Strategic Analysis of EE Telecom: Macro & Internal Environment

This report provides a comprehensive analysis of EE Telecom's business strategy. It begins with an introduction to business strategy, using EE Telecom as a case study. The report applies PESTLE analysis to assess the impact of the macro environment on EE's business strategies, examining political, economic, social, technological, legal, and environmental factors. It then employs the Ansoff matrix to evaluate market penetration, product development, market development, and diversification strategies. The internal environment is analyzed using the VRIO framework, assessing the value, rarity, imitability, and organizational competencies of EE's resources, along with a SWOT analysis. An external analysis of the competitive market utilizes Porter's Five Forces model to evaluate the telecommunications sector. Finally, the report analyzes strategic direction and options for the organization using Porter’s generic model. The report concludes with a summary of findings and recommendations.

BUSINESS STRATEGY

Contents
INTRODUCTION..........................................................................................................................3
TASK 1..........................................................................................................................................3
P1 Impact and influence of macro environment on organization and its business strategies..................3
TASK 2..........................................................................................................................................6
P2 Internal environment of organization and its capabilities.............................................................6
TASK 3..........................................................................................................................................9
P3 Evaluate the competitiveness of UK’s telecommunication sector..................................................9
TASK 4........................................................................................................................................11
P4 Analyze strategic direction and options for the organization.......................................................11
CONCLUSION............................................................................................................................13
REFERENCES.............................................................................................................................14

INTRODUCTION
Business strategy is used by all the businesses which mean taking decisions and
performing actions and tasks to achieve goals and objectives of the business. To understand the
strategies better the report will take EE Telecom Company for further study and research. The
EE telecom company is a sub company of BT group which provides 3G, 4G services, fiber
broadband etc services to its customers. It mainly has its base in UK. to understand the impact of
macro environment on the business strategies of the company, the report will use pestle analysis
and ansoff matrix. Further the report will talk about internal environment of the company and its
capabilities by using Vrio technique and by showing strength and weakness of the company
where the company can work on its weakness. As moving further, the report will conduct
external analysis of competitive market by using porter's five force model which will clearly
show the threat of new entrant as well as substitute. At last the report will depict the analysis of
strategic direction and options for the organization by using Porter’s generic model.
TASK 1
P1 Impact and influence of macro environment on organization and its business strategies
The PESTLE analysis model is a business tool which helps the company in assessing and
monitoring all the external marketing environmental factors which is creating the negative
impact on the working of EE Company. EE Company being a telecommunication industry has to
face many competitive and marketing challenges for sustaining in the market.
PESTLE Analysis
1. Political – For a telecom sector, political risk are related to the regulations, radio
spectrum, licensing of network etc. With the help of political factors, Government of
the country intervenes the functioning of telecom industry. The Laws made by the
government put many restrictions and compliance requirements related to tariffs,
production of mobile phones, new technology adoption etc. which has to be adhere by
EE company (Cagnin, 2018). Also, the company has to ensure that its goods and
services are in line with the safety and privacy factors which have been laid down by
government regulations.

2. Economic – It comprises factors such as Interest Rate, Inflation and tax which EE
company has to face and all these expenses affects the pricing strategy per plan which
is offered to the customers. The company also gets affected with the phase of
recession as its customers started cutting down their landlines connections and
consumption of cellular services has also slowed down during that time period
thereby affecting the profitability of the company.
3. Social – One of factor which affects the business growth of EE Company is its
limited access, expansion and growth opportunities in the rural areas of the country.
Because of social factors, many business organisation engaged in the
telecommunication sector get influenced and affects its business operations,
profitability and performance level.
4. Technological – The main business operations of EE Company is based on use of
new technology, mobile networks etc. any changes in these factors creates great
impact on the performance and profitability aspect of the business. The customers
across the world are facilitated with more and more changes in the Information
technological factors such as introduction of cloud computing, tablets, 5G network
which has created more competition between telecommunication industries (Deans,
2015). These changes have brought more competitive advantage and improvement in
business operations.
5. Legal – Many legal compliances, issues and regulations has impact over the
functioning of EE Company in long run. Company has to comply with all the changes
taking place in laws, broadcasting and licensing requirements from time to time so as
to remain competitive in the market.
6. Environmental – Many factors of environment such as climatic changes, global
warming, bad weather, heavy rainfall etc. can affect the services of EE Company.
These factors can hamper the facilities which are provided by any telecom company
to its customers across the nation such as mobile networks, signals, national radio
spectrum etc. Also because of various environmental factors, customers have to face
issues of bad and poor mobile networks, no signals' availability etc. which indirectly
affects the profitability of EE company as well if company is not able to resolve these
issues with time.

Ansoff matrix
Ansoff matrix will be used by EE Company which is division of BT group to see the
impact of business strategies on the company. It is a tool that will help the company to analyze
and plan strategies which will lead to potential growth for the company. This ansoff matrix uses
four strategies which can be used by the company and also help it in analyzing risk associated
with each strategy. Among all the 4 strategies, market penetration is considered to be less risky
whereas diversification is the riskiest.
Market penetration - Under this, the company focuses on increasing sales of existing
product in the already existing market. It is a strategy of the company to increase market share of
the company (Olson and et.al., 2018). The EE company operates in 700 retail stores in UK and to
increase its market share the company decreases its prices to attract new customers and can
increase promotion by introducing creative and innovative advertisements and to make more
distribution efforts. The other way to do market penetration is that EE company can acquire a
competitor in the same market place so that the competition of the company can be eliminated
and company can increase its market share.
Product development - The product development strategy deals with developing new
product in the existing market. Launching a new product is not an easy task, the company need
to do to research and development along with expansion of the product range. EE company can
launch new product only when it has the knowledge of its existing market and can provide
innovative solutions to meet the standards of the existing market. The company needs to invest
in R&D to develop new products so that it can cater to the existing market. The company can
also acquire product of competitor and to combine the resources so that the company can meet
the needs of people in creating a new product. The company can also choose for strategic
planning with other companies so that it can get access to partner’s distribution channel to
increase the customer base.
Market development - In such strategy, the company enters into a whole new market

with existing product. For this purpose, the company needs to analyze new geographic, segment
of customer and regions etc. EE company can do it by catering to different customer segment.
The companies can also entering into a new domestic market by expanding regionally. The other
way to develop market is to operate outside UK which means in foreign markets.
Market diversification - This is the riskiest strategy as both market and product
development is needed in this strategy (Buckley, 2016). EE company can either opt for related
diversification or unrelated diversification. The synergies can be realized between new product
and existing in case of related diversification and vice versa.
TASK 2
P2 Internal environment of organization and its capabilities
Vrio technique to analyze the strategic capabilities of the organization
Vrio framework helps the company in evaluating the importance of resources to the firm.
VRIO stands for Value of the resources, rareness of resources, imitation risk and
organizational competence. It is basically a resource focused tool which will help EE
company in building sustainable competitive advantage by understanding the role of
resources in the company.
The resources of the company can be classified into two types which are tangible and
intangible resources (Bentley-Goode, 2017). The tangible resources of EE company are
its physical entities that includes its land, plant, equipments, inventory and money
whereas intangible resources of EE company are skills and level of knowledge of its
managers, brand name, goodwill, trademarks and copyrights of the company along with
supply chain partners. The four components of Vrio analysis in the context of the EE
company are :

Valuable - The valuable resources of EE company are its financial resources, human
resources, operations management and marketing expertise. The human resources of the
company which are its managers and employees are highly skilled and knowledgeable
whereas the financial resources of the company is also very strong because the company
is the subsidiary of BT group which can supports the finances of EE company to expand
its market or to launch new product (Marketing strategy of EE, 2018). Moreover, the
operation management of the company are also efficient and smooth which make sure
that services are sent to the customers on right time. At last, the important resource of the
company is marketing expertise which plays an important role in selling the services and
products of the company.
Rare - The resources that are rare in EE company and is costly to afford for other firms
are marketing expertise and human resources of the company as managers of the
company are highly skilled and are rare for the companies (Wieland, 2017). The
resources need to be rate as else the new entrants and competitors will easily be able to
get access to the resources easily and can enter into a competition with the company.
Imitate - Imitation of the product of EE company can be done through two ways which
can be either by creating duplicate products on the name of the company or competitors
like Vodafone, virgin etc coming up with substitute products and this can affect the
industry structure as well as market share of the company.
Organizational competencies - It measures how company is able to handle its valuable,
rate and difficult to imitate the resources in the market. The level of exploitation of
resources is highly dependable upon the execution and strategy of the company and it can
be judged by assessing quality of human resources in the organization. Capabilities arise
over a time as company takes action on building strategic resources.
Strength and weakness of the organization

Strength of the company: As one of the leading firms of UK, EE has number of strengths that
help the company to sustain and to be stable in the market. The strength of the company not only
help in achieving success but also in penetrating in the new market. The strength of the company
are :
❏ The company has strong brand portfolio as it’s been so many years that the
company is investing in strong building portfolio (Rugman, 2017). This portfolio
helps in expanding into new market and new products.
❏ The company regularly comes up with innovative and new products which means
the EE company maintain successful track of the product.
❏ The satisfaction level of the customer of EE company is high as company is
dedicated to maintain its customer relationship management and maintain good
reputation among its customers.
❏ EE has an strong cash flow which provides in hand cash to the company to meet
regular requirement of the business operations.
❏ The company has a skilled workforce by continuous training and learning
programmes. EE has invested huge amount of money in training its employees
and as a result the employees are highly motivated.
❏ The company keeps a proper record of its merger and acquisitions and the
company has continuously integrated number the technology companies to build
its operations and to build an efficient supply chain.
❏ The other main strength of the EE is its market expertise (Baraibar‐Diez, 2017).
The company enters into a new market with expertise and be successful which
helps it in building new revenue stream and diversify the risk in the different
markets in which it operates.
❏ At last the company has a chain of reliable suppliers which enables the company
in carrying out its working operations smoothly.
Weakness of the company : There are number of areas where the company can improve and get
competitive advantage. The weaknesses are :

❏ The financial planning of the company is inefficient and not proper which means
that the current asset of the company suggests that the cash can be used more
efficiently.
❏ The inventory of the company is high for the day as compared to its competitors
which can make the company raise its capital more and this can affect the
company in long term.
❏ Investment of the company in research and development is quite low when talking
about dealing with competitors. The leading players like Vodafone etc invest way
too more in R&D.
❏ As compared to other industries, the EE company has higher labor turnover rate
and have to spend more on training and development of its employees.
❏ The EE company is not that successful when its about integrating firms with
different culture as it can successfully integrate small firms but cannot
successfully adopt their culture.
TASK 3
P3 Evaluate the competitiveness of UK’s telecommunication sector
With the help of porter’s five force model, the competitiveness of UK’s market of
telecom can be evaluated. It helps to analyze industry attractiveness of telecom industry.
Threat of new entrants (Low) - The EE company is already a well established company and
therefore the threat of new entrants is quite low for the company. It is low because the
requirement of capital is very high to compete in this market and EE has efficient cash flow as
well as good finances to do research and development as well as to manufacture the products and
services which gives it stability in the market. The other reason of low threat is that the company
is having trademarks and patents which make it difficult for the new entrants to use the patent
processes of the company. The other positive aspect is that the customers of the company are
loyal towards existing brand; they do not changer the operator they are using in seconds. The
advanced technology makes it difficult for the new competitors to enter in the market as they
have to develop technologies before being competitive to the EE company. The other reason for

low threat of new entry as already the competition is high in telecom industry and making a
space in such competition is quite difficult (Christ, 2017). The last one is that the telecom
industry constantly push the companies to be innovative and launch new products which is not
possible for the new entrants to develop in short span of time.
Threat of substitute (Moderate) - The availability of substitutes in this industry is moderate and
can force the company to cut down its prices. There are many companies offering same services
and products with cut throat competition. The companies like vodafone offer some scheme at
low rate then EE company’s customers may switch to the other company to avail that service or
it can create a pressure on EE company to lower down its prices for customer retention.
Sometimes, it does not even affect the customers as the procedure of changing the services is
quick but not that quick and changing the operator again and again is not likeable to most of the
people so in that way substitute does not affect the EE company.
Bargaining power of consumers (High) - In telecom industry, the bargaining power of
consumers is high therefore product or cost differentiation can be a way to deal with this issue.
The power of customers is rising as the choices are increasing day by day in the
telecommunication industry with very little or no differentiation except the brand name. Also,
the information related to this company and their schemes are very well known to the customer
which makes it easy for them to bargain. Low switching cost also make it easy for the consumers
to switch in a fraction of second. The company can cut down its cost and offer innovative
services to its customers so that they do not switch to other services and EE company can
successfully retain its customers.
Bargaining power of suppliers (Moderate) - Although EE company has good and
efficient chain of suppliers and maintain an effective relationship with its suppliers yet the power
of suppliers is moderate. The company has a lot of suppliers therefore in case of high bargaining
from supplier, it can easily switch to other supplier. The other important factor is that the
suppliers among themselves have intense and cut throat competition which leads to decrease in
price for the company and in a way benefit the company. The other factor is as the goodwill of

