Business Strategy Analysis Report for Vodafone (2024)

This report provides a comprehensive analysis of Vodafone's business strategy, examining its external and internal environments. It begins with a PESTLE analysis to assess the impact of political, economic, social, technological, legal, and environmental factors on Vodafone's operations. The report then utilizes the Ansoff Matrix to evaluate growth strategies like market penetration, market development, product development, and diversification. An in-depth look into Vodafone's internal environment is provided by VRIO analysis and SWOT analysis to assess its capabilities, strengths, and weaknesses. Furthermore, the report applies Porter's Five Forces model to analyze the telecommunications sector and concludes with a strategic management plan for Vodafone, integrating the findings from the preceding analyses. The report aims to understand the impact of different factors on Vodafone's performance, offering insights into its strategic decision-making and future direction.

Business Strategy

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1 – EXTERNAL ENVIRONMENT ....................................................................................2
PESTLE Analysis...................................................................................................................2
Ansoff Matrix of Vodafone....................................................................................................4
TASK 2 – INTERNAL ENVIRONMENT AND ORGANISATION'S CAPABILITIES..............5
Application of VRIO Analysis...............................................................................................5
Strengths and Weaknesses of Vodafone.................................................................................7
TASK – 3 ANALYSING TELECOMMUNICATION SECTOR...................................................7
Porter's Five Forces Model.....................................................................................................7
TASK – 4 UNDERSTANDING AND INTERPRETING STRATEGIC DECISIONS..................9
Strategic Management Plan....................................................................................................9
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
A business strategy is a long term planning is means in which organisation set its desired
goals and objectives. This mainly cover a period of about 3-5 years. In business, the long term
sketch or blueprint of the desired image, direction and destination of the organisation is made
with the help of strategies and they play an important role in the success and failure of an
organisation. The following assignment is based on the analysis of the impact of different factors
on the working of an organisation. In order to know about the impact of macro environmental
factors, PESTLE Analysis and Ansoff Matrix will be done. The assignment will also focus on
the critical evaluation of the company's internal environment and also its capabilities by making
use of VRIO Analysis and SWOT Analysis. In addition to this, the assignment will also make
use of Porter's Five Forces Analysis and will also produce a strategic management plan for the
organisation based on the above analysis done. The organisation chosen for the completion of
this assignment is Vodafone which is headquartered in London and was founded in the year
1991. The net revenue of the company in the year 2018 € 46.571 billion. The employees working
in this company are approx. 1,11,556.
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TASK 1 – EXTERNAL ENVIRONMENT
PESTLE Analysis
PESTLE Analysis is a framework which is used in order to know about the impact of
macro environmental factors and also monitor their impact on the performance of an
organisation. External Environment can be defined as the environment which impacts upon the
working of an organisation externally such as the technological changes, changes in the taste and
preference of people, governmental policies changes and many more. On the basis of six factors
the impact of macro environment is analysed which is explained as under:
Political Factors:
These are those factors which impact upon the working of an organisation depending
upon the intervention made by the government in the working of an organisation. These factors
plays a significant role in determining the impact of these factors on the working of an
organisation (Akter and et. al., 2016). In Vodafone, it is generally subject to regulations
governing the operations of their business activities which are related to industry specific laws
and regulations covering telecommunication services and general competition. The initiatives
concerning consumer protection might become the most important factor for the future of
European mobile phone market. For example: there is increment in tax rates, then Vodafone
either increase internet prices of services or reduce range of internet services for consumers. This
change in tax rate is because of change in political party at UK.
Economical Factors:
These are those factors which impacts upon the working of an organisation due to
changes in exchanges rates, currency rates, inflation, etc. cause severs impact on the working of
an organisation. In case of Vodafone, it is an opportunity for the company to make advantage
which the country had after the crisis in the form of economic stability (Amran and et. al., 2016).
It can make benefit out of it by investing more and also by expanding its business to more
countries. To understand the future economic environmental factors such as monetary policy
economic policy and will help the company in creating good policies so as to ensure good
chances of growth and development in future. For example is of monetary policy such as the
central bank of a country lowers the interest rates on loans so it will become easy for the
company to get loans and foster the growth and development of the company. As the policies
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will impact favourably on the company so the company could take long term financial decisions.
However, severe increase in the labour cost in UK is a threat to the company as it will increase
its cost of operations which can create a bad impact on the working of the company.
