Business Strategy Report: Vodafone's UK Telecommunications Sector

This report provides a comprehensive analysis of Vodafone's business strategy within the UK telecommunications sector. It begins with an introduction to business strategy and then analyzes the macro environment using PESTEL analysis, considering political, social, legal, economic, environmental, and technological factors influencing Vodafone's operations. The Ansoff Matrix is applied to explore market penetration, product development, market development, and diversification strategies. The report then assesses Vodafone's internal environment, employing the VRIN/VRIO model to evaluate its strategic capabilities, strengths, and weaknesses. Finally, it examines the competitiveness of the UK telecommunications sector, utilizing Porter's Five Forces to understand the bargaining power of buyers, the threat of new entrants, the threat of substitutes, the bargaining power of suppliers, and competitive rivalry. The report concludes with an overview of strategic direction and offers insights into Vodafone's position within the industry.

Business Strategy

Table of Contents
INTRODUCTION 3
TASK 1 3
P1 Influence of macro environment 3
TASK 2 6
P2 The internal environment and organisation capabilities 6
TASK 3 9
P4 Competitiveness of UK’s telecommunications sector 9
TASK 4 11
P4 Understanding and interpreting strategic direction 11
CONCLUSION 13
REFERENCES 15

INTRODUCTION
Business strategy is the art, craft and science management of implementing, formulating
and analysing cross-functional judgements which assist a company in achieving their objectives
and goals. Regional and global telecom players faces numerous challenges in the worker
productivity and capital monetization in mature intensified market competition in emerging and
developing trade. Mobile telecommunication sector has been growing fast globally. There are
different activities and components that is being considered while developing a business strategy.
In this report, different aspects of UK telecommunication sector and Vodafone i.e. one of largest
telecom company would be focused (Ackermann and Audretsch, 2013). It will assess influence
of macro environment and international environment in order to investigate the entire sector of
telecommunication in effective manner. This will interpret and understand the strategic direction
of whole using Bowman's clock strategic model.
TASK 1
P1 Influence of macro environment
Companies get different resources from supplies and environment of services and goods
in environment. There are different factors in environment which influence the ability of
business to serve their consumers. These elements of environment provide threats and
opportunities to a certain business. Macro environment consist of external forces which influence
the organisation's strategy of marketing in wider length. There are two external environment
types i.e. macro and micro that influence the decision making and strategy of marketing. In order
to understand distinct aspects of macro environment, study of PESTEL analysis would be more
suitable.
Vodafone is one of largest telecommunication chain which is taking universe's nomadic
organisation within the countries like India, Europe and United Kingdom. The company is
biggest web supplier in the whole United Kingdom (Annabi and McGann, 2013). This is one of
the strategic tools which is affecting different factors such as economical, social, political,
technological, environmental and legal elements of company. Here are the study of macro
environment of sited company i.e. discussed as below:
Political Factor: The political instability and system of different of United Kingdom after
the period of Brexit. Vodafone, therefore, will require to determine and carry out appropriate
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business strategy. Licenses of mobile phones are expensive and are strictly controlled. In few
cases, there are tight measures which the government has implemented for decrease use of
phones children leading to health issues (Auzair, 2011). Vodafone has to follow governmental
regulation to support and expand their network, which make it essential for them to register and
licensed from state.
Social Factor: Consumer want best and effective service which they can be provided for
suiting in or being better than other society. Mobile and smart phones are in trending nowadays
which is leading to more sales to mobile operating and telecommunication companies. But as
there are more aged population then the younger one, it can lead to less use of telecom
equipments in country.
Legal Factor: As United Kingdom has been facing imbalance in their system,
government has supported some laws and legislation for creating more suitable environment.
Sales of Goods Act 1974 should be followed by Vodafone which states that the commodities
must be suitable for the manufactured purpose. Also the business organisation need to comply
two different code of practice of advertising which can restraint the growth of Vodafone proven
as limitation to company. However, their competitors also has to faces these regulations as well.
Economical Factor: Recession has carried out drastic change in the purchasing habits of
UK consumers who are not willing spend their financial assets. It has led to price war among the
different leading telecom service providers to trim down the costs of services in order to attract
more buyers or consumers. Also, the economical condition of Vodafone has risen as the people
are preferring their children to carry phones for safety and communication purpose for
emergencies.
Environmental Factor: Vodafone contain proper recycling programs for their SIMS and
phones to support healthy environment through reusing the handsets (Azar, 2011). They render
incentives in money terms to consumer in exchange of older phones. Also the higher costs of
energy is a disadvantage for the company as this is creating more green house gas emission.
Technological Factor: Technologies varies and modify itself dynamically. In order to
meet the market requirements and provide more advanced technologies, company has been
developing 5G technologies. Also analysing the advancement in business, company has set their
websites so that their clients can conveniently purchase their services or products online.
Vodafone also render the opportunities to examine the features before buying their services.
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Hence, through this, proper understanding of Vodafone can be established a proper
manner which can help in developing the business objectives. This is not only enough to carry
out PESTLE analysis for understanding macro environment (Bharadwaj and et. al., 2013). Thus,
the report will carry out Ansoff Matrix for setting best strategy in regard of increasing sales. The
concept of Ansoff matrix reviewing can assist in drive ring strategic positioning of firm which is
mentioned as below:
Source 1: Ansoff Matrix of Vodafone, 2018
Market Penetration: This phases provide Vodafone existing service and products in the
recent market. This is paramount for Vodafone to launch existing services in existing trade
through conducting proper competitors market or rivals analysis. The company has increased
their revenues through penetrating their market over the last few years. Vodafone can adopt this
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Illustration 1: Ansoff Matrix of Vodafone

model for customising and adapting according to the local or regional parameters for becoming
the country's most leading cellular telecommunication service provider.
Product Development: According to this concept, Vodafone look forward for creating
new services and products in the existing market (Bucolo and Matthews, 2011). Hence, the
company has recently launched Wi-Fi services in United Kingdom in the existing market where
other companies are also rendering the same commodities. In order to compete them, the
company has started the service of broadband in cost effective prices in Europe and UK through
using this method.
Market Development: This is one of main techniques where Vodafone has launched their
existing services in market. The company has been launching their wireless services in different
part of world including Asia. Cause of geographical change, company has to develop new
strategies of marketing and distributing methods. Company has been facing some cultural issues
an d economical & political elements before introducing their services in the new area of market.
Diversification: The company has launched their services in the new country and market
so that the company can build up more challenges in order to attract consumers. This techniques
render plan for creating more stronger strategy of market to gain the clients or consumer.
Current strategy of company is grow through acquisition of potential consumer,
geographic expansion, retention of recent customers and enhancements in service usage through
technologies advancement. Through accurate macro environmental analysis, they can develop
effective strategies to meet their vision and mission of enterprise.
TASK 2
P2 The internal environment and organisation capabilities
While developing a business strategy for any organisation in the worldwide, it is
indefensible for a company to understand strategy (Grover and Kohli, 2013). Strategic capability
of an organisation refer to the set of resources, skills and capacities which builds long term
competitive edge for a firm. Therefore, in brief, it refer to the ability of business to successfully
employ the activities of business employing appropriate competitive plans which allows them to
increase their market value and survive in the industry over a time. In order to perform or analyse
the strategic capabilities of Vodafone, company need to implement VRIN/VRIO model that
assists in identifying limitations and strengths of organisation. Here are discussed VRIO model
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in order to determine strategic capabilities possessed through the sited organisation which is
discussed as below:
VRIO Analysis: From the evaluation it can state that competitors of Vodafone and the
organisation have their temporary competitive edge (Jocovic and et. al., 2014). These benefits
could be lost of rivals carry out more modified services that Vodafone is not bale to imitate
immanently.
Source 2: VRIN framework of Vodafone
V- Valuable: Economies of scale cause of large infrastructure of company.
R- Rare: Global presence create beginners to United Kingdom identifying the Vodafone brands
instantly which is highly specialised stuff for the unified services of mobile and
telecommunication.
I- Inimitable: Brand render more easier admittance to the segments of market in which firm has
a culture of being leader of market however the culture does not encourage restraining the
opportunities as they emerge.
N- non-suitable: None
Hence it can conclude after analysing VRIN model of Vodafone that company has been
increasing their grounds of sustainable competitive edge. This helps in identifying the strengths
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Illustration 2: VRIN framework of Vodafone

and weakness of organisation in more proper and suitable manner which is essential for
understanding the internal working environment of company.
Strengths and Weakness of Company: Vodafone is considered as brand which has its
roots across multiple nations and countries (Kalyani and Sahoo, 2011). It has been enlisted as
one of the largest telecommunication company in entire United Kingdom. After the VRIN
analysis, the organisation can easily determine their major strengths and limitation which is
mentioned as below:
Vodafone is the largest telecom company in United Kingdom which has been nominated
as top 395 business organisation among top 2000. This is popular for their widen network and
distribution which operates their business in more than 25 nations in entire globe.
Vodafone generates more than billion dollar each and every year. This is enlisted as 104
company in terms of sales of services. Strong research and development enable company to
increase their competitive edge through becoming the leaders of market in terms of technology.
The saturated trade create more complications and barrier for firm to stand among their
competitors.
Strong culture of Vodafone has permitted company in being successful with JVs and
M&A. Managerial resources has decreased and has become hard to seek cause of rapid growth
leading to constant brand recognition within group.
Strong financial bas provide company face for errors without creating the bankrupt
situation to Vodafone and reinvestment ability. But due to extensive competition in Europe,
Vodafone does not influence the operated market.
Vodafone has the flexibility to control the cost and provide more cheaper phones as
company produce and trade own mobile phones (Klettner, Clarke and Boersma, 2014). It allows
them design plans and further strategies of business that increase their brand image. Where on
the other hand, if anything goes wrong with the company, it can damage the recognition and
brand image. This can create more potential risk for company.
Resources of company are focused on their Research and development rather than
extravagant campaigns of marketing. Their strong image of company allows them to do it
without any interruption or risk. On the other side, the company has been targetting more the
generation Y which lead to poor marketing of Vodafone.
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TASK 3
P4 Competitiveness of UK’s telecommunications sector
Telecommunication market of United kingdom is categorised through fierce competition
in the broadband and mobile sector. Following the major recent development or expansion of
networks, the capabilities and reach of network has increased greatly. Networking companies
involving Vodafone, O2, EE, and other networks are engaged in developing and trialling the 5G
technologies to launch it by the end of 2020 (Köseoglu and et. al., 2013). In respected of position
and growth of global and international market, this is vital for company to operate their business
through using potential future strategy which can be improved effectively with the assistance of
Porter's five forces in context of entire telecommunication sector of United Kingdom which is
discussed as below:
Bargaining power of buyers: In the telecommunication sector of United Kingdom,
consumer act as the leader as they enjoy indispensable bargaining power. Cause of industry's
regulated nature, there is sharp competition in the rival companies in telecom sector. These
competition benefit consumer who are dealing with different services and products at the relative
cost. Hence, it can state that buyer power is high in this sector. The another reason of high
service user power is dearth of differentiated services and products. Vodafone, on the other side,
will keep creating more reasonable benefits in comparison of their rivals.
Bargaining power of suppliers: The suppliers are majorly involved in the form of
organisations that render mobile operator with the infrastructure of technology required for
operating the setup of mobile in the nation. In this addition, mobile manufacturers are also
considered as the industry suppliers. Cause of the larger supplier presence, the power of
bargaining is now only intermediate (Murano and et. al., 2011). Vodafone's suppliers has high
power of bargaining since the organisation operates with more benefits in comparison of their
competitors. Market share of telecommunication industry is larger than other businesses which
makes the major organisations like Vodafone, EE, O2 etc. more influencing and mainly focused
company. The sited company, Vodafone can conveniently manage lower costs from their
suppliers as well as continue to create more and more benefits.
Threats of new entrants: In United Kingdom, the threats of new business entrance
significant. The cause behind this is the fact that there is potential growth in the telecom sector.
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However, here are discussed some of the elements which decrease the threat level from the
organisation:
 Huge investment of capital need to form operations of telecommunication.
 Companies are enjoying economies of scale recently in the present trade. Presents brands has consumer loyalty and dedication.
Hence, there is low threat of new fresh market entrance in the business because of the
lack of consumers (Oestreicher-Singer and Zalmanson, 2012). The organisation who are
focusing over the entering of market has to pay huge fees of licensing coupled through
availability of spectrum as well as has to face regulatory issues linked with the industry. On the
other hand, setting up new infrastructure is very expensive process and cause of the rapid
alternation or advancement in technologies, the process become more complex and highly
expensive which in incorporable for new entrance. However, the respected company can cope up
with such issues through managing the high-efficiency level of their services to the unrivaled
level.
Threats of substitutes: The substitution threat is very high in the presence of similar
services and products, production information access ease and low switching price. However,
organisation can create innovative and new technologies to increase competitive edge over
another rivals. The company is dealing with considerable threat in regard of their services and
products.
Rivalry within market: Due to many large companies and less telecommunication
organisation in the United Kingdom, competition intensity is higher in the industry of United
Kingdom. Rivals organisation in telecom sector create bo0th non-price and price strategies in
order to achieve competitive edge among the entire telecommunication organisations. Another
intense competition indicator is the budgetary allocation level for advertisement and marketing
purpose (Schaltegger and Wagner, 2011). Companies spend huge amount on research and
development in regard of improving their service and carry out advanced and modified
technologies that can help them in gaining more competitive edge over the competitor company.
Hence, The growth of UK telecommunication is increasing each and every day which is
leading to the market development and leading of existing companies. But due to high
competition among the different companies, there are various changes and advancement in
technologies are incurring which assist them in achieving the business industry. However,
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evolution was witnessed in this area during the 90th century that has completely changed. Due to
privatisation and deregulation further develop efficiency as well as carried out the new market
competition. After analysing the various sectors and elements of United Kingdom, it has been
observed that more than 92% adults are using the smartphones in country according to the last
five years study. This has also assumed that more than 85% of senior people or olds will be using
the smartphones by the end of 2023. the media, technologies and telecommunication activities in
nation will be developing drastically in 2018 due to emergence of digitalisation and use of
advanced technologies usage in different part of world (Scholes, 2015).
Vodafone retails their telecommunication services and products on the international
trade. Since the organisation has expanded their business globally, they have been recognised as
the second world's largest company of telecommunication across the international market.
Through company is still struggling to compete their rivals and new entrance in business sector
for which they are building effective strategies and plans implementing in market in more
creative and ideal manner.
TASK 4
P4 Understanding and interpreting strategic direction
Strategic direction refer to the course of activities which lead to success of organisational
strategy achievement. Vodafone has been working over their marketing strategies which is
weaker than expected as company has a strong positioning in the market. In order to understand
and recommend the whole strategic direction of company, report will utilise the Bowman's
strategy Clock model for assisting company to explore the major elements.
Bowman's strategic Clock Model: This is one of the effective model utilised for the
marketing purpose in order to evaluate the competitive company position through comparatively
measuring it with the offerings of competitors (Slack, 2015). This was developed by David
Faulkner and Cliff Bowman, as the explanation of three strategies of Porter generic. This models
stress over the positioned competitive position in market. The main purpose of this model is to
present the manner of position of commodities based on 2 dimension i.e. perceived value and
price. Here are elaborated the model under the used illustration:
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Source 3: Bowman's strategic clock, 2018
Position 1 (Low Cost & Low Added Value): It is not competitive business position in
which service is not distinct and consumer perceives very less value beside a low cost. This refer
to a bargain basement strategy which suggests to keep the products prices as cheaper for compete
the rivals.
Position 2 (Low Price): This is often associated with the economies of scale concept
which require the cost minimisation strategy for achieving success. Lower profits margin of
products and high output volume can enable company high benefits and revenues. This often
lead to price wars among the competitors companies in industry.
Position 3 (Hybrid): As per the name, this situation presents the lower prices along with
the differentiation in the products and services provided by organisation. This aims to persuade
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Illustration 3: Bowman's strategic clock

