Importance of PESTEL Analysis for Vodafone Plc

This report discusses the governance and structure of Vodafone Plc, the importance of conducting PESTEL analysis for the organization, and the application of PESTEL framework to analyze the external environment. It highlights the political, economic, social, technological, environmental, and legal factors that impact Vodafone's business operations.

BUSINESS
ENVIRONMENT

Executive Summary
The below mentioned report is based on Vodafone Plc. The report is divided into 3
sections. The analysis of first section implies that the chairman of the company assumes the main
responsibility of which activity needs to be executed and how. Further, the Board members take
crucial decisions for the company. The second section reveals that PESTEL analysis is a cost
effective and useful framework that helps the organisation in gaining knowledge about its
external environment. The last section of the report demonstrates that every external factor holds
opportunities alongside threats that need to be duly taken into consideration by the organisation.

Table of Contents
Executive Summary.........................................................................................................................2
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
Examine how your chosen company is governed and structured...........................................1
TASK 2............................................................................................................................................3
Evaluate the importance of carrying out PESTEL analysis for an organisation....................3
TASK 3............................................................................................................................................4
Use the PESTEL framework to analyse the external environment of your chosen company.4
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................7

INTRODUCTION
Business environment is the composite of internal and external factors which have an
impact over the manner in which an organisation carries out its business operations at market
place. Looking upon the turbulent and hyper competitive business environment, it becomes
important for businesses to constantly analyse and review the corporate landscape. This provides
due assistance in identification of potential opportunities and threats that can affect the
functioning of an organisation. This holds immense significance for the development of effectual
promotional and marketing strategies. The current project is based upon Vodafone Plc which is a
multinational corporation operating within the bounds of telecommunication sector (Becht,
Franks and Wagner, 2019). The project consists of information about the organisational structure
along with the way in which the company is governed. In addition to this, the report
encompasses the importance of PESTEL analysis in accordance with the business growth. At
last, the PESTEL analysis of the organisation is carried out in a comprehensive manner.
TASK 1
Examine how your chosen company is governed and structured.
Vodafone Plc is as of now managing business operations in telecommunication sector to
gain higher profits. The registered office of this organisation is based within Newbury,
Berkshire, England. On the other hand, the worldwide headquarter of this company lies within
London, England. This multinational corporation was established during 1982 via Gerry Whent
along with Ernest Harrison. It comes under the Top 5 companies internationally which are
operating within the telecommunication industry. As per the information accessible, it was
discovered that organization works within 25 distinctive countries where it acts as a networking
accomplice for 45 diverse countries (Kerr and Moloney, 2019). In accordance with the analysis
of past, this entity has developed itself at an extraordinary speed where they have worked in the
field of most recent market for radio innovation in the field of military. The historical backdrop
of this organization shows that it comes up with innovations and new technologies at rapid
intervals of time in order to give a boost to the technological market of the country. At whatever
point any of the associations is required to outperform the rivals prevailing within the bounds of
same sector, it should guarantee that the organisational structure and the governance framework
is suitable to meet the objectives and goal set by the corporation at the beginning of the time.
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Structure
Vodafone Plc follows matrix structure where reporting of all the activities is done to
diverse hierarchical heads. This organisational structure allows the enterprise to make
compelling choices and recoup any of the difficulties being encountered by the business
association. (Kleiousis and et. al., 2019) The matrix structure provides assistance in setting
effective coordination and collaboration between the departments. It enables the different
departments of the respective telecommunication company to communicate in an effective
manner. With the help of matrix structure, Vodafone Plc is able to make sure that the corporate
goal is duly achieved in a timely manner.
Governance
In the present time, The Companies Act guides and governs the operations of a company
operating within the market place. Apart from this, there are mainly 11 directors in the Board
composition of Vodafone Plc. All of these directors take active part in taking decisions for the
welfare of the company. The directors are mainly categorised as non executive and executive. In
relation to the executive directors, it can be said that these are the directors who manage every
single activity of the business (Molino, 2019). On the other hand, non executive directors are the
ones that do not actively take part in the affairs of the corporation. At the present time, there are
2 executive and 9 non executive directors belonging to the Board of Vodafone Plc (Armour and
et. al., 2017).
Within an organisation, the management of activities and the decision when and how an
activity would be done is taken by the chairperson. The roles and responsibilities held by the
chairperson within an organisation provide assistance in ensuring that the organisational goals
are achieved in a timely manner. Gerard Kleisterlee is the current Chairperson of Vodafone Plc