Social Factors:
These are those factors which impact upon the working of an organisation due to changes
in the taste and preference or due to changes in the taste, belief, consumer behaviour and faith of
customers of any related area. All these factors impact upon the working of an organisation and
also on the design of their work. For example, the growing importance of social media by the
people has increased use of Internet so here is an opportunity for Vodafone to make their
network platform more strong in order to attract more and more people towards the services of
the company. On the other hand it also causes negative consequences for the company because
people having negative experiences with the company will share their views and it will create
bad image of the company in the market. It can also increase their access to remote areas where
the people do not have any access to internet This will put an increase in the awareness of the
services of the company which in result will contribute towards the growth and development of
the company. For instance: there is requirement of more internet services at corporate level as
compared to domestic level. So managers of Vodafone has to provide fast telecommunication
services to official people.
Technological Factors:
These are those factors which impact upon the working of an organisation due to some
changes in the technology. It impact depends upon the change which is positive or negative in
the technology which ensures about the impact of that change on the organisation. For example,
in Vodafone, it is an opportunity for the company to make innovation in their services such as
improvement in the speed of their network which will be a positive change and also impact
positively on the working of the organisation. The threat to the company is because of increasing
cyber crimes, at some these incidents are also impacting on the use of services of the company
because due to cyber crime fear some people are do not making use of Internet Services. For
example, in the technological advancements, the online chatting and video calling system can
impact negatively on the working of the organisation as people are diverted from the use of
calling to video calling.
Legal Factors:
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These are those factors which impact upon the working of an organisation due to some
rules and regulations made by the government of a country. On Vodafone, the rules and
regulations made by the government such as data protection policies are impacting heavily on
these organisations because of data breach and stolen of users by some other persons for
unauthorised uses. Due to this, the companies have to reform their policies related to Data
Protection of their customers.
There are different laws and regulations related to telecommunication services such as
range of providing services, measures to be taken related to Vodafone towers, etc. For instance:
there is change in range of internet services offered by organisations, so they have to abide it and
later their services.
Environmental Factors:
These are those factors which impacts upon the working of an organisation due to the
impact of an organisations working on the environment (Ansoff and et. al., 2019). However, the
company's working is not impacting much on the environment but its participation in the
environmental activities will lead to increase in the brand awareness of the company's services in
the market and help in increasing the demand of their services also. Telecommunication services
has different link with change in climatic factors, so sometimes, there is fault in
telecommunication services offered by Vodafone. For instance: due to excess rain, there is issue
in services offered by Vodafone and number of complaint from consumers gets increased. His
affects brand image of Vodafone and bright possibilities that consumers may switch to other
brand such as BT, Virgin group.
From the above analysis it is clear that the impact of macro environment factors are not
much impacting on the working of Vodafone. However there are some threats to the company in
relation to these factors which could be eliminated by adopting suitable strategies.
Ansoff Matrix of Vodafone
The following analysis is used in order to adhere opportunities for making increment in
the revenue of business by adopting several strategies such as market development, product
development, etc. which are discussed as under:
Market Penetration:
In the very first step, it says that company should focus on selling more their existing
products to the customers. For completing this, it has to found new ways by which it can increase
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customer loyalty and value that the product or service provides to their customers. The company
could provide additional benefits to their customers in order to improve their sales in the existing
market. This could be made possible such as providing additional discounts to their products
such as during recharges or with the help of making improvement in their CRM Services (Sia,
Soh and Weill, 2016). For instance: managers of Vodafone plan different new and innovative
marketing strategies for attracting consumers and make them familiar with brand.
Market Development:
In this part, the company extends the area in which it serves. In other words it can be said
that Vodafone could expand its services by expanding its business to other parts of the world.
But it is not much easy for the company to expand. In order to get sufficient market share in the
company in any new area it is essential for the company to provide23 23something new to the
customers which could attract them and which the existing firm are not providing to the
customers. For instance: in order to enter in new market, managers of Vodafone use joint venture
mode, so there is support of some local brand who have knowledge about culture, ethical values
of residing people.
Product Development:
Another important factor which ensures and provides the company with an opportunity to
grow and develop. Here, the company is creating opportunity for itself by inventing new feature
in their products or services which becomes a source of attraction to the customers. It is also
possible that the development made in the products are related to the feedbacks provided by the
customers. For example, increase in the speed of Internet provided by Vodafone will be a
development in the services provided by them. So the company could also focus in this area in
order to attract more and more customers towards the services of Vodafone. Vodafone has
launched their 4G services in market by analysing other competitors in society. In order to
develop market for existing product and services, they make alterations so consumer gets
satisfied and ready to avail it.
Product Diversification:
The last but not least factor in the Ansoff Matrix. Here, the company's main focus is on
diversifying the product (Anwar and Hasnu , 2016). For example, if a company providing
services related to transportation and the now the company is diversifying itself to other market
segments by introducing new products in the market with the same name.
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From the above analysis it is clear that the most appropriate strategy for the company to
choose is Product Development. With the help of this the company could work on developing
new features in their services as in case Vodafone, Product Development will be best suitable for
the company as the company could make improvement in their existing services which will help
the company in attracting the potential customers into real customers. The micro environment of
an organisation can be defined as the environment which concerns with the elements in an
organisation's immediate areas of operations which impacts upon the performance and decision
making process of the company. It covers factors such as competitors, customers, distribution
channels, suppliers, etc.
TASK 2 – INTERNAL ENVIRONMENT AND ORGANISATION'S
CAPABILITIES
Application of VRIO Analysis
The following is a strategic analysis tool which helps organisation to uncover and protect
the resources and capabilities which will give the company a long term competitive advantage.
Internal Environment can be defined as the environment which impacts upon the working of an
organisation internally such as employees, board of directors, managers, shareholders, etc. are
covered under the internal environment. On the application of this analysis on Vodafone, the
findings are as follow as:
Value:
It can be defined as the value of resources and answers the questions about its
availability, cost and many other factors (Razak and et. al., 2016). The resources which creates
value to the firm are financial resources, human resources, marketing expertise, brand image and
operations management. These resources are valuable to the company as with the help of
financial resources company will be able to perform their day to day activities and are also
required for their survival and growth, likewise human resources are also important to consider
because these are the core assets of the company and help in the development of the company by
innovating new features in the services of the company, marketing expertise is also valuable to
the company as with the help of this expertise, the company is able to make good and attractive
advertisements which has not only attracted but also increased the sales of services of the
company.
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Rareness:
This factors consists with the rareness of the resources of the company whether they are
scarce or not (Brewster, 2017). Human resources, marketing expertise and the operations
management are rare for the company as it is not possible for the company to get skilled and
efficient employees to perform the activities of the company effectively. Brand Image of the
business is also rare as it need much time and good performance of the company in market to
establish a good image. However, financial resources are not much rare to the company as
finance will be available to the company only if the work of employees is up-to the level and
from their work, the company will earn profits. Logo of Vodafone is different from other
telecommunication organisations, so this makes easy for consumers to identify it. This is also
brand image of association with which image of Vodafone improves.
Imitable:
In this factor it is analysed that the resources of the company can be easily copied or not.
So among all these resources, the resources which could be copied are financial resources and
human resources. But the competitors could not be able to copy marketing expertise and
operations management of the company (Peng, 2017). In addition to this, the brand image of the
company cannot be easily copied by the competitors. So this factor is not imitable. Brand name
and logo of Vodafone can not be copied by other because it is registered under intellectual
property right. Their logo is registered under copy right act, so this makes team different from
others.
Resources such as employees at Vodafone are skilled and expertise, so these resources
are rare, imitable and valuable for growth and development. Financial resources is selected from
registered and nationalised bank, so sources of finance is also reliable.
Organised to Capture Value:
In the last factor of VRIO Analysis, it is analysed that which resources of the company
are valuable, rare but not imitable for the competitors of the company (Chang, 2016). For
Vodafone, the factors which are organised to capture value are Operations Management,
Marketing Expertise and Brand image of the company.
Overall, it can be said that the company is having Sustainable Competitive Advantage.
Strengths and Weaknesses of Vodafone
The Strengths and Weaknesses of the company are discussed as under:
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Strengths Weaknesses
 Based on the Internal analysis of the
company, the strength of the company
is its marketing expertise and brand
image and operations management
which provides the company a
sustainable competitive advantage
(Evans and et. al., 2017).
 Another strength of the company is the
best network provided by the company
to their customers such as high quality
phone calls which make its
differentiation from other firms.
 A vital weakness of the company is the
high churn rate that it is facing. This
may be due to its inability to lock in
their customers for a longer period of
time.
 Another weakness is in its high prices
for fixed line voice broadband services.
