UK Telecommunication Sector: Vodafone's Business Strategy Analysis

This report provides a comprehensive analysis of Vodafone UK's business strategy within the telecommunications sector. It examines the macro environment's impact using the PESTLE model, assessing political, economic, social, technological, environmental, and legal factors influencing Vodafone's operations. The report delves into Vodafone's internal environment, evaluating its strategic capabilities through the VRIO/VRIN model, identifying strengths and weaknesses related to revenue, network infrastructure, and employee capabilities. Furthermore, it analyzes the telecommunications sector, exploring opportunities and threats, and interprets Vodafone's strategic direction, including its objectives, vision, and mission. The Ansoff's growth vector matrix is used to analyze the organization's strategic positioning. The study concludes by summarizing Vodafone's strategic initiatives and their implications for the company's future growth and competitiveness. Desklib provides a platform for students to access similar solved assignments and study resources.

Business Strategy: Telecommunication Sector (UK)
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Table of Contents
Introduction................................................................................................................................3
Task 1 – The external environment............................................................................................4
Task 2 – The internal environment and organisation capabilities............................................10
Task 3 – Analysing the telecommunications sector.................................................................14
Task 4 – Understanding and interpreting strategic direction...................................................16
Conclusion................................................................................................................................19
Reference List..........................................................................................................................20
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Introduction
This assignment briefs about the various kinds of strategy adapted by an organization. These
strategies are used in operational, tactical and strategic role for an organization to increase its
standards. While dealing with the strategies, micro and macro environment has immense
impact in determining the products and services demands in relation to some external factors.
Business strategies help in creating opportunities and increases competitiveness with other
organization. Business strategy incorporates a plan taken by the organization to frame certain
objectives and estimate a period of achieving those goals with various processes. Firms and
companies apply strategy to compete with the entry of new threats and develop its own
weaknesses. Implementing strategy in a business helps in obtaining the objectives through
various actions taken by the organization. Strategies are formed to gain customer satisfaction
for the services provided by the company. Vodafone in UK occupies a brand name in UK
telecommunication sector. Vodafone with its strong communication network has led an
increase to the market share. With the help of the stakeholders and the partners, Vodafone has
been able to expand its business globally.
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Task 1 – The external environment
1.1)Analyse the impact and influence the macro environment has on your chosen
organisation and its business strategies.
UK's telecommunication networks have a major contribution to the Critical National
Infrastructure. Vodafone has contributed to UK telecommunication sector immensely in
giving shape to the wireless industry of UK. Vodafone UK is now on the verge of developing
its company and network globally. Vodafone, as a telecommunication company has acquired
the brand name of being the best networking communication. Globally the company is
aiming to expand its business. Vodafone has adapted certain strategic goals to develop its
networking sector in UK and globally.
Objectives: The Company aims at actively managing the company's portfolio to increase its
value of returns. The company is striving to reduce the cost of production in Europe. As
customers helps in increasing the demand for the company, Vodafone has an objective in
delivering the best customer’s needs in telecommunication.
Vision: The Company has created a vision with its employees to serve the customer’s needs
and be the leader in communication sector globally.
Mission: The Company’s mission is to create innovative services for the customers with the
help of the power of the mobiles. Being globally situated, the company has spread its
telecommunication sector almost in 26 countries with its marketing strategies. Through the
micro and macro strategies, the company establishes certain goals in achieving success over
the competitors.
a) PESTLE model for environmental analysis
Political  Vodafone as a multinational
telecommunication company operates
in almost 26 countries, attracting 444
million customers
 Political factors of a country affect
the customers to a great extent. The
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political crisis like the Brexit has
impacted not only the customers but
also the companies in UK. The
customer's confidence has faced a
negative jerk. Customers are less
attracted in purchasing the services
from Vodafone.
 A cordial collaboration exists
between the UK government and
telecom communication. With the
help of this collaboration, the
government has taken many several
initiatives for improving the standards
of the telecom industry. Vodafone has
taken the initiative to shift from GSM
cards to wireless communication.
Economic  UK has maintained the record of
being the 5th highest country in GDP.
Vodafone contributes largely to the
GDP of the country.
