Business Strategy Report: Macro & Internal Analysis of Three UK

This report provides a comprehensive analysis of Three UK's business strategy. It begins with an introduction to business strategy and its importance for Three UK, a British telecommunications company. The report then delves into the macro-environmental factors affecting Three UK using the PESTLE model and Ansoff's growth vector matrix. It assesses the company's internal capabilities through SWOT and VRIO analyses, followed by an evaluation of its competitive forces using Porter's Five Forces and stakeholder analysis. Finally, the report culminates in the development of a strategic management plan based on Porter's generic model, offering a holistic view of Three UK's strategic positioning and future direction. The report uses various business models and frameworks to evaluate the company's performance and provide recommendations.

Business Strategy

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
Presenting macro environment factors for Three UK.................................................................1
TASK 2............................................................................................................................................5
Critically evaluating the organization's internal environmental capabilities using models........5
TASK 3............................................................................................................................................8
Applying the models, evaluating the competitive force for the company..................................8
TASK 4..........................................................................................................................................11
Producing the strategic management plan for an organization.................................................11
CONCLUSION..............................................................................................................................14
REFERENCES..............................................................................................................................16

INTRODUCTION
Business strategy is that working plan which is used to achieve its vision and objectives
and to improve its financial performance as well. Therefore, its main purpose is to attain its
desired ends and through an effective business strategy, the company can easily grow at further
level of success and accomplish its goals as well. In the same way, report main aim is to describe
the importance of business strategy for the firm. The chosen firm for the report is Three UK,
which is a British Telecommunication and Internet service provider which is operating under
three global brands. The quoted firm provides 3G and 4G services through its best network
infrastructure.
Report will describe the macro factors that affect the external environment of the
company by using PESTLE model and Ansoff's growth vector matrix to determine the
organization's strategic positioning. Further, report will describe its internal environment
capabilities by using SWOT analysis and VRIO and then study will describe its competitive edge
by using Porter's five force model and stakeholder analysis. Lastly, report will produce a
strategic management plan by using Porter's generic model.
TASK 1
Presenting macro environment factors for Three UK
To determine the macro environment factor, the quoted firm uses PESTLE model that
helps to identify the external environment. This is comprises following factors such as:
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Political Factor: This plays an important role in determining the factors that affect
Three UK's long term profitability, such that the political condition of UK is quite stable but
sudden change in the tax rates can influence the political condition of a country and it directly
creates negative impact upon the firm's financial performance. Such that its increases the rates of
service which is provided by Three UK to their customers (Pucheta‐Martínez and Bel‐Oms,
2019). On the other side, telecom industry should also be fit to essential government regulations
such as Safety and privacy in order to run its business smoothly.
Economical factor: In 2013, recovery of Gross Domestic Product and stability of the
inflation rates after the economy recessionary period creates the positive impact upon the
consumer as well as telecommunication industry. This helps to improve the company's financial
performance but on the other side, if the country does not have stable economic condition then it
affect the business at negative way, such that if there is an inflation, then the price of the services
that offered by Three UK will be high and the customers did not want to spend high amount for
the services. This led to decreases in its overall services and as a result, its financial services gets
affected. Apart from this, though unemployment rate decline in past years, which further remain
high an limit the demand on some mobile telecommunication services. But at the end, disposable
income has continued which further rise the demand of their customers and creates positive
impact upon the company's overall profitability as well.
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Illustration 1: PESTLE model
(Source: PESTLE model, 2018)

Social Factor: The young generation addiction and using variety of Internet based,
consuming data through connecting 3G and 4G application also change the way. Therefore, this
creates positive impact and also lead to increase the demand of new version of phones and more
data usage contracts among them. Even on the other side, when the customer find some other
company who offer the same into unique way, will also affect the business in negative way. This
is so because it lead to decrease the sales and profitability of a business (Ansoff and et. al.,
2019). In addition to this, acceptance of IPads in education system also increases the demand and
force company to keep producing new version of the Internet plans.