It has also impacted upon the profit
margin of the company as Vodafone is
also purchasing these services from BT
and has to add a profit margin above
BT's initial price.
TASK – 3 ANALYSING TELECOMMUNICATION SECTOR
Porter's Five Forces Model
The following mode was propounded by Michael E. Porter in the year 1979. The
following tool is used in order to assess and evaluate the competitive strength and position of a
business organisation. The following theory is based on five forces which determines the
competitive intensity and attractiveness of the market in the industry. The explanation of this is
provided as under:
Threat of New Entrants:
In the Telecommunication Sector, the restriction to enter in the industry are very high.
The main reason behind this not due to government regulations but because of the relatively high
costs needed in order to start up the business (Hart, Sharma and Halme, 2016). However, it is
easier for the companies within one sector to enter to the other sectors of communications. New
Entrants in Telecommunication Sector also brings innovative services, new ways of working and
put pressure on the other companies to adopt lower pricing strategy, reducing their costs and
providing new value propositions to their customers. So it is important to manage all these
challenges for the company to survive in the market Due to these reasons the power has been
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considered as moderate for the company. There is more threats of new entrants in
telecommunication sector, so this affects working style of Vodafone in negative manner as they
have to regular analyse market about competitors policies.
Bargaining Power of Buyers:
In this industry, the bargaining power of buyers is also high. It is so because of intense
competition and lack of differentiated products and services. The companies dealing in this
sector cannot differentiate their services from one another except in the case of price reduction
but this will be a loss to the company to adopt this strategy to capture the market share. The
strong power of the buyers effectively reduces the prices of the services provided by different
companies. As the power of buyers do not impact on any single organisation but influences the
overall industry. There are numerous number of consumers at Vodafone, so mangers has to
consider their demand in order to make them satisfied. When consumers are satisfied, they are
ready to avail services from this brand and maintain same brand image in industry.
Bargaining Power of Suppliers:
The bargaining power of suppliers is considered as high because the company is
operating with great margins as compared to their competitors (Leonidou and et. al., 2017). But
due to its large market share, the company can easily take away the price increments made by
their suppliers. So this power is considered as high but the impact of this power on the company
is very low.
Competitive Rivalry:
The competition in this industry is very high which is clear from the low call rate prices
adopted by approx all of the companies in this market. Likewise, the competitors of Vodafone
are also providing innovation in their services fro time to time which clearly shows the high
intensity of rivalry in this industry.
Threat of Substitutes:
The threat of substitutes is also high. As there are a number of companies operating in
this industry and they are also very close substitutes to each other. So the company is having a
high degree of threat of substitutes from its competitors. As the landlines and CDMA services
are fast declining and the broadband services are increasingly becoming common. So this power
is also considered as very high (Linder and Williander, 2017).
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Overall it could be said that Vodafone's competitive strength and position in the industry
is good but it needs to work more on their products and services in order to stand in the market.
From the above discussion, growth prospects and policies of competitors can be analysed with it,
so this sector is profitable and attractive for Vodafone as they are able to undertake long term
sustainability in industry.
TASK – 4 UNDERSTANDING AND INTERPRETING STRATEGIC
DECISIONS
Porter's Generic Model
In accordance to this model, it helps in determining whether the firm's profitability is
above or below the industry average (Yuliansyah, Rammal and Rose, 2016). With the help of
four strategies, the company will be beat the competition which are discussed as under:
Cost Leadership:
In this strategy, the company focuses on acquiring large market by keeping the lowest
price possible. It will help in maximising the sale of the product and will help the company to
gain competitive advantage.
Differentiation:
Under this strategy, the company focuses on making improvement in the products by
adding some different features in it to make it different from that of others. Innovation and
proper research & development will ensure Vodafone to deliver best quality products.
Cost Focus:
In this strategy, the organisation keeps the pricers of their products as low as possible in
order to capture more market share and satisfy their consumers.
Differentiation Focus:
In this strategy, the focus is on market with less competition and product with different
features. It is done with a motive to make good brand image and enhance the loyalty of
customers towards the product of the company (Wheelen and et. al., 2017).
Apart from above mentioned four strategies, there are two more strategies which assist in
know strategic decision taken by managers of Vodafone.
Low market share- This is the situation in which Vodafone is offered lower quality
services as compared to competitors and charging standard price for it. This improves
performance of Vodafone but consumer satisfaction gets negatively affected.
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