Business Strategy of BT Global Services: A Comprehensive Analysis

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Business Strategy: Telecommunication Sector (UK)
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Table of Content
Introduction...................................................................................................................... 3
LO1.................................................................................................................................. 3
Task 1 – The external Analysis........................................................................................3
P1: PESTLE Analysis.......................................................................................................4
M1 Ansoff’s growth vector matrix to analyze the British Telecommunication strategic
positioning........................................................................................................................ 5
LO2.................................................................................................................................. 6
Task2: Internal Environment and BT capabilities.............................................................6
P2: Strength and Weakness of British Telecomm Global Services..................................6
Strengths..........................................................................................................................6
M2: Applying the ‘VRIO/VRIN’ model to analyze the strategic capabilities of BT Global
Services........................................................................................................................... 7
LO3.................................................................................................................................. 9
Task 3 Analysis of Telecommunication Sector.................................................................9
P3: Porter’s Five Forces Model:......................................................................................9
M3: Stakeholder’s Analysis:...........................................................................................10
LO4................................................................................................................................ 12
Task 4 Understanding and interpreting strategic direction.............................................12
P4 Bowman’s Strategy Clock Model..............................................................................13
M4 Porter’s Generic Model:........................................................................................... 13
Conclusion..................................................................................................................... 15
Reference List................................................................................................................ 16
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Introduction
BT Global Services is a British Telecommunication company which is the largest trading
company in United Kingdom. It has its headquarters in London. The company has
extended its operations in more than 180 countries. It provides services like broadband,
various mobile or IT services and ETHERNET services.BT Global Services controls
many subsidiaries and provide various telecomm services to the customers worldwide
both government and corporate.
BT has tried to maintain itself as the market leader with the better quality of product and
thus has established a brand name. It is today a great multinational corporation
delivering its products in UK and many other countries. It has competition with many
firms like AT&T and Orange business but it is focusing on its market and product quality
at its best. Although the firm has gone through huge debts because the company first
tried to merge with MIC which was quite unsuccessful and later on with AT&T which
again led to its second downfall. The fall in the tax profit was around 45%. This huge
loss faced by the firm was during the time period 1994-2004.
The firm now has overcome its problems learning from the past mistakes and has
reduced its product, thereby focusing on the best quality delivered. Because of the
losses it had some problems in the market, so the firm is now trying to come up with the
best market strategies to deliver its product. The firm today has a cash flow of around
£100m which shows success in their current strategy. The changes are motivated by
the leaders and also the development of telecommunication systems.
In order to understand the strategy adopted by BT Global Services and its effects,
internal and external analyses are necessary.
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LO1
Task 1 – The external Analysis
To understand the strategy adopted by British Telecommunication Global Services and
its decisions external analysis is important. Moreover, it makes easier with this analysis
to understand the benefits or drawbacks in the strategy thereby coming up with better
changes. It uses:
1) PESTLE strategy for political, economic, social, technological, ecological and
legal issues.
2) Ansoff’s growth vector matrix to analyze its strategic position.
P1: PESTLE Analysis
This analysis helps in analyzing the business condition for any company for which
information is accessible. PESTEL examination gives significant knowledge into the
working difficulties that any organization in the business seems to confront. Detailed
PESTLE analysis is described below.
1) Political factors: British telecommunication industry has an impact due to
decrease in the price and increase in the quality of service delivered. Expansions
of its business are low at some places like Iraq while other places like Pakistan
have terrorist activities which result in lowering down the business. Sometimes
Government has to take care of employees and its needs so they force some
laws on the company with respect to the expulsion strategies. This also results in
lowering down the business (Adner et al. 2016).
2) Economic factors: This Company has lot of problems in past due to its merging
policies with MIC and AT&T Company. The unsuccessful mergers led to the
crisis in the company. Moreover, a decrease in the revenue is seen every year
and the downfall is 4% on an average scale. This ultimately leads to expulsion of
employees from the company. The approximate tax profit fall was 45% in the
past due to the merging loss. Now the company is focusing to work on super-
fast networks and analyzing the requirements of the users to fulfill their demand.