Technological Factor: It has been analyzed that technological factors plays an important
role in order to gain high competitive advantages over the rivals in a market. Such that
introduction of 4G services increases the speed in data transmission and also allow the broader
range of Internet services. Even in UK, Three UK also have many rivals but by introducing
innovative products using advance technology will also help a business to increases its sales and
profit as well because every company follow advance technology and Internet to run the business
effectively (Priem, Wenzel and Koch, 2018).
In addition to this, it is also realized that the quoted firm always focus on latest trends of
a technology which have been the fundamental locution that company should be follow. But on
the other side, various Over the Top providers also provides an opportunity to call and message
for free which affect the number of text and messages, calls decreases sharply.
Legal Factor: The telecommunication industry of UK is regulated by the Office of
Communication, which is an independent body and thus, the quoted firm should follow all the
legal laws that is formed by a government. There may be chances that the firm may faces some
issues regarding copy and its pirated issues. That is why it is necessary to keep adhering all the
laws such as Health and safety law, consumer Protection law, employment law etc. This also
helps to sustain its positive image which will help in gaining the trust of the customers. Such that
in UK the legal environment is quite stable and Three UK also adhering the laws which helps to
run its business smoothly.
Environmental Factor: As globalization increases, people become more and more
ethical oriented (Braun, Latham and Cannatelli, 2019). Even the customers also expect that their
favorite brand to be more social responsible and they play an effective role for the betterment of
the society. In the same way, Three UK also follow sustainability law that helps to protect the
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environment. Though it is realized that telecommunication industry operations are least affected
by the environment; factors but still many companies who work for preventing the environment
as well.
Ansoff Growth vector Matrix: It is the marketing planning model that helps a business
to identify its product and market growth strategy. This is as mentioned below:
Market Penetration: It is simply selling a mixture of canal to an extant products and this
helps to increases the customer loyalty and also grow the customer lifetime values as well. For
example, if Three UK offers 4G and 3G services in its existing market in UK, then it will help to
increases the base of its customers. This directly affect the company's financial performance.
This strategy is most common and used by many company in order to increases its market share
of the current products and this can be achieved by the combination of different competitive
pricing strategies, advertising, sales promotion etc.
Market Development: It is the best approach which helps to attract the new customers
for an existing product. It means selling the existing products to a new country or
location/market (Habib and Hasan, 2019). For example, Three UK offers its 4G services to new
market through different sales channels in order to target its new customers. This will also helps
to attract different customers and to creates new market segments as well. Apart from this, this
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Illustration 2: Ansoff Growth vector Matrix
(Source: Ansoff Growth vector Matrix, 2018)

strategy is consider quite risky as compared to market penetration because of targeting new
markets.
Product Development: This is a growth strategy that is used when a business wants to
introduce new products in existing market. Therefore, this strategy also require the development
of new competencies and also requires the business to develop some modified products that also
appeal to some existing products. Moreover, this strategy is mainly suitable for the business
where the products needs to be differentiated in order to remain competitive (Ramdani and et.al.,
2018). For example, Three UK can introduce Tables phones in UK in order to raise its brand
image in success and through research and development, it has been analyzed that the this
products helps to fulfill the demand of their customers.
Diversification: It is the one of the most risky strategy among all because it is used when
the business wants to introduce new products in completely new market. This is risky because
the business is moving into market in which there is no or little experience (Yusoff and et.al.,
2019). For example, if Three UK wants to introduce Tablet or new mart phones in new market
but there is no chance whether it may be success or demises. Therefore, this strategy is used
rarely by companies.
Among all, the company uses market penetration as a growth vector matrix because it
helps a business to raise its market share and grow the customers lifetime values as well.
Through this strategy, the quoted firm can also improve the order process and also make it easier
for the customers by providing the best services to their customers.
