Vodafone brands, handsets, SIM cards etc.
◦ Price – Vodafone has set their prices with the view of competitors as there is so much
competition in this telecom industry so the company has set competitive prices for
their products and services.
◦ Place – Vodafone company operates in more than 22 countries and having their
partnership in many countries. Companies services are available on both online
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platforms such as website and app and offline platforms such as customer care and
outlets.
◦ Promotion – Company uses digital platforms for their marketing and brand building.
Company also uses social media marketing and influencing for promotion of their
services and products.
 Strategy formulation – Company should focus on the cost leadership strategy in which
company should focus on the decreasing the cost of their existing product to gain more
healthy products while giving quality services to their customers.
 Implementation - Vodafone company can use advanced machineries and technologies
for decreasing their operating cost. Also company should use the waste material for
further use for the cost savings.
 Evaluation – Company will use Key Performance Indicator (KPI) for measuring the
company's performance.
CONCLUSION
It can be concluded from the above report that business strategic plan is very important in
order to the business growth. Macro environment of the business organisation heavily impacts
and influence the organisation and also its strategies. Porter's five forces model is an important
framework for analysing the different competitive forces in a market of an organisation. A
successful business plan needs to be proper research and experience. There is a various methods
and range of theories to analyse the market and make a excellent business strategic plan.
Business plan is basically the way or roadmap to achieve the goals and objectives which are
created by the organisation.
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References:
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