Business Strategy of British Telecom: A Comprehensive Analysis

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BUSINESS STRATEGY
(British Telecom)
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Table of Contents
INTRODUCTION.........................................................................................................3
TASK 1........................................................................................................................4
TASK 2......................................................................................................................10
TASK 3......................................................................................................................15
TASK 4......................................................................................................................20
CONCLUSION.......................................................................................................... 24
REFERENCES..........................................................................................................25
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INTRODUCTION
This report will elaborate on the different strategies that a company uses in different
environments. In a wider context, this report presents the analysis of different
strategies that a company uses and the threats that are faced by the company and
on the basis of that, this report generates a basic strategic plan that could be
adopted by the company to outgrow their business. The organization chosen in this
report is BT (British Telecom). The starting section includes the analysis of internal
and the external environment of the company using proper frameworks and the latter
sections explains the market of the company and then helps in creating a good
strategic plan recommendation for the company. This report is also going to
elaborate a creative way of using different frameworks.
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TASK 1
INTRODUCTION TO BT
BT is the commercial name of British Telecom. It is one of the leading
telecommunication service companies. The main headquarters of BT are in the UK
and London. The company serves in approximately 180 countries. The main
services that BT provides are broadband, networked IT services, Television products
and services and fixed-line services. BT was introduced to the world in 1980 as an
Electric Telegraph company. BT has a lot of customers (approx. 18 million only in
Great Britain). The current CEO of BT is Philip Jansen (Since 1 February, 2019). (BT
About, 2019)
The company has various environments as shown below:
MACRO ENVIRONMENT
The Macro Environment refers to the factors that the company cannot alter or such
factors that are not under the control of the organization. An organization can only
change the things and policies which are within the organizations to prevent the
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negative impact of Macro Environment and to get benefit from these factors. The
Macro Environment Includes: Competitors, Government rules and regulations, Local
Communities, Cultural Evolution etc. (Craig and Campbell, 2012). To see how these
factors affect the company and its strategies we can use the following models:
1. Ansoff Growth Vector Matrix.
2. PESTEL Model of Environmental Analysis.
3. SWOT Analysis.
4. Porter’s Five Forces etc.
In the below section we will be using PESTEL and Ansoff Matrix for understanding
the different effects of Macro Environment on the organization.
PESTEL ANALYSIS
PESTEL is an acronym which states the different factors that influence the company
and its strategies. These factors are Political, Economic, Social, Technological, Legal
and Environmental (Issa, et al., 2010).
Fig 1 - PESTEL Analysis
[Source: PESTEL Image]
Political Factors
These are factors like government parties and regarding governmental issues.
These factors can affect BT's long term planning and profitability. Since BT has its
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branches in a lot of countries it has disclosed itself to many political factors and
political issues (Issa, et al., 2010).
Economic Factors
The country’s economic status like the overall GDP, inflation rates, import and export
taxes, service transfer rates etc. are the factors that can affect BT directly. The cost
and productivity in the economy is also a notable thing because this can affect the
overall revenue of the country directly. The unemployment rate in a country also
needs to be noted while planning future strategies (Issa, et al., 2010).
Social Factors
The way BT executes its work and the ethics that BT's employees apply in the
business environment can be affected by the social environments. BT's work ethics
can influence the social mindset of the citizens and which in turn, can affect the
company in a reverse manner. Work ethics of BT’s employees can directly affect the
customers and hence the company's trust. The advertisement’s message contexts
must be designed with most care (Issa, et al., 2010).
Technological Factors
Being a telecom company, these factors can be a matter of concern for BT.
Technological changes can directly affect the company’s structure and growth.
Organization need to be changed according to the change in the technology else the
slower system and company structure cannot make an impact over the world and
add value to it (Issa, et al., 2010).
Environmental Factors
The company develop products and services that can affect the environment and
then this adverse effect can influence the company’s profile and facilities that it
holds. The company should use recyclable material and must implement the
management plan for the waste generated by their products.
Legal Factors
In most of the countries, the legal laws and regulations are not that strict. This can
lead to misuse of the legal laws signed by the organization and also the theft issues
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of ideas and researches. The company should put a keen observation of these
factors (Issa, et al., 2010).
