British Telecommunications (BT) Business Strategy Analysis Report

This report provides a comprehensive analysis of British Telecommunications (BT)'s business strategy. It begins with an introduction to business strategy and its importance, followed by an examination of the macro environment using PESTLE analysis. The report delves into BT's internal environment, focusing on strategic capabilities and the application of the VRIO model to assess these capabilities. It also identifies BT's strengths and weaknesses. Furthermore, the report analyzes the competitive forces within the telecommunications industry using Porter's Five Forces framework. The report concludes with an understanding and interpretation of BT's strategic direction, offering insights into the company's approach to achieving its goals.

BUSINESS STRATEGY

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Impact and influence the macro environment and its business strategies.............................1
2.1 Strategic Capability...............................................................................................................4
2.2 Application of VRIO model to examine strategic capabilities.............................................5
2.3 Determination of strengths and weaknesses of firm.............................................................5
TASK 3............................................................................................................................................7
PORTER FIVE FORCES OF BT:...................................................................................................7
TASK 4............................................................................................................................................8
P4 Understanding and interpreting strategic direction................................................................8
CONCLUSION..............................................................................................................................10

INTRODUCTION
The business strategy can be described as to those policies or techniques through which
various kinds of activities or procedures are carried out in business. Each and every organisation
focus on actual desires and build an effective as well as efficient strategies to complete required
targets or goals in an appropriate manner to generate better outcomes on regular basis, it is very
important to make proper policies that provide support to boost up productivity as well as
profitability of an organisation (Ackermann and Audretsch, 2013). This report is based on British
Telecommunication Plc that is abbreviated as BT and headquartered in London. It was founded
in the year 1969, almost 49 years ago. It provides several products such as fixed line or mobile
telephony, broadband internet, fibre-optic communication, digital television, home security, fleet
management, telecommunications equipment IT and network services. This assignment will
discuss about an effective analysis of macro environment and how it determines strategic
management decision in correct manner. It also includes explanation about internal environment
and organisational capabilities. The description about competitiveness of telecommunication
sector and understanding along with strategic direction is given below.
TASK 1
P1 Impact and influence the macro environment and its business strategies
Business is the activity which aim is to get profits. Business runs in society. There are
various factors which are effective to know what can be done so positive results can be
generated. There are possibilities that due to change in roles and responsibilities manager has to
select technique which is significant for performing business. There are possibilities that due to
use of measures which are not relevant then it must be removed. BT association works for
telecommunication sector. In this sector there are many changes which are taking place in
environment. So there are possibilities that due ton change in environment, so this might affect
business in adverse way (Annabi and McGann, 2013). PESTLEE analysis is one of the effective
approach through which knowledge about external factors associated with business can be
gained. This helps to take actions to over come them. PESTLE analysis of BT is discussed as
under-
Political- This is one of the important factor that affects business in adverse way. It is
important to work according to need f society. BT operates in various parts of UK and there are
various governmental force control operations of company. There is use of techniques which is
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significant for BT. When there is change in governmental policies, then this affects operations of
company. Mangers of BT has to frame policies according to government norms and hence there
is requirement to modification of strategies.
Economical- There is need of finance to run business. While running business, there is
use of techniques which are significant for running business smoothly. There are various sources
of finance, which has to select by manger after analysing targets. In BT association, changes are
taking pace very frequently, so it is essential to work as per requirement. Resources must be used
optimally so there will not under or over budget outcomes (Auzair, 2011).
Social- Business run in society and managers of BT has to consider changes happening
in society. In initial days there is no concept of 4G, but as demand of internet increases then its
speed also matters. This is effective for making changes in roles and responsibilities through
which changes are effective for growth of business. In case BT does not come with upgraded
services, them it will become out of run from competition. Managers of BT has keep social
factor in mid as it helps to imp[rove image in market and there is trust and loyalty among
customers.
Technological- Technology is important in case of BT association. There is use of
approaches through which services provided are effective and efficient., there are policies
through which there are less possibilities of dissatisfaction among customer and proves to be
hurdle in communication services. Technology requires cost and time, so this affect business
activities. There is requirement of training which is performed with involvement of cost.
Manager has to motivate employees to work under changed environment.
Legal- There are some legal factors which are required to be part of business operations.
It is effective for making changes in roles and responsibilities and it helps to provide comfortable
to employees. There are many laws related to employees, which HR manager of BT has to be
considered. As per change in legal status, then managers of BT has to modify their plans and
polices (Azar, 2011).
Environment- Environment is one of the important factor in telecommunication sector.
There is change in climatic condition, so manager has to keep in mind that services does not get
affected due to this. If proper services are not provided then consumer may shift to other brand.
This means there must not be hurdle in satisfaction of customer.
ANSOFF’S GROWTH MATRIX
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Ansoff’s growth matrix works for making product in form so it can satisfy demand of
society. There are factors which has to be considered and this is effective for making changes in
existing operations. This matrix was pronounced by Igor Ansoff in 1957. there are four major
component of this matrix. They are discussed as under-
Market Penetration- This is the first block in Ansoff's Matrix. As per this factors there is
marketing of existing product among well known people. This is effective for making positive
impact sales and it helps to get growth in current product and services of BT (Bharadwaj and et.
al., 2013).
Market Development- This means to come with ideas to attract new people with existing
product. This second block of Ansoff's Model. There is use of policies which are frequent and
effective in targeting new customers. BT works to target old people by new and innovative
advertisements.
Product Development- When BT come with 5G services. This covers in this product
development concept. There is use of various techniques through which new services offered by
BT managers can market in market. In this component, market penetration is not possible.
Diversification- This is one of the factor which has huge risk and it is effective for
making changes in demand of customer. This can be done after proper research in market. In
targeted customer as well as services provided by BT enterprise both are new. This is last block
of Ansoff's Matrix ( Bucolo and Matthews, 2011).
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Illustration 1: Ansoff's Matrix
(Source: Ansoff's Matrix, 2017)
2.1 Strategic Capability
Strategic Capability depicts the capacity of business to effectively utilize competitive
techniques that enable business to get by in market for longer time and help with gaining high
competitive edge in market. This is the main element that assists organization is accomplishing
business targets in a viable way. In other words, it can be depict as set of skills, abilities and
resources that provide competitive advantage to company for long term in international market
(Kalyani and Sahoo, 2011). With the assistance of this approach or tool, British
Telecommunication can analyse its strategic value in form of present financial resource that
requires to be utilized in proper and ideal way. It typically depends on financial related
information of the organization that figure out their performance in market in form of incomes,
revenues and sales throughout the year consistently.
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2.2 Application of VRIO model to examine strategic capabilities
VRIO Model: This model was developed by Jay.B.Barney with the purpose of assessing
the effect of organization's micro environment factors, for example, material resources, financial
and human resource, data on their operations and activities of business. It is a kind of
investigative system that deals in assessing organization's competitive advantage and resources
in international market. It consists of Value, rareness, limitability and association.
With the help of this mode, British Telecommunication can without much of a stretch dissect
their resources in a successful way. Once the organization knows about its resources, they better
comprehend competitive weakness and advantage. The measurement of VRIO are defined
below: Value: It incorporates cost of assets and how to get it effectively from the market? Rareness: It manages how constrained or uncommon assets are? Imitability: How is it hard to emulate the assets?
 Association: It bargains whether accessible assets supports the current course of action of
organization and can the firm utilize it ideally or legitimately.
British Telecommunication has principally considered this model to evaluate the
circumstance inside the company. Further, it additionally laid its emphasize on following things:
 If the resources of British Telecommunication isn't important, at that point the
organization needs to outsource it (Meskendahl, 2010).
 If the assets are important yet not restricted or uncommon than, the organization is in
their aggressive ramifications and requirements to center around conceivable potential
change for a given assets.
 In the event that the asset are significant and uncommon however not sufficiently costly
to impersonate then the organization is having upper hand.
 In the event that assets are profitable, uncommon and costly to emulate however the
organization can't sort out it appropriately inside the organization, at that point the asset
end up costly for us
 In the event that we can sort out and oversee it legitimately, at that point organization can
without much of a stretch change over transitory upper hand into perpetual.
2.3 Determination of strengths and weaknesses of firm
Strengths:
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Broad market scope: British Telecommunication appreciates solid client and market
base spread the whole way across the world. By and by, the organization is working in excess of
30 nations and furthermore has accomplice task in numerous progressively extra places. Hence,
the organization is getting a charge out of noteworthy offer in portable telecom segment in the
vast majority of the nations in which they are essentially working (Schaltegger and Wagner,
2011). Starting at 2017, the piece of the pie of British Telecommunication in South Africa, UK,
India, Germany and Italy are 50.9%, 40.6%, 22.7%, 3.9% and 32.3%. In addition in UK, it was
positioned the sixth most significant worldwide telecom mark in United Kingdom.
Innovating promoting methodologies: Innovation ha dependably assumes pivotal part in
British Telecommunication publicizing systems: In-actuality the organization was the first
among other people who comes into association with Yahoo in 2006. As indicated by the
overview directed by Deloitte "over 74% of UK's young populace utilizes their cell phones while
strolling, showering, eating .This must be conceivable if the versatile system they are utilizing
gives solid signs to them with the goal that they can utilize it any place they need to. In Today's
period life of a man is thoroughly rely on the most recent and propel innovation.
Weaknesses:
Fierce Competition everywhere: In its country, the organization is confronting solid
rivalry against Vodafone, Three system, O2. This empower their administration to continue
changing their approaches and techniques on visit premise. Accordingly making disturbance in
general business exercises and task as they firm just spotlights on achieving high upper hand
over others.
Lawful Proceeding: The organization additionally confronted some affirmation related
with wireless radiation that will prompt lessening income of telecom-versatile industry. Different
bodies of evidence have documented against British Telecommunication concerning medical
problems that kids or individuals look because of broad utilization of portable use (Kalyani and
Sahoo, 2011). According to the Deloitte insights report, In UK, youthful age matured between
16-75 years of age have expanded their utilization of cell phones up-to 74% which isn't great as
this may unfavourably influence their well-being and brings mental precariousness.
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TASK 3
PORTER FIVE FORCES OF BT:
It is one of the best technique to analyse the industry. It is given by Michel E. porter. In
which porter describe about the 5 forces. It is one of the best technique to attract the market. It
create the external environment in the company that affects its ability to serve its customers and
generate revenue. since BT mainly provides broadband, mobile and vision customers, porter's
analysis will cover all these sections (Klettner, Clarke and Boersma, 2014). The collective
strength of all the forces determine the ability to earn the profit in market .The strength of the
forces varies from industry to industry.
ENTRY BARRIERS:
This force help examines how easy or difficult it is for competitor to enter into the market
place. It is some times risky also for the new entrant. The low price of product, high cost of
infrastructure, government regulation and product differentiation act as a barrier or risky to entry
for new competitors. But UK government remove all the barriers and restrictions of the BT
company related to new entrant.
RIVALRY DETERMINANTS:
Rivalry means number of competitors are available in the market. How many alternate
products are there and what kind of quality they provides. BT face large competition from fast
growing Talk talk/AOL(market share 23%) in internet /broadband market. In mobile phone
operations, it finds competition from likes of T-mobile & oranges combined, Telefonica and
Vodafone. Government move away from the market that's lot of competition will create in the
market and provides a better technology to the world.
BARGAINING POWER OF CUSTOMERS:
BT has a customer base of over 5m while virgin has a customer base of 8.2m and SKY at
10m. BT has a large number of substitute in comparison to other competitors. Two major
advantages of BT are highest number of fixed line and low cost. The price sensitivity of the
budget customers is however higher which is often compensated by high range of product with
less price variance. BT is having a tough competition by virgin and SKY (Köseoglu and et. al.,
2013).
DETERMINANTS OF SUPPLIER POWER:
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This force will affect the negatively or positively on product. Because if suppliers charge
high, than the price of the product become increase and vice versa. BT has strong tie up with
suppliers. The company deal with a number of supplier for the same product or part of it. This
gives a huge benefit to the company (Murano and et. al., 2011).
DETERMINANTS OF SUBSTITUTE THREAT:
Competitors substitutes that that can be use in place of companies product or services. It
is cover under porters 5 forces model. The relative price performance of substitute is par to BT.
Having the highest number of fixed lines provides an advantage to BT. The major substitute, are
poor customer service and unacceptable quality of products. The switching cost is comparatively
higher as buying a new broadband means paying for installation charge again to new provider.