who was appointed at the respective designation on 26th of July in the year 2011 (Becht, Franks
and Wagner, 2019).
Via the Nominations and Governance Committee, the composition of the Board is kept
under review. In the time period of last 12 months, several changes have been made to the Board
inclusive of the appointment of Nick Read as Chief Executive and Margherita Della Valle as
Chief Financial Officer. The promotion of Nick and Margherita reflects the commitment of
Vodafone Plc to succession planning in concern with all the senior positions in the bounds of the
respective company (van der Enden and Klein, 2020). The NonExecutive Director after thorough
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screening was appointed in the form of Sanjiv Ahuja during November of 2018. he brought
relevant experience within the telecommunication sector as he worked in corporations such as
Telcordia and Orange Plc (Durana, 2020). The respective telecommunications company has been
committed to possessing a Board which is diverse in all terms. The organisation set the target of
having 33% females in the Board by the end of the year 2020, the target has already been
achieved by the entity.
TASK 2
Evaluate the importance of carrying out PESTEL analysis for an organisation
Pestle analysis is acknowledged as a prominent framework that is used by the business
managers to evaluate the external macro environment (SHTAL and et. al., 2018). The respective
framework is effectively used to find out possible threats which could affect the business so that
they can be easily eliminated within the available period of time. Usage of this framework is
supportive for the company in acknowledging current performance of the company so that
appropriate measures towards its improvement could be done in rightful manner. The respective
framework is mainly used when business entity is going for new venture into the new
marketplace. PESTLE analysis mainly includes 6 main factors which stand for Political,
Economic, Social, Technological, Environmental and Legal . Here, Vodafone PLC has made use
of PESTLE analysis in order to check out all the phases of project such as idea generation,
introduction of new product and services, demand of the core marketing strategies as well as
other different stages. Along with this, it can be further said that by conducting effective
PESTLE analysis Vodafone Plc can easily enhance its scope of success while introducing its
business in the new area.
Importance of PESTEL analysis for an organisation
Importance of Pestle analysis can be seen for Vodafone in several ways. The main among
them are specified as below in detailed manner:-
Cost Effectiveness: Pestle analysis is acknowledged as the cost effective framework
because only requires appropriate amount of time rather than the monetary value. Thus, if any
manner if the company invest more time in conducting the framework then it would not develop
any sort of financial trouble for the company (Christodoulou and Cullinane, 2019). In context of
Vodafone, it can be later said that the respective manager of the company conducts PESTEL
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analysis several times but in order to save their they emphasizes on indulging to into the effective
planning process so that things could get executed within the available period of time without
any error.
In-depth understanding: Incorporation of this framework helps entity in developing in
depth knowledge on the external environment along with this core influence over the company’s
performance. Also, usage of PESTEL analysis helps company in executing their all work within
the legal parameters (Çitilci and Akbalık, 2020). Moreover, it also contributes in making use of
the latest technologies which further contributes in gaining competitive edge effectively. Here, it
can be said taht usage of PESTEL analysis supports Vodafone in attaining adequate information
regarding the influential factor that affect operational activities of the company in both the
positive as well as negative manner.
Tapping Opportunities and dealing with threats: PESTEL analysis is supportive for the
business entity in determining available opportunities for them at marketplace along with the
possible threats associated with the external business environment. With reference to Vodafone
Plc, it can be said that detailed study on market helps the business manager in developing
required strategies that would contribute in overcoming issues (Perera, 2017). Also, usage of this
framework supports company in gaining competitive edge as they are aware of the threats and
with adequate planning they can easily overcome it and succeed at new marketplace.
TASK 3
Use the PESTEL framework to analyse the external environment of your chosen company.
The implementation of PESTEL analysis on a company allows the organisation to screen
its external environment in an effectual manner and thereby identify the threats as well as
opportunities affecting the business. PESTEL analysis when applied by Vodafone Plc will result
into identification of market opportunities that can be tapped and risks that can pose threat to the
market positioning of the business. This will help the respective telecommunications company to
carry out strategic planning and thereby lay down strategies and tactics that can be fruitful for the
organisation in the long run. Thus, PESTEL analysis is carried out in context of Vodafone Plc as
follows:-
Political Factors: This consists of facets such as stability of government, alterations in
policy, level of corruption, bureaucracy, trade regulation, governance and many more. In this
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relation, Vodafone Plc operates in a constantly changing landscape which exposes the
organisation to vulnerable political conditions. Now, the United Kingdom is considered as a
politically stable country. If the country gets disrupted by any kind of political turbulence, there
are chances that the business operations of Vodafone Plc are negatively affected. Besides this,
the governance structure of UK is well developed, and this provides assistance to Vodafone Plc
to enjoy the democratic policies and operate in an effective manner. United Kingdom being the
11th most corrupt country within the world posing the companies to the risk of being involved in