TASK 2
Critically evaluating the organization's internal environmental capabilities using models
VRIO model is comprises value for resources, Rareness, imitation and Competences and
it mainly focus on strategic analysis tool so that it helps to build the sustainable competitive
advantages by better understanding the role of resources (VRIO analysis, 2018). The tool is
mainly used to determine the internal capabilities of the company in effective way and also helps
to determine the exact internal factor that affect the internal capabilities. Therefore, the VRIO
model for Three UK is as mentioned below:
Resources: Sales channel Management
Value: Yes
Rare :No
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Imitation : Can be resemble by rivals
Organization: Yes
Competitive Advantages: Sustainable advantages
Resources: Marketing expertise
Value: Yes, it can compete on the basis of differentiation in industry
Rare : No
Imitation : Pricing strategy can be matched by its competitors
Organization: Yes
Competitive Advantages: temporary Competitive Advantages
Resources: Ability to attract talent at global level
Value: Yes, through its innovative strategy
Rare : Yes
Imitation : Difficult to imitate
Organization: Yes
Competitive Advantages: Strong Competitive advantages
Resources: Brand awareness
Value: Yes
Rare : Yes
Imitation : No
Organization: Yes
Competitive Advantages: Sustainable advantage
Resources: Successful Implementation of digital strategy
Value: Yes
Rare : No
Imitation : Can be resemble by rivals
Organization: Yes
Competitive Advantages: Cannot provide sustainable competitive advantages.
As per above, it has been critically evaluated that Three UK has large resources but die to
tough competition in market, sometimes the company did not able to gain high competitive
advantages. Apart from this, it is also realized that as it has brand awareness, which means that it
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has a sustainable advantage. Moreover, it also uses high advertising campaigns which mean that
it can successfully implement the digital strategy.
SWOT is a strategic management model that is used to determine the internal factor that
affect the internal environment of the company which is as mentioned below:
Strength: The company has its brand image in market and its excellent services that
helps to attract wide range of customers towards it. The advertising campaign is considered as its
biggest strength which further help to build the brand awareness and in 2013, it has been
analyzed that it brand raises up to 67% of the UK population and also recognized one of the top
20 global company. In addition to this, the company also creating a series of initiatives such as it
abolishes the service roaming charges in which 4G network are offered at no extra cost which
helps to double its profit and also increases its customer base as well (Cao and et.al., 2019).
Three UK also has a strong customer base because of providing the best quality of products at
reasonable rates and has an excellent advertising services to helps to draw attention of many
customers towards it.
Weaknesses: as the company is operating at 3G and 4G services and its weakness is lies
into customer services issues such that there is a poor signal of 3G in specific areas and this
creates a negative impact upon the company. As a result, it deprived many new customers,
moreover, the firm was the last in rolling out 4G services in UK and also have the lowest
population coverage as well. Thus, it leads to negative consequences such as losing some
potential customers in many areas, even it has the lowest level of customer loyalty such that it
affect the brand image of company. In this modern era, individual wants to use effective network
and that is why they want to use 4G services and now the firm did not provide the same services
that is why it is converted into company's weaknesses.
Opportunity: By introducing 4G technologies, the quoted firm can boost its partners
revenue and through selling 4G phones it also attract wide range of customers and it can sustain
its brand image in further markets as well (Teece, 2018). Apart from this, by increasing use of
Internet from the mobile phones to cars together with an invention of new communication
devices will also help a business to enhance its customer base and raises its market share as well.
Even by growing the number of population, recovering the economic condition of the country
also helps to generate new customers and higher revenue as well.
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Threats: The company faces high competition from its rivals and this is considered one
of the biggest threat for Three UK. Apart from this, the threat also come from the increasing
number of Over the Top who allow the text and messages for free and this leads to affect the
sales of the company as well (Scholes, 2015). The company also faces threat when any IT
security threats whose aim at mobile phones through an Internet will discourage from some data
functions. Moreover, the telecommunication market is quite competitive which also drive to
lower the price offerings and innovation from the rivals that affect huge losses for a company.
TASK 3
Applying the models, evaluating the competitive force for the company
Porter five force model is used to determine the competitive advantages and also known
as a competitive strategy as well. For Three UK, its porter five force is as mentioned below:
Bargaining power of Buyers (Weak): The company faces weak bargaining power of
buyers because it has been analyzed that when buyers are powerful the profit generation is low
and this also lead to lower the prices or increases the cost by adding features and services.
Therefore, In this condition, the bargaining power also exercised indirectly through purchasing
decision of customers. For this reason, the company should make its strong bargaining power by
choosing from a wide range of supply firms and it can also find it easy and inexpensive to switch
to some alternative suppliers as well.