TASK 4
P4 Understanding and interpreting strategic direction
The strategic direction can be described as criteria of carrying out different kinds of
procedures or activities to generate desired goals. It is necessary to build more effective as well
as efficient strategies to conduct regular tasks along with better results. British
Telecommunication Plc have to make several policies in an accurate manner to get desired
outcomes. These techniques are helpful to improve profits of company and increase goodwill of
brand through attaining grabbing better profit share (Annabi and McGann, 2013). By utilising
Bowman's strategic clock model, the organisation can evaluate several major things properly that
is as follows:
Bowman's Strategy Clock Model :- This model was developed by cliff bowman and
David Faulkner for the improvement of general strategies in 1996. Bowmen's strategy model is
represent diagrammatic relation between quantity and prices. In business this type of model are
describes that at time company uses model to designing marketing strategy for to analysing its
competitive position in comparison to offering the services of other competitors. Many large
company are utilise this strategy as a framework against competition (Oestreicher-Singer and
Zalmanson, 2012). It is tool that use in determining the level of company and identifying break
down of strategy into different section of model in market.
Position 1 (Low Cost & Low Value Added) :- This segment of Bowman's Strategy
Clock model are the bargain basement but many company's not want to be stay in this
position. When lack of product differentiated at a time industry are adopted this position. In
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company managers apply this position for effectively selling of product or regularly attracted
consumers (Bharadwaj and et. al., 2013). At any business level managers are trying to
satisfying users but they not win customers loyalty for this reason company offering high
quality of product according to needs of consumers at affordable price for attracting to final
users .
Position 2 (Low price) :- Option of low cost are used by company for their product or
services when his profit margin very low at a time in business to sale large volume of
production. The market offers low value with higher selling in comparison to other
competitors.
Position 3 (Hybrid) :- It is combination of average price & differentiation in company
producing goods to consumers at a lower prices with higher quality than other low cost
competitors. The valuable product are offering by company so the last users agree to pay
sensible price.
Position 4 (Differentiation): - This can be described about that criteria through an
effective as well as efficient goods or services are provided to customers. Features or quality of
products is considered as major reason for which people take decision of buying from same
organisation. It is necessary to put proper efforts to boost up quality of goods or service in
correct way so that company can achieve trust of consumers in an appropriate way and create
desired outputs on regular basis. British Telecommunication Plc have an attractive strategy to run
business along with providing required products or services to clients and achieve their
satisfaction as well.
Position 5 (Focused Differentiation): - It can be explained as to focus on differentiation
by creating separate image of company than other competitive organisations. It is necessary to
make an effective and attractive image of product so that people can recall it immediately
through some specific sign or logo (Auzair, 2011). Through providing more accurate products to
customers helps to grab more market share and British Telecommunication Plc can maintain an
appropriate position amongst competition of market.
Position 6 (Hazardous High Margin): - This can be described as that strategy which
bears high risk factors as positioning of brand will required high cost and price of goods remain
same. When people become loyal to particular brand then it is beneficial but still they find out
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better goods at reasonable price. British Telecommunication Plc have to focus on this factor and
make adopt more suitable techniques to gain desired results.
Position 7 (Monopoly pricing): - This kind of strategy is helpful in market when inly
single firm has that efficiency to provide specific goods or services. In such condition, those
businesses do not have stress and render product on fixed rates to customers. It is necessary to
maintain this position because if competitors are raised them factor of monopoly will start
decline and hence ended. British Telecommunication Plc can apply this technique if they have
unique and creative products or service which are not provided by any other organisation.
Position 8 (Market share loss): - This can be described as to that situation in which they
are surviving in large competitive market problems (Azar, 2011). These firms are also needed to
identify standard cost of along with middle range of products and low quality will lead to their
potential customers. British Telecommunication Plc can also utilise an efficient strategy to gain
an appropriate position market through gaining better profits.
The above described factors can be focussed by organisations to achieve better
productivity as well as profitability and maintain an effective image of bra British
Telecommunication Plc and through grabbing more profit share of market in correct way.
CONCLUSION
Business runs in society and it is essential to make policies through which changes are
possible in running business strategies. There is use of various techniques through which
business is effective for making business growth. There are policies through which changes are
effective in making decisions for smooth running of business. There are policies which has to be
taken in performing business operations. PESTLE analysis is the technique which is effective for
knowing external factors which hampers working of company. There must be use of techniques
which helps to work according to use of policies through which goals can be achieved. There is
competition in market,. So it s essential to work according to need of society and this helps to
create good image in society. Porter's five model is effective as it helps to know about threats
which affects business operations. VRIN and Bowman's model are effective for making policies
which are frequent and efficient for growth of business.
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