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3) Social factors: It is seen that social factors sometimes increases the revenue of
the company. During Olympic Games it is seen that there is more usage of
networks and employment which also helps with its better connections to the
other nations.
4) Technological factors: Increase in the quality of technology has proved to be
beneficial for the company. It helps in the growth of connections with better set-
top boxes and increased configurations. End to end connections are seen with
better speed that ultimately helps the users thereby strengthening the
organization.
5) Legal factors: Various laws for protecting data or intellectual property should be
taken into consideration. This is so because company has lot of patents and data
which needs to be protected. For the welfare of employees working in the
company, discrimination law is also enforced. This basically focuses on fair
treatment with the employees. Moreover, certain laws are enforced to take into
consideration the safety of the people working and also to maintain a better
quality of product and its pricing.
6) Ecological factors: Environment plays a major role in the strategies of BT
Global Services. Various climatic changes lead to changes in their strategies as
there is change in the market flow. Moreover, a great change in transportation is
seen with the change in climatic factors. The company makes use of renewable
resources so with the awareness; people sometimes prefer to pay more prices
with the support of the Government and thus use its services.
M1 Ansoff’s growth vector matrix to analyze the British Telecommunication
strategic positioning
In order to grow our market strategies, sometimes a matrix grid is used. This is Ansoff's
growth vector matrix. This matrix has four quadrants where every time you enter into a
new quadrant risk factor increases. According to this matrix, a company makes use of
its current product and market and analyzes ways to grow with these product and
market step by step (Zhao et al. 2016). Thus, this makes four possible combinations:
a) Market Penetration: The firm here tries to achieve better market share and
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growth with already existing product.
b) Market Development: The main target of the firm here is to enter into new
markets with their existing products.
c) Product Development: The firm here focuses on the development of existing
products in the same market.
d) Diversification: This is the most risky field where the firm focuses on both,
development of new product along with the extension in market.
According to the research, BT Global Services has main focus on Market
Development currently (Martinet et al. 2016). This is due to the fact that BT Global
Services already had a great downfall due to its merging strategies with the two
companies MIC and AT&T. During this time the firm focused on many products but
they incurred huge debts. So now they are focusing on lesser products with great
quality but improving their market in UK. Although the brand name already has a
good reputation their focus is to make use of it and extend their market. The firm now
has the focus on multinational corporations instead of the products (Loredana, 2016).
Moreover, the firm is also little focused on product development where it is trying to
deliver super-fast networks and better services to meet the demands of the users.
But it has main focus on market and extension of firm overseas.
LO2
Task2: Internal Environment and BT capabilities
Further to analyze the strategy of British Telecommunication internal analysis is
considered. This includes:
1) Strength and weakness of the company.
2) Applying the VRIO/VRIN model to analyze the capabilities of the firm.
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P2: Strength and Weakness of British Telecomm Global Services
Strengths
BT Global Services has laid a great foundation with due course of time. It has a brand
name which focuses on the customer’s requirements. It is the telecom operator that has
Universal Service Obligation in UK. It also has very appealing client base which
includes many top MNC's like SIEMENS and many more. This in turn helps in providing
greater sales. It has also maintained long term contacts with the companies which
reduce the trust issues. It has turned out to be a multinational corporation which is
working on better quality products. It also focuses on extending its market in UK (Aithal,
2016). This firm is providing super-fast networks and better broadband. This thus leads
to greater contracts and expansion of business in the future.
Weakness
A lot of trouble is seen while accessing the internet services of the company. It is
analyzed that the WIFI security of this company can also be easily cracked using WPA
or WEP keys. More time is needed for reconnections due to loss of internet service and
crashing of the systems. Also with this big organization the work pattern is fixed so any
changes in the procedure of work is not entertained or difficult to implement.BT Global
Services also had incurred huge debt due to their joint ventures in the past. The
company had a major turnover in senior management which is thus leading to some
problems in their strategies.