consumer through providing more effective value and reasonable price of services which is very
effective techniques to create better positioning in market.
Position 4 (Differentiation): Aiming over the different service or products, this provide
high level of value added services and products to their consumer. Quality and branding of the
service plays the major role in this. Vodafone create strong awareness of brand to create loyalty
and dedication among the buyers through providing relatively more value added produces as per
the requirements.
Position 5 (Focused Differentiation): This aims over keeping the service value at higher
rates which is preferred by consumer for consuming high perceived value. It is the positioning
strategy adopted through the luxury companies that focus to meet their premium cost through
highly aimed segmentation, distribution and promotion. This lead to threat of product sustaining
in market cause they should have unique quality or USP which lead organisation to high margin.
Position 6 (Hazardous High Margin): It refer to the higher risk strategy of positioning in
which the determination of high cost without providing any perceived value of product. If the
consumer are constantly purchasing their products, it will create more benefits, but consumer
eventually find a better products with reasonable cost along with the perceived value. This is a
short term and uncompetitive strategy.
Position 7 (Monopoly Pricing): In situation of monopoly of business, company does not
have to focus or stress over the products and service value as consumer has only choice left i.e.
purchase product or not without any alternative. In various nation, the monopolies are strictly
regulated in order to prevent themselves from determines cost as organisations desires.
Position 8 (Market Share Loss): This position can be referred as the recipe for the
competitive market disaster. Determination of standard cost with middle product range as well as
low perceived quality of service will lead to loss consumer and market share of company.
According to the elements of the whole Bowman model, 6, 7, 8 position are
uncompetitive in which the focus is quality despite of cost (Svee, Giannoulis and Zdravkovic,
2011). Vodafone, on the other hand, utilise Position 1, 2, 3, 4 for their service delivery in order to
support their products. The company has great positioning in market which has been optimising
different strategies and plans to develop. Through the assistance of the respected internal and
external environment of company as well as strategic positioning and direction of company.
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CONCLUSION
This can be summarise from the above report that United Kingdom's telecommunication
sector has been growing drastically in past few decades. This is essential for a company to
develop effective analysis over the environment of business where the company is operating
before developing a business plan. Through proper PESTLE analysis and Ansoff Matrix
analysis, Vodafone can attempt their business plans. This is essential to conduct appropriate
VRIN as well as strengths and weakness evaluation of company that can assist them in
understanding aspects of organisation capabilities and internal environment of enterprise. Also
through further strategic direction and opportunities of development can be understand through
implying the Bowman's strategy clock model.
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Online
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Deloitte predicts UK telecommunications sector trends for 2018. 2018. [Online]. Available
through:<https://www2.deloitte.com/uk/en/pages/press-releases/articles/uk-
telecommunications-sector-trends-for-2018.html>.
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