 Any changes in the economy of the
country, is the consequence of the
profit of the company. With the
provision of high standards of
income, the customers have the
opportunity to purchase the services
of Vodafone. With better economic
condition of the country comes the
increase in the profit of the
organization.
 However, recession in the year 2008
and rate of inflation has adversely
affected the profit of the company.
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Vodafone suffered a loss due to
recession has led it reducing potential
customers and employees (Linge and
Sutton, 2016).
Social  Customers behaviour and belonging
to different cultures determines the
service type and pricing of the
products. Vodafone has the young
generation as the customer segment.
As the younger generation does not
have a high earning as they lack in the
source of earning, they are unable to
purchase high price commodities.
Vodafone to overcome this barrier
should implement cheap cost
available products or reduce in the
cost of the product.
 Due to globalization, the customers’
demands vary with the choice of the
products. Vodafone to avoid
customers being bored of the service
has developed wireless
communications and latest features in
the mobile. Vodafone has adapted this
strategy of implementing latest
technology has helped to attract the
targeted customers.
Technology  Vodafone being one of the biggest
telecommunication companies
definitely depends on the
technological advancement.
 However, telecommunication
company are in itself are a gift of
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technology. As a consequence of
technological advancement, Vodafone
has the ability to provide its
customers with latest features. From
GSM to wireless communication, the
telecom industry has made a vast
change.
 With this advancement, competition
has also increased in the market (SHI,
2015). Competition is increasing with
the increase in the demands of the
product with variance. Competitors of
Vodafone are using advanced tool to
occupy their position in the market
too.
Environmental  UK has made many laws for the
companies to abide by in order to
maintain their position n UK. UK
Communication Act 2003 has been
followed by Vodafone in the market
of UK. Even certain employment
regulations are also implemented to
protect the employee’s rights. The
Employee Act 2010 has helped the
employees in UK. Any prohibition to
the acts is subject to penalty.
Legal  Organizations, in order to maintain its
position in any country has to ensure
the environmental standards.
Vodafone has invented many CSR
programs to reduce the negative
impact of the company on the society
and the country.
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Threats Opportunity
Changes of the taxation policies in UK and
imposition of VAT has made Vodafone to
implement certain changes. Following the
governmental decisions, Vodafone has made
a reduction in the pricing strategy. As a
consequence of the rate of inflation
adversely affecting the country, the
government of UK has made it compulsory
for all the organizations to abide by it. As a
result of recession, Vodafone has reduced its
employment structure in terms of quantity.
The marketing criteria of Vodafone have
been affected due to economic crisis.
Vodafone has also been accused of not
paying the employees according to their
standards when compared with its
competitors. Due to salary issues, many
employees often leave the company and have
joined hands with the competitors increasing
the risk of sharing the innovative ideas with
them. The uncertainty due to Brexit,
environmentally has led a stop to the pace of
innovation
A high rate of GDP characterizes the income
standards of the residents of the state. The
more the income level of the residents, they
are more contracted to buy latest
technologies for their comforts. This affects
the profits of the company and helps in
expanding beyond its boundaries. Vodafone
was successful in meeting the customers
demand by innovating latest technologies.
Vodafone being a European centred company
has made changes like adapting flexibility in
the business styles. Vodafone has
recommended changes in its preferences
considering the local culture of the state. The
innovative advertisement of zoo zoo’s
attracted many customers. With
environmental changes, Vodafone has shifted
from GSM cards to wireless communication.
Table 1: PESTLE of Vodafone Company
(Source: Created by author)
b) Ansoff’s growth vector matrix to analyse the organisation’s strategic positioning
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Market Development: This process includes the launching of existing services in new markets
(Loredana, 2016).
Market Penetration: When existing products are sold in the existing markets, the purpose of
increasing the market share becomes successful. This strategy is called market penetration.
This process involves reduction in the cost and low chances of risk. Having less chances of
risk in applying the strategy helps to increase competition.
Product Development: This strategy includes applying technological advancement in the
products to attract customers. Introducing new products will help in expanding the market for
the company. Vodafone has shifted from GSM card facility to wireless and many latest
features in internet to retain customers and their purchasing interests. Being already
established in the market, Vodafone involves less risk factor. Due to globalization, the
demands of the customers are changing.