M2: Applying the ‘VRIO/VRIN’ model to analyze the strategic capabilities of BT
Global Services.
Resources play a vital role in any business. The difference in the business depends on
how you use a resource alone or in a combination. These resources help to execute
relevant activities in the business. There might be a number of resources used but only
some of them prove to be really useful or important. These kinds of resources prove to
be important for the company. According to the theory of VRIO, any resource with these
four particular qualities is very important for the business and thus lead to competitive
advantage (Yin, 2016). These are:
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 Value: As we know that all types of resources are not easy to obtain. A resource
that brings value can thus lead to a better competitive edge.
 Rareness: Any resource which is not easily available can provide a better
competitive edge for the business.
 Imitability: Any resource which cannot be obtained by other firms or cannot be
copied is considered ideal.
 Organizational Competence: Any resource which can never be substituted by
any other resource and is an ideal one.
A complete framework was given by Jay Barney who converted this VRIN concept to
VRIO where the changes in the last letter refer to the “organization”. Thus this
framework is used for assessment of internal resources of the firm. This concept along
with the PESTLE provides complete structure to explain the strategies of any firm
completely. The resources in VRIO can be tangible like building, land or intangible like
management or skills (Widya et al. 2018).
In order to get a more detailed analysis, this method can be combined with
other analytical techniques.
VRIO Analysis for BT Global Services include
a) Copyrights, Intellectual rights to property and trademarks: These are found to be
extremely valuable to the firm, rare to find and cannot be copied by the competitors,
thus lowering down the risk of imitation. Moreover, it is utilized by the company well.
So as a combination this factor has a good competitive edge.
b) Use of Digital Strategies: It is of value as it is very difficult to compete with. But as
many other firms have these strategies it cannot be marked as rare. With
knowledge, this strategy can be imitated and it plays a leading role in industry. So,
overall it is important but cannot be considered of competitive advantage
(Echchakoui, 2018).
c) Use of raw material for better execution: It is of great value and is also rare as
position of firm in the market needs to be analyzed. It can although be replicated by
other competitors but is also of organizational value. Thus overall, it provides a great
competitive edge.
d) Community of customers: As various products are co-created by them they are of
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great value. A better relationship has to be established by firm with the customers. It
cannot be imitated as the culture and community are difficult to understand. So this
is also proved to be of great advantage for competition (Wicker et.al, 2015).
LO3
Task 3 Analysis of Telecommunication Sector
In order to improve the competitive edge of BT Global Services among other
telecommunication organizations in UK, various analytical tools and models are taken
into consideration. A detailed analysis of some of them includes:
a) Porter’s five forces
b) Stakeholder’s Analysis
c) Balance Scorecard
P3: Porter’s Five Forces Model:
These refer to the Five Forces that helps in the analysis of profitability for any
business, thus providing strategies to improve its methods for long term
development and profit. BT Global Services make use of these five forces to
understand its competitive edge among diversified corporations in a better way and
improve its strategic decisions along with exploration of profitable opportunities
(Stan, et.al. 2018). These Forces include-
1) Threats of New Entrants: Various new corporations are entering in this sector
with their own new technologies, innovations and strategies to do work. Thus,
this forces BT Services to lower down its pricing strategies with respect to
customer needs. Also reduces cost and provide new value.
BT Global Services can tackle these problems if it focuses on the quality of
current product and provides innovation of new products and better services. It
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can take care of research and development area of the product which is not
affordable by new companies and improves the economies as well.
2) Bargaining Power of Suppliers: Suppliers are needed when it comes to buying
raw material. High power of suppliers leads to losses as they use their dominant
power to extract more money from the firm. This results in lowering overall profits
(Gillespie and Goddard, 2017)
BT Services can take care of their suppliers if they have a multiple chain of
suppliers. They can also focus on more sources of products which lead to
different raw materials. So in case, there is a rise in the price of one product
material, they can switch to the other if crisis prevails. They can also have third
party manufacturers but with less bargaining powers so that they depend on
them solely, for their business (Shinoj, 2016).