corrupt activities and business practices (Wei, 2019). It is important for Vodafone Plc to take
into account all of these factors so that there is no negative impact over the operations of
concerned company.
Economic factors: This include facets like foreign exchange rate, interest rate, labour
market condition, extent of inflation, savings rate, and so on. They must be duly considered by
any company to make sure that there is no negative impact over the organisation. The economic
development of United Kingdom acts as an opportunity for Vodafone Plc to increase its sales
volume along with profitability in the long run. The respective telecommunications company
also derives benefit from the infrastructural development of the UK (Kerr and Moloney, 2019).
The unemployment rate of United Kingdom being 3.9% demonstrates that the companies like
Vodafone Plc can procure labour only at high rate.
Social factors: This constitutes facets like societal norm, value, custom, trend and
consumer lifestyle. These place impact over the demand and supply of products and services of a
company. By gaining effective knowledge of the demographic and market trends, Vodafone Plc
can introduce services which can appeal to the public at large and lure them to experience the
same. The country has a PDI score equal to 35 which implies that United Kingdom believes in
fair play via provision of equal treatment to personnel pertinent to the location. Besides this, the
Hofstede insights reflect that UK is a Masculine nation, implying it is goal centred (Rodrigues,
2019). All these factors need to be considered while devising marketing plan or strategy for
Vodafone Plc.
Technological factors: The technology evolves over the course of time. As a result of
this, the companies take initiatives to apply and implement the latest technological trends. These,
when applied, provide due assistance to organisations in gaining the attention of public at large.
Vodafone Plc has the opportunity to apply the latest and emergent technologies to gain a
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strategic advantage in market place while also enhancing the operational efficiency. Social media
marketing is a prominent technological trend that provides assistance to the companies like
Vodafone Plc to gain the attention of large base of audience (Williams, 2017). UK consists of 45
million active social media users. This implies that the different social media platforms can be
leveraged by the organisation to attract the customers and augment the revenue figures.
Environmental factors: This encompasses environmental standards, regulations and laws
pertaining to a particular nation. In this regard, it is crucial for Vodafone Plc to adopt and apply
effective waste management procedures and green business practices to gain the trust of
stakeholders and ensure long term sustainability at market place (Ang, 2016). This will provide
assistance to the corporation in gaining support from public and thereby enhancing its profit
margins.
Legal factors: This encompasses various laws and legislations pertaining to a particular
nation. The concern of Vodafone Plc is all the units and departments comply with the laws of
United Kingdom. In an instance whereby the organisations fails to abide by the legislations, it
would have to deal with adverse outcomes (Step, 2017).
CONCLUSION
The comprehension of the above discussion leads to the conclusion that business
environment needs to be constantly reviewed so as to make sure that any discrepancy can be
timely identified and dealt with. For this purpose, one of the most important tools which are put
to use is acknowledged to be PESTEL analysis. This is a business management framework
which assists an enterprise in gaining knowledge of the external aspects of the business
environment within the confines of which an organisation operates. With the application of this
model onto a business, a company is able to identify the potential opportunities and threats that
have the potential of affecting the operations of any organisation.
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REFERENCES
Books and Journals
Ang, R., 2016. Vodafone Global Telecommunications: Optimizing Operations. IUP Journal of
Operations Management, 15(4), p.46.
Armour, J., Enriques, L., Hansmann, H. and Kraakman, R., 2017. The basic governance
structure: The interests of shareholders as a class. European Corporate Governance
Institute (ECGI)-Law Working Paper, (337).
Becht, M., Franks, J.R. and Wagner, H.F., 2019. Corporate Governance Through Exit and
Voice. European Corporate Governance Institute–Finance Working Paper, (633).
Christodoulou, A. and Cullinane, K., 2019. Identifying the Main Opportunities and Challenges
from the Implementation of a Port Energy Management System: A SWOT/PESTLE
Analysis. Sustainability, 11(21), p.6046.
Çitilci, T. and Akbalık, M., 2020. The Importance of PESTEL Analysis for Environmental
Scanning Process. In Handbook of Research on Decision-Making Techniques in
Financial Marketing (pp. 336-357). IGI Global.
Durana, M., 2020. Sustainability Reporting: A Literature Review. Available at SSRN 3608500.
Kerr, W.R. and Moloney, E., 2019. Vodafone: Managing Advanced Technologies and Artificial
Intelligence.
Kerr, W.R. and Moloney, E., 2019. Vodafone: Managing Advanced Technologies and Artificial
Intelligence.
Kleiousis, E., Terzoglou, A., Valsamidis, D. and Tsourgiannis, L., 2019. Corporate Governance:
A Comparative Analysis of the Accounts of the Telephone Companies Cosmote,
Vodafone, and Wind. In Economic and Financial Challenges for Eastern Europe (pp.
509-523). Springer, Cham.
Molino, A., 2019. Corporate identity and its variation over time. Corpus Linguistics, Context and
Culture, 15, p.75.
Perera, R., 2017. The PESTLE analysis. Nerdynaut.
Rodrigues, M., 2019. Vodafone group Plc-telecommunications (Doctoral dissertation).
SHTAL, T.V., BURIAK, M.M., AMIRBEKULY, Y., UKUBASSOVA, G.S., KASKIN, T.T.
and TOIBOLDINOVA, Z.G., 2018. Methods of analysis of the external environment of
business activities. Revista ESPACIOS, 39(12).
Step, T.Y.E., 2017. Wireless Network.
van der Enden, E. and Klein, B., 2020. Good Tax Governance?… Govern Tax Good!. Available
at SSRN 3610858.
Wei, L., 2019. Financial Analysis of Vodafone Group Plc.
Williams, C., 2017. Complexity Of Modern Management.
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