the company is good, no supplier would want to affect their relationship with such a company
therefore it also works positively for the company.
Intensity of rivalry (High) - Competition is too high between the companies operating in
telecommunication. The companies are constantly in a race to be ahead of each other, they
reducing their prices and bring offers and discounts to attract the customers and in the end the
customers get benefited. The other way in which competition can be ahead of EE is that the
finances of other company can be strong which can affect EE company. The competitors like
Vodafone invest more in research and development of new product in comparison to EE
company which can affect it and its business operations.
In conclusion, it can be said that the rivalry is high and hence EE company need to invest
more in R&D to be ahead in the race.
TASK 4
P4 Analyze strategic direction and options for the organization
To analyze of strategic direction and options for the organizations by using Porter’s generic
model - There are four strategies stated by Porter which are business tools which are used to
identify methods to implement business strategies -
● Cost Leadership - The main objective of this strategy is to achieve lowest cost of
production compared to the competitors in the industry. EE company with its strong
financial support implements this strategy efficiently. In the telecommunication industry
they have managed to keep their costs in line with the competition (Yang, 2015). By
achieving this EE company has opened its doors for better profit earning opportunities by
decreasing expenses and managing the finance efficiently. The company fulfills the
requirement to achieve cost leadership in the market by their high level of production and
their capacity to utilize resources at huge scale.

● Cost Focus - These are the strategies in which the ‘me too’ products or services come
into play. Basically these are the products or services where the company does not seek
high cost advantage and targets sufficient customers who are sidelined by the high priced
market leader. EE company is focused on launching such services into a particular niche
of the market against the market leading competitors to capture the cost effective markets
ignored by the competitors like Vodafone.
● Differentiation Focus - In this strategy the company segregates the small markets into
smaller special potential market with special needs and opportunities. This gives the
company upper hand over the competition as the competition is targeting a broader
segment of the same market. Every consumer has its own unique demands waiting to be
filled by identifying such opportunities and markets which shows the importance of this
business strategy (Marx, 2015). Usually small businesses who can not compete in the big
market tend to target such markets to capture such markets. EE company however being
one of the largest telecommunication company in the country, can adapt this strategy to
expand and tighten its focus on the consumers with special needs and try to fulfill such
needs before the competitors which are targeting for such niche of the customers capture
them under their market share.
● Differentiation Leadership - Unlike differentiation focus in this strategy the company
lays emphasis on larger markets over broad customer criteria which help the company to
achieve competitive advantage over its competitors. The identification of few major
criteria’s over which the consumer chooses a product or services is the initial function of
this strategy (Porter’s generic model, 2018). The premium price of the product justifying
the production costs compelled the consumers to choose the differentiated product of
service from the competitors. Subsequent marketing budget is required to fulfill this
strategy’s implementation demand, which is not an issue with EE company as it is
resourceful. The company is required to provide superior services to its competitors with
quality and features which justifies the production costs genuinely. Another important
aspect of this strategy is brand reputation which is important for the consumer for trust
building (Levinthal, 2018). EE company has successfully implemented this strategy by
providing high quality services and by covering huge geographic mass, capturing the

untapped market and sustaining them with its reliable and strong service point and brand
name.
CONCLUSION
The report concluded how strategies are important for any business to survive in the market
weather it is for long term or short term. The telecom industry is an industry of cut throat
competition in which the company requires to keep updating and introducing their strategies to
maintain sustainability and stability in the market. The report depicted the importance of external
analysis by using pestle analysis which showed various political, economical, legal,
technological factor etc which can affect the business and its operations. The other way used to
measure external environment was ansoff matrix which showed 4 quadrants and helped the
company in analyzing macro factors. However, for internal analysis the report used vrio analysis
which helped the company in knowing its rare, valuable and imitable resources whereas also
showed strength and weakness of the organization. Further, the report summarized the report by
analyzing competitiveness of firm by using Porter’s five force model which included bargaining
of suppliers, customers and threat of new entrants and substitutes. At last the report ended with
showing critical analysis of strategic direction for organization by using porter’s generic model
which included cost differentiation, cost focus etc.

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Online
Marketing strategy of EE, 2018. [Online]. Available through :
<https://www.academia.edu/7563865/Everything_Everywhere_-
_marketing_strategy_and_mix>
Porter’s generic model, 2018. [Online]. Available through :
<https://www.tutor2u.net/business/reference/porters-generic-strategies-for-competitive-
advantage>