Diversification: When any newly launched product is introduced in the new market, it is
called diversification. Launching new products involves high risks as whether the customers
will have positive or negative impacts which will affect their purchasing interest. This
strategy is also highly expensive (Johnson, 2016).
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Task 2 – The internal environment and organisation capabilities
2.1 Conduct an assessment of the organisation’s internal environment and its
capabilities.
a) Explain what strategic capability means
'Strategic capabilities', the term itself indicates an organization ability t use the strategic
plans successfully to improve its efficiency and standards in the markets. Having the strategic
capability helps in keeping the financial stability of an organization. If a company possess the
strategic capability, investors are keen in investing money in the company as there are high
chances of profits. Maintaining strategic capability helps to reduce the fear from layoffs for
the employees. Possessing these kinds of capability helps to understand the position of the
company along with its competitors in the market. Strategic capability on the other hand
determines the innovative techniques a company can implement to retain its position in the
market along with the threats. Vodafone has shown its strategic capability by providing
telecommunication services in UK at a minimum price without compromising the quality of
the service. In respect to technological capability, Vodafone has been successful in
employing skilled employees.
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Core Concepts in
Strategic Capability
Foundations Analysis Development Cost efficiency Organisational
knowledge Sustainability

Figure 1: Concepts of Strategic Capability
(Source: Pdfs.semanticscholar.org, 2018)
b) Apply the ‘VRIO/VRIN’ model to determine the strategic capabilities possessed by
your chosen organisation
In the year of 1984, Birger Wernerfelt developed the Resource Based View propagates the
concept that competitive advantage of an organization depends on its ability to apply valuable
tangible and intangible resources. Relating to this model, the VRIO model has been
developed. This model is used for analysing the value of the resources of an organization.
Resource or
capability
Valuable Rare Inimitable and
non sustainable
Organized to
exploit
Network
infrastructure
Yes No No Yes
Diversified
Revenue Base
Yes Yes No Yes
Employees Yes No No Yes
Leading market
position
Yes Yes Yes Yes
Table 2: VRIO Model
(Source: Created by the learner)
Network infrastructure – Customer data of Vodafone is most valuable resource as most of
the strategies of the company are dependent on it. Vodafone currently is upgrading the
national transport network among all its subsidiaries. This includes usage of all services like
IP as strategic technology. Vodafone has made it possible with the advanced networking
facilities access transmissions through fixed broadband networks, 2G/3G mobile networks
and private corporate networks. The core network of Vodafone comprises of packet switched,
circuit switched, IMS, service platform.
Diversified Revenue Base - By the year 2017, Vodafone has a record of generating 10.55
billion Euros in revenue. The Company has expanded its market with the help of strategic
decisions and partnership. By the end of 2008, Vodafone acquired almost about 289 million
customers globally. Vdafne contributed about 15.2% of the total revenue globally.
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Figure 2: Revenue of Vodafone
(Source: Vodafone.com, 2018)
c) Identify the organisation’s strengths and weaknesses
Revenues: Vodafone has made an immense record in generating revenue of billions of
dollars per year. In 2016, Vodafone has generated about 87.3 billion dollars. This has
definitely boosted the rankings in numbers with its competitors. Vodafone with the help of
revenue has also increased its expectations from the customer’s ends. In sales, Vodafone has
ranked in 104 globally out of 2000 and 84 in figures in market value.
Premium cost: Vodafone in the competitive market to maintain its position is bringing
diversification in its products. Vodafone among the customers has acquired the reputation of
being a notch above the rest of the companies. Customers have shown high rate of
satisfaction and is proud to be its users. As a consequence, Vodafone is able to receive some
premium from the customers and be in the margins. While other telecom companies are still
struggling to achieve the position and maintain positive margin.
Brand value: The brand value of Vodafone is 28 billion dollars by the year of 2016. Both the
brand value and equity are high in the market. Vodafone is the most satisfied company
preferred by majority of the customers (Paicu, 2015).
Extensive market coverage: Vodafone globally enjoys a significant customer base.
Globally, this telecom company operates in more than 30 countries and even includes
partnership with other countries. Vodafone has its strength in having an increase in the share
of the company in the market. By the year of 2017, Vodafone Group occupies about 22.7%,
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