To gain high competitive advantages, Three UK should build the large customer base by
rapidly innovating new services and offer them discount as well.
Bargaining Power of Suppliers (Weak): Three UK has weak bargaining power of
suppliers and if the suppliers forces up the prices paid for inputs then the profit will
automatically be reduced (Akter and et.al., 2016). The only condition when the suppliers feel
themselves powerful is when there are only a few large suppliers and the resources they supply is
insufficient. Even Three UK can also sell the products to its rivals in order to make its suppliers
more stronger and effective. On the other side, if the suppliers power is high then the product is
extremely important for the buyers and in the same way, as the Three UK faces tough
competition from its rivals and as a result, the supplier switching cost is quite relative to the firm
switching cost.
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To gain high competitive advantages, Three UK should build the effective supply chain
at multiple suppliers and by developing the dedicated suppliers whose work is depend upon the
firm will help to sustain its brand image.
Threat of New entrant (High): As the company offer its best services to their customers
then it also faces the threat of new entrant and this also keep a top on attaining the profits as well.
But on the other side, if a new company is entered into telecommunication industry then it
requires an experience and also invest a lot of money for its establishment. While if the business
is successful in the market then it also affect other rival firm's financial performance (Thompson
Strickland and Gamble, 2015). In the context of Three UK, as it faces high threat of new entrant
which means those company who have good customer loyalty and provide better incentives to
attract the wide range of group towards it.
Therefore, to gain high competitive advantages, company should use competitive pricing
strategy which helps to change the pricing strategy of a company after determining its rivals
strategy.
Threat of Substitute (moderate): the company faces moderate threat of substitute and it
has been analyzed that when a new product and service meets a similar customer needs in
different ways then the industry also suffer.
Therefore,to gain high competitive advantages and to cope with this situation Three UK
should be service oriented rather than product oriented and even by understanding the core need
of the customer rather than the customer buying and this will also help to increase the switching
cost for the customers as well.
Rivalry Among existing competitors (Intense): it has been analyzed that if the rivalry
among the existing players is intense then it will also drive down the prices and decreases the
overall profitability as well (Olson and et.al., 2018).
To cope up with this situation and gain high competitive advantages, Three UK should
build the sustainable differentiation and by build up the scale so that they can compete the better
will also help a business to sustain in this competitive market. In this way, the company will also
creates positive impact upon the business performance and as a result, it will help to grow at
further level of success.
Stakeholder Analysis: It is another management tool that helps to assessing the system
and some potential changes to it as it relate to the relevant parties, i.e. stakeholders (Stakholder
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analysis, 2019). This model helps to identify the stakeholder's interest and this mechanism also
influence positively to other stakeholders as well. There are four types of stakeholder such as:
Primary stakeholder: These stakeholder are highly affected from the organization's
action in positively as well as negatively manner. These are Board of directors, shareholders and
investors.
Secondary Stakeholder: They are the intermediaries and are indirectly affected by the
organization action such as suppliers.
Tertiary Stakeholder: These stakeholder affected the least such that government.
Key stakeholder: This are major stakeholder who directly or indirectly affected from
company's action such as customers and employees.
Highly satisfied: Board of directors, Shareholders, Investors
Satisfied: Customer, Employees
Monitor: Suppliers
Informed: Government
Board of Directors: For Three UK, it is quite necessary to keep satisfy the primary
stakeholders, this is so because it helps to creates positive environment of the company. They are
also responsible for taking the best decision for the welfare of the company and they should be
make sure that they receive the return on their investment.
Employees: It is quite necessary for the firm to keep satisfy their key stakeholder such as
employees because they help to generate the high revenue and produce the products as per
demand of their customers (Higgins, Omer and Phillips, 2015).
Government: if a new action is taken by the company, then it is quite necessary for the
firm to keep informed about all the decisions and Three UK should also adhering all the laws to
run its business efficiently.
By keep satisfying all the stakeholder, the business can easily gain high competitive
advantages, this is so because through effective coordination between stakeholders that helps to
run a business smoothly. As a result, through stakeholder analysis, the company can easily
determine that there is a need to satisfy stakeholder as it leads to further level of success.
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