ANSOFF GROWTH VECTOR MATRIX
Ansoff matrix is a strategic planning matrix that facilitates to identify how the services
and the products of the organization will affect the market. By this analysis, an
organization can easily identify where they are influencing the market and how they
can grow in a specific area. The Ansoff Matrix consists of four different segments
based on market and product/services (Hussain et al., 2013).
Fig 2 - Ansoff Matrix
[Source: Ansoff Matrix Image]
By doing the analysis of BT according to Ansoff Matrix we can identify that in which
market the organization is proceeding and what kind of products and services they
are providing.
Market Penetration
When the organization launches an existing product in the existing established
market then the strategy is called as market penetration. BT uses this strategy way
too often because being a telecom service company the company knows that what
the requirements of the consumers are (Hussain et al., 2013).
Market Development
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The company is using a market development strategy if it is trying to launch and sell
its services and products in new markets. As we have already seen above that BT
has its roots in 180 countries so it is clear that BT uses market development strategy
too often (Hussain et al., 2013).
Product Development
When a new product is launched in an existing market then the strategy is called as
market development. BT has launched new products and services like television
services and continuously trying to bring more products and services to its
customers (Hussain et al., 2013).
Diversification
When a new product is launched in a new market then the strategy is known to be as
diversification. BT is stick to the slow and steady growth approach. So, it barely
launches new products directly in the new markets but the organization is making its
best efforts to do so (Hussain et al., 2013).
CRITICAL ANALYSIS OF MACRO ENVIRONMENT
Having a closer look at the above analysis we can identify clearly that what strategic
approach BT is using to influence the macro environment and how the macro
environment is affecting the overall business decisions. Now we will analyse the
strategies and the decisions that BT is taking in the response to these factors and
macro environment (Strategic Response, 2019). Since the organization cannot affect
the macro environment factors so BT uses the following approaches to get over
these factors:
Minimum Conflicts
The company uses this strategy as a passive approach to handle the effects of these
macro environmental factors. Under this approach the company instead of hitting
back or giving an instant response simply accept the change and try to cope up with
it. The organization’s leaders and the managers train employees to work under such
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conditions. The organization analyse the change or the effect of the factor and then
react accordingly (Strydom, 2011).
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Stepping ahead with Caution
This strategy is far more complicated than the one mentioned above. In this strategy,
the organization shows more interest in the sudden changes and makes efforts to
understand and find the never changing nature of such an environment. This
strategy is more sophisticated but provides good results and also helps in the growth
of the organization. BT supposed to use this strategy during their suffering periods
(Strydom, 2011).
Dynamic Response
The established companies like BT which are on their highest level use this strategy.
Such organizations have a well-developed analysis and feedback system. They can
foresee the threats from a far distance and can create an environment to respond
actively towards them. They can even have strengths to turn these threats into
opportunities. Such organizations can even manage to get over such threats without
causing any harm to them (Strydom, 2011).
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TASK 2
The internal environment of an organization consists of all the things, strategies,
procedures and the culture that occur within the organization and which can be
altered whenever needed by the organization. Internal environment includes things
like strategies, employee culture, management and leadership approaches,
technologies used within the organizations and every single aspect that can affect
the organization and its consumers directly. In the below sections we are going to
analyse the internal environment of BT using frameworks like VRIO and VRIN.
Fig 3 - Internal Environment
[Source: Internal Environment Image]
VRIO/VRIN
This model was introduced by Birger Wernerfelt in 1984. This theory is a resource-
based view of the company. According to Wernerfelt’s theory, a business is a
package of resources. Various businesses differ based on what their resources are
and how they are linked with each other. Resources can be processes, assets,
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knowledge, capabilities, attributes, information etc. Together these resources allow
any organizations to execute their respective tasks (Barney and Hesterly, 2010).
Fig 4 - VRIO/VRIN
[Source: VRIO/VRIN Image]
According to this model, to pick the best resources that can provide a long-term
competitive advantage for any organization they must satisfy the following qualities
step by step:
Value
The first quality is that the resource must add enough value to the company to
prevent it from a competitive disadvantage. The resource is considered valuable if
it helps the organization to perceive the customer's satisfaction and provides a
competitive advantage (Schroeder and Kotlarsky, 2015).
Rarity
If the resource is valuable then its rarity is checked in the market i.e. how much
different the resource is from other competitors. If the resource is not rare then the
organization faces competitive parity it means the resource is valuable but such
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