3) Bargaining power of Buyers: The demands of small and strong buyers are
generally high, leading to the lowering levels of profits.
BT services can handle this issue if they have a large number of buyers. This
helps in both lower demand and improving sales. Continuous innovation of new
products also limits their bargaining powers.
4) Threats to Substitute Services and Products: If a new product that substitutes
the already existing ones develops, meeting the demands of the user, profits of
the organization suffer a lot. For eg. Various substitutes to the hardware devices
have launched like Dropbox which provide better facility to the customer so they
prefer them.
BT Services can take care of this issue by focusing on its services along with the
product. It should not only focus on what a customer is buying but should also
take care of customer need to understand this.
5) Rivalry Among Existing Competitors: Intense rivalry among different existing
competitors may take down the long term profits of the company.
BT Services thus tries to provide better scale for better competence. It can also
build an acceptable differentiation and thus can cooperate with players to focus
on market size other than the competition if it is a small market.
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M3: Stakeholder’s Analysis:
Management of stakeholders is considered a vital part to have support from others
for your projects. It ensures the success of your project when there is downfall for
others. This approach gives four main benefits:
1) Powerful stakeholders help in better defining or analysis of projects.
2) Resources like money or power come more to you with the support you gain
from powerful stakeholders.
3) By proper communication and understanding, more support is ensured by the
stakeholders for the project.
4) Planning actions according to the minds of stakeholders if proper anticipation of
them is done before.
Stakeholders as a part of BT Global Services:
The company has various internal stakeholders that include groups or individuals.
This also includes employees and shareholders of the company.
 Shareholders: They play a major role as a stakeholder as they provide money
to the company to gain profits. They although are not involved in day to day
decisions but put efforts for the profit of the company. Shareholders, in turn, get
their share from the overall profit as dividend (Fozer et al. 2017). BT Services
pays dividend twice in a year. They also get other benefits from the
organizations like credit cards and discounts on new products.
BT aims to improve its profits by:
 Increasing sales by developing new goods and services in the business.
 Attaining new customers by building better reputation of the company.
 By using better and efficient energy resources.
 Employees: They are very important part of business asset as they bring skills
like creativity to the company. Various programs are run by the company to
improve these skills of the employees. Freshers are specially trained in
telecom engineering, information technology and customer services so that
they can deliver value to the company and career. Dissatisfied employees are
seen not to deliver good products and go in search of new jobs. In order to
satisfy them and gain commitment, BT provides various rewards and better
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career prospects. Thus the company gains advantage of better workforce and
maintain a peaceful environment (Ser et.al. 2016).
LO4
Task 4 Understanding and interpreting strategic direction
BT needs to think about the total array of contenders through a gradual way to deal with
change the executives. Watchman has contended that associations ought to consider
the conduct of firms that are creating same/comparable items just as the activity of
providers, contenders delivering substitute items and the clients themselves. A gradual
system empowers organizations, for example, BT to build up a comprehensive
perspective available to advance business versatility and lift benefits. Upper hand has
been talked about through a model proposed by Porter examined later (Phadermrod et
al. 2019).
Ansoff has examined how organizations ought to likewise build up the methodology
remembering the stream of basic assets for creation. They ought to think about how
they will affect non-market characters. Nonmarket on-screen characters or key premium
gatherings likewise have an essential task to carry out in impacting the improved
technique of a firm. BT ought to pursue a cost administration methodology for minimal
effort as opposed to going for item uniqueness as there are numerous opponents
offering benefits in this area (Haselwanter 2016).
CULTURE: Work culture additionally assumes to be a vital job in affecting the strategy
an organization adopts. The organization's capacities rotate around the asset, abilities
and methods just as its skills. BT has a very unique work culture. It centers on finish of
ventures and collecting of pivotal contracts. The authoritative culture of an organization
impacts its accomplishment in current occasions. BT needs to pursue a steady
technique whereby it adjusts to changing worldwide and residential condition so it can
stay aware of its rivals. The decision of a vital administration approach depends on a
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