Business Strategy and Telecommunication Sector Analysis Report (UK)

This report provides a comprehensive business strategy analysis of Virgin Mobile within the UK telecommunication sector. It begins with an introduction to business strategy and its application, focusing on Virgin Mobile. The report then delves into the external environment using the PESTLE model, followed by an analysis of Virgin Mobile's strategic positioning with Ansoff's growth vector matrix. The internal environment and organizational capabilities are assessed using the VRIO model, highlighting the company's strengths and weaknesses. Further analysis of the telecommunication sector is conducted using Porter's five forces model and stakeholder analysis. Finally, the report concludes with a strategic management plan for Virgin Mobile, offering recommendations for future strategic directions and choices.

Business Strategy:
Telecommunication Sector
(UK)

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1- The External Environment...............................................................................................3
PESTLE Model for environment analysis..................................................................................3
Ansoff's growth vector matrix for analysing organization's strategic positioning......................4
TASK 2- The Internal Environment and Organization's Capabilities.............................................5
Application of VRIO model in order to analyse strategic capabilities of Virgin........................5
Strength and weakness of Virgin media......................................................................................6
TASK 3- Analysing Telecommunication Sector.............................................................................8
Porter's five forces model............................................................................................................8
Stakeholder Analysis...................................................................................................................8
TASK 4- Understanding and Interpreting Strategic Directions.....................................................10
Strategic Management Plan for the Virgin Mobile...................................................................10
CONCLUSION..............................................................................................................................14
References......................................................................................................................................16

INTRODUCTION
Business strategy refers to the set of competitive actions and moves which business
organizations uses for attracting customers, strengthening the performance level, competing in
successful way and also accomplishing overall goals and objectives. It leads to outline how
business organization need to be carried out for achieving desired goals. This report is based on
the mobile telecommunication sector which is growing on a rapid pace across the worldwide.
Chosen telecommunication organization for present report is Virgin Mobile and it is
mobile phone service provider company that operates in UK. This company was launched by the
Virgin Group in the year 1999 and it is the first Mobile Virtual Network Operator (MVNO).
Report will discuss various kinds of strategies which can be used in the tactical, operational and
strategic role for the company. The report will also include wide range of models, theories and
concepts which helps and supports the organization's strategic directions and choice. PESTLE,
Ansoff's growth vector matrix, VRIO/VRIN model, Porter's five force model, Ansoff's
product/market matrix and various other models are applied in the report.

TASK 1- The External Environment
PESTLE Model for environment analysis
The strategic management decision may get influenced and affected due to various
factors which are present in the external business environment (Desai, 2019). PESTLE analysis
can be used by Virgin Mobile for analysing the macro environment and to identify how the
future trends within political, economic, technological, environmental, social and legal factors
impacts the organization and its strategic decisions.
Political Factors: Virgin Mobile also faces political challenges and issues as because it
is spread into various foreign countries and it has to follow strict regulations and rules. The
operations of company get affected due to licensing bureaucracies laid by foreign governments,
increased control and regulations on company, political instability, high rate of tariff, etc.
Environmental Factors: There are dramatic alternations in the climatic conditions due
to the planetary heating and pollution, therefore this is a cardinal factor which needs to be
considered by the business organizations (Cuppen, 2016). For example, the strategic decision
and business operations gets influenced due as the Virgin Mobile focus on sponsoring assorted
programmes and events for the environmental causes.
Social Factors: The education level, beliefs, culture and demographics of populations of
UK may lead to bring influences and affects on the operations and activities of Virgin Mobile.
For example, company's advertisement is focused on young population and employed advanced
thoughts so that it can portion common ideas and beliefs, this leads to bring great benefits and
positive impacts on the operations.
Technological Factors: These are related with increased rate of the technological
changes, automation in the manufacturing operations, cost for acquiring new technologies and
acquisition of advance equipments and machinery. The negative side of technological factors can
be that company have to spend high rates for the technological inventions and innovations.
Legal Factors: This includes influences from the side of government, its rules,
regulations and policies on the telecommunication industry. For example, safety and wellness
jurisprudence was being enforced in the 2004 by the government, and it prevented the use of
nomadic phones when driving (Widya Yudha, Tjahjono and Kolios, 2018). This change led to
bring great impacts on the Virgin mobile and it also led to increase the gross revenues of
Bluetooth headsets.

Economic Factors: This includes inflations rates, interest rates being charged on
investment and capital, foreign exchange rates, economic development of country, etc. Economic
recession was experienced by the nations between 2007 and 2010 and it led to cause great losses
for the Virgin mobile. The operations of company also gets affected due to the global economic
crisis and unexpected fluctuation rates in both domestic and international economies.
Ansoff's growