Vodafone's Business Strategy: Macro Environment and Internal Analysis

This report provides a comprehensive analysis of Vodafone's business strategy. It begins with an introduction to business strategy and the selection of Vodafone as a case study, highlighting its global presence and services. The report then delves into the impact of the macro-environment on Vodafone, utilizing PESTEL analysis to assess political, economic, social, technological, environmental, and legal factors. It examines Vodafone's vision, mission, objectives, and strategic approaches, including market development, market penetration, product development, and diversification using Ansoff's Matrix. The internal environment is assessed through SWOT and VRIO analyses, identifying Vodafone's strengths, weaknesses, opportunities, and threats, as well as its valuable, rare, inimitable, and organized capabilities. The report concludes by summarizing key findings and offering strategic recommendations for Vodafone's continued success in the telecommunications industry.

Business Strategy

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1 .........................................................................................................................................1
LO1 Impact or influence of macro environment on organisation................................................1
TASK 2............................................................................................................................................4
LO2 Analyse the internal environment and it's capability...........................................................4
TASK 3............................................................................................................................................7
LO3 Evaluate and analyse the Porter's Five Force Model...........................................................7
TASK 4............................................................................................................................................8
LO4 Apply different theories and concepts to understand the strategic directions ....................8
CONCLUSION ......................................................................................................................10
REFERENCES ............................................................................................................................11

INTRODUCTION
Business strategy is the management tool where organisation formulate or implement the
various strategies which help the business to achieve their goals & objectives in order to increase
their productivity as well as profitability (Baumgartner, 2014). These strategies taken by the top
management on behalf of company's owners which meet with customer's expectation and build
competitive advantage. Vodafone Group Plc selected for the better understanding of this
concepts and it is British multinational telecommunication company. Which have headquarter in
London and Newbury, Berkshire.
This report include the macro environmental affect on organisation and it's business
strategy as well as assess the internal environmental & capabilities. In addition, evaluate the
outcome through analysing porter's five force model. Along with this, it include the various
theories and concepts which is discussed in this report.
TASK 1
LO1 Impact or influence of macro environment on organisation
Business Strategy:
Vodafone is multinational British telecommunication company which ranked 4th all over
the world regarding mobile customers. Company founded in 1991 and founder is Ernest Harrison
& Gerry Whent. Vodafone serve their services in all over the world and have total 111556
employees. They operates their networks across 25 countries and partner networks with 47
countries. Vodafone also provide the IT services to their corporate clients across 150 country.
Vision: To contribute in the nation in term of providing sustainable living through
delivering innovative services and sustainable connectivity.
Mission: To enrich their consumer's lives by providing effective mobile services with
high quality of connectivity (Beamish and Lupton, 2016).
Objectives: Main objective of the company is to maximise their profit margin and further
achieve their vision, mission in best possible manner.
Strategy is the plan which is adopted by the organisation and implement for the
achievement of their business goals & objectives. Top management of the company build various
strategies which help the Vodafone company to implement and achieve their business goals &
objectives.
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Business strategies plays very important role in the Vodafone to achieve their goals &
objectives. Currently company focuses on geographically expansion and attract more customers.
It become more successful business strategy for the Vodafone company which make this market
leader in the 1986. These strategies help the management to take effective decision in various
context. It further helps in increasing productivity which directly increase the profitability.
Analytical Framework of macro environment:
PESTEL Analysis help the Vodafone company to analyse environmental impact which
affect the Vodafone company as well as it's productivity & profitability.
Political: Those factors which affect the whole organisation in terms of their productivity
& profitability. It include Government policy, foreign trade policy, political stability, tax policy,
trade restriction etc. These factors affect the Vodafone company to grab the new opportunity:
 Opportunity: Political stability positively affect the Vodafone company because which
country have government stability where company expand their business and increase
productivity as well as profitability.
 Threads: In the Mexican market, it is not easy to get the telecom license because it is
expensive as well as this market have huge growth. Vodafone company have to take
permission to entered in the Mexican market.
Economic: This factor affect the business and their profitability which include economic
growth, inflation, exchange rate, disposable income etc. These elements affect the Vodafone
company where they try to reduce threads.
 Opportunity: Proposed merger with the idea Cellular in Indian market which increase
their market share and customers (Bell, Bryman and Harley, 2018).
 Threads: Intense competition in the telecommunication market which affect the
Vodafone company and it's productivity as well as profitability.
Social: It include the individual believes or attitude of the group of people which affect
the demand of product and it is based on population, growth, age, health etc. These factors direct
affect Vodafone company in Opportunity or Threads way.
 Opportunity: In the Mexican market, approx 90 to 95% people have ability to take good
decision which is beneficial for the Vodafone company. Because they target the people
and fulfil their needs to success in Mexican market.
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 Threads: It is very hard for the Vodafone company to convince the consumers to adopt
or try new technology. Because in the Mexican market, technology change continuously
which affect the business strategy of Vodafone.
Technological: By use of latest technology company can increase their productivity as
well as profitability. It also affect the marketing & management in the way producing new goods
& services, by using new distribution channel etc.
 Opportunity: Growth in the Mexican market create a opportunity for the Vodafone
company because is the well established market. Here, companies can earn more or
increase their market share in the telecommunication sector. Vodafone introduce new
technology such as Wi-Max and 3G.
 Threads: Use of latests technology make their product more expensiveness and that will
be not affordable for the all income range people. It will affect the productivity as well as
profitability of the Vodafone company.
Environmental: This factor become important for the organisation due to insufficiency
of raw material, business ethics, population etc. These factors affect the Vodafone company and
helps in reducing their Threads impact (Das and et.al., 2015).
 Opportunity: Current weather condition affect the Vodafone company to manage their
resources and finished goods. It will develop opportunity to increase their profit margin
which further helps in achieving business goals & objectives.
 Threads: Extreme wastage at the time of producing products so Vodafone need to
manage their environmental habits otherwise they have to pay pollution fine.
Legal: It include the different legislation or regulation which is important to follow by
the organisation. Such as equal opportunity in the workplace, consumer rights, product quality,
employment law etc.
 Opportunity: Protection law regarding company's Intellectual property rights where they
protect ideas and patents which is beneficiary information for the company.
 Threads: Health and Safety laws implemented in the organisation for the workers safety
but it is expensive but Vodafone has to be engage with it. Not because of regulation, due
to ethical or social responsibility.
Ansoff's Matrix: It is a strategic planning tool which provide a framework to the
manager, market researcher and executives. It help the organisation to build marketing strategies
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which further helps in achieving future growth. With the help of this matrix manager of
Vodafone company will take effective decision and it will be discussed below:
Market Development: In this strategic approach, company introduce their existing
product in the new market which is risky as well as it required huge investment for their
promotional activities. Vodafone company can introduce their existing packages in the new
market and for this company need to build effective strategies which help the business for the
successful implementation of plan.
Market Penetration: This is phase where company sell their existing product in the
existing market. It include the minimum risk where Vodafone company build various strategies
according to the taste, preference of their existing customers. Company can implement this
strategy to increase their market share as well as growth in the telecommunication industry.
Vodafone add new features in the monthly plans which attract the more consumers and it will be
beneficial for the company (Deodhar and et.al., 2012).
Product Development: This strategy include the innovation of new product in the
existing market. This strategy include the huge risk as well as huge investment to develop new
product. Vodafone company can develop new product to attract more consumers in he existing
market which will increase the productivity that automatically increase the approachability of the
company.
Diversification: In this strategic, company introduce new product in the new market. It
will involve the huge risk, investment and intense research which help the management to build
strategy for the successful development of new product. Vodafone company can adopt this
strategy because with the help of technology they introduce innovative product and company
have enough brand value which make them popular among the consumers. \
Vodafone company focuses on product development strategy where they develop new
product in the existing market. It is beneficial for the organisation, because they have enough
capital to survive in the market, good customer base, brand value and innovative idea which
helps in developing new product in the existing market.
TASK 2
LO2 Analyse the internal environment and it's capability
SWOT Analysis of the company:
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It is a strategic planning techniques which help the individual as well as the whole
organisation to identify their strength, weakness, threads or opportunity. It further helps the top
management to take effective decision in respect of achieving business goals & objectives
(Keränen and Jalkala, 2014). With the help of this analysis Vodafone company analyse the
internal factors which affect the most and it will be discussed below:
their competitors
Strength Weakness
 It is the 2nd highest telecom operator.
 Vodafone have huge market coverage
in term of distribution of network.
 Company have effective marketing
strategy which which done effective
positioning in the consumer's mind.
 Vodafone have large subscription base
which is approx. 350 million.
 Brand valuation of Vodafone company
is $28 billion.
 Company have huge customer base
who are loyal for the brand.
 Vodafone have large distribution
channel across the world.
 Company drop their subscription base
due to competitors. So Vodafone need
to strengthen their core values and
build effective strategies.
 Brand valuation also drop due to
decrease in subscription base.
 Vodafone loose their market share in
the USA market.
 Poor performance in the Europe market
due to Brexit and another economic
condition (Mithas, Agarwal and
Courtney, 2012).
Opportunities Threads`
 Market penetration is the best
opportunity for the Vodafone company
to introduce their existing product in
the existing market it will provide the
huge growth.
 Company need to focus on rural market
because in the urban market
 Vodafone company have huge
competitors and biggest one is Airtel.
 Due to differentiation, profit margin of
the company will reduce.
Differentiation strategy work in the
initial 3 to 4 years.
 Portability of mobile number also
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competitors already work.
 Vodafone company need to focuses on
developing countries such as India.
Because, here they get the opportunity
for the expansion or can increase their
market share.
 4G network also create their place in
the consumer's mind. By improving
their services and network coverage.
become thread for the Vodafone
company due to network issues
customer will change their network
with their competitors.
 Saturation of market will reduce the
revenue of Vodafone company. In this
case, company invest the higher
amount but in result they get the less.
VRIO model: It is a business analytical framework where basic strategies help the
business to complete their vision, mission or achieve their business objectives & gaols. It will
include the internal & external analysis, strategic choice and implementation of the various
strategies. Vodafone company done VRIO analysis and it will be discussed below:
Capabilities Valuable Rare Inimitable Organised
Competitive
advantages
Yes Yes No No
Customer base Yes Yes No Yes
Market share Yes No Yes No
Brand Value Yes Yes Yes Yes
Valuable: Vodafone have valuable competitive advantage, customer base, market share
and brand value. In the telecom sector, company have huge competition but they have also adopt
various effective strategies which provide competitive advantage. Vodafone company have huge
customer base which increase the brand value of the company (Morgan, 2012).
Rare: In this case, Vodafone company have competitive advantage such as Airtel is the
biggest competitor in the telecom sector. Company have rare customer base which affect the
organisational productivity as well as profitability. Vodafone does not have rare market share
because after differentiation, market share of Vodafone company will reduce. It was increased in
the initial years. Company have rare brand value due to it's marketing strategies such as zoozoo.
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Inimitable: Competitive advantage and customer base are not inimitable because by
using effective strategies, Vodafone company can take it for the longer period. But market share
and brand value are inimitable because no company can maintain their market share for the
longer time. It can be increase and decrease but not stable for the longer time and same as brand
value can be up or down which is totally depend upon the other factors which affect the
company most (Salavou and Sergaki, 2013).
Organised: Competitive advantage and market share of the company are not organised
because other competitors also sell the same product with same price range. Brenda value and
customer base is organised because to build customer loyalty will take longer time or if they
build then take for the longer period. It is the biggest strength of the any company and after
building customer base it is hard to harm the image of the company.
TASK 3
LO3 Evaluate and analyse the Porter's Five Force Model
Porter's Five Force Model: The Porter developed a model which consists five forces.
All these forces have a significant impact on the companies. Eventually, these five forces
determines about the structure of the industry and level of competition in the industry. The five
forces of porter's model are as follows: threat of new entrants, bargaining power of suppliers,
bargaining power of buyers, threat of substitutes and rivalry among competitors. The Vodafone
company implements this model to know competition in their industry. Herein, detailed
description of these forces are is mentioned below (Porter's Five Force Model, 2019):
 Threat of new entrants: This model determines that if industry is profitable then there
would be no barrier of new entrants. As well as due to no barrier there can be tough
competition in the market and profit of existing companies will start to fall (Schoenberg,
Collier and Bowman, 2013). It is necessary for the exist industry that they should make
high barriers to enter new entrants. Herein, the industry of Vodafone company the new
firms can easily enter in the market and this can raise the competition. For this, they can
prevent the entry of new firms.
 Bargaining power of suppliers: Suppliers are those who provide raw material and other
basic things to the companies. If there are less number of supplier in the market then their
bargaining power will be high because companies will not have any other option. On the
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other hand if suppliers are in more number then, competition will be high and their
bargaining power will be low. Herein, the case of Vodafone company they have more
suppliers in their industry so bargaining power is low of their suppliers.
 Bargaining power of buyers: Buyers are the king of the market. Companies profitability
depends on the customer's perception. If there are less number of customers then their
bargaining power will be high because they have more option to buy. Apart from it if
customers are in large number then their bargaining power will be low. Additionally,
customer's income level also determines their bargaining power. The Vodafone company
has high bargaining power of their customers because their customers have more
alternatives in the market.
 Threat of substitutes: This force of porter's model defines about the threat of substitute
products and services that can be launched by the competitors with similar features but
different price. Due to this competition can increase in the industry. In the industry of
Vodafone there are many substitute products and services which are giving tough
competition to them (Shah, 2012).
 Rivalry among competitors: This force states about the level of competition among the
competitors. The reason of this competition is when then there are large number of
competitors, exiting barrier , lower customer loyalty etc. Due to this force, customers get
the advantage because they have more option to buy. Like in the industry of Vodafone
company, there are lot of competitors and because of this they face the tough
competition. It is important for company to sustain in the tough competition because at
some phase of time the competition can low.
TASK 4
LO4 Apply different theories and concepts to understand the strategic directions
Porter's Generic Strategies: This strategy model help the organisation to identify their
competitive advantage across the whole market. It include three strategies such as Cost
leadership, differentiation and focus strategy. Here, company measure the area where company
have to focus competitive scope or in competitive advantage. It will be discussed as follow:
Cost leadership: This model provide the competitive advantage and it also have two
ways to achieve. First one is about increase profit margin by reducing cost of products because it
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will increase the productivity which automatically increase the profitability of the company. It
also helps in increasing market share by offering lower price of the product. It will attract more
customer toward company. Vodafone company can adopt cost leadership strategy which help the
organisation to reduce the product cost which help the business to increase their productivity as
well as profitability. By using cost leadership strategy, Vodafone can achieve their business
goals & objectives of the company and it will provide market growth and create brand value
among the consumers (Sigmar, Hynes and Hill, 2012).
Differentiation: In this strategy, company introduce their existing products in the new
market where company required intense research regarding new development or innovation of
product. For the successful completion of this strategy, business required to provide high quality
product and effective marketing & sales strategies. Vodafone can adopt this strategy and it help
the company to expand their business and capture the market share of telecom industry.
Focus: In this strategy, company need to analyse that further concentration will be
provided on niche market after analysing the market and demand of customers. Company have to
focus on narrow or broad market where narrow market should be cost effective and broader
market must be differentiating of products. Vodafone company can adopt this strategy but be
sure that weather they focus on cost or on differentiation.
Vodafone company follow the cost leadership strategy where they have to minimise the
cost of product which attract the huge number of customer. Which increase the productivity that
automatically increase the profitability of the company. With the help of this strategy company
can achieve their business goals & objectives. It further helps to increase their market share and
provide global expansion through effective customer base (Unit, 2015).
Strategic management plan:
It is the document which is used for the communication purpose which include the
organisational objectives, vision or mission statement. It include the various strategies, resources
and need to ensure that employees are working on a common which is similar to the
organisational goals. Product development strategy recommended for the Vodafone company
and they have to prepare strategic plan for the further implementation and it will be discussed
below:
Objective: Primary objective of the company is to maximise the profit margin which is
about 10% in the next 2 years. After launching customize package of calling, SMS or data.
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Vision: Vision of the company is to provide their contribute in the economy for the
sustainable development of the society.
Mission: To provide the high quality service to their consumer which develop customer
loyalty for the longer period (Veit and et.al., 2014).
There are some strategies followed by the Vodafone company at the time of introducing
new product in the existing market and it will be mentioned below:
Research & development: With the help of intense research, Vodafone company can
identify the current demand of market as well as customers. It help the company to build their
strategies according to the requirement of customers.
Promotion: By using effective promotional strategies, Vodafone company can launched
their new product in the market. Because attractive advertisement or promotional strategies will
help to attract more customer which maximise the profit margin of the company.
Arrangement of funds: It is the basic or important requirement of the company to run
their business or to expand through product development. Company manage the fund from
various resources such as internal as well as external resources.
STP Analysis: It include the three major strategies which is followed by the Vodafone
company at the time of launching their new product and it will be discussed below:
Segmentation: This strategy means divide the market into small segments where some of
them selected for the further action. Where Vodafone company choose the geographical
segmentation and select the young age group people (Zikmund and et.al., 2013).
Targeting: This strategy include the targeting of consumers where Vodafone company
chose the young age group who are more interested and use to it for the internet. Basically young
age customer more attracted to this product.
Positioning: Company adopt effective strategies which help the organisation to build
more customers. With the help of this, company build their product image in the consumer's
mind. It will increase the productivity as well as profitability of the Vodafone company.
CONCLUSION
In conclusion, it is stated that the effective and authentic process of formulating proper
strategic plan that support an organisation to attain the predefined goals is known as business
strategy. In each kind of organisation it is very crucial to determine the elements of business
environment that is external and internal. That help to predict the positive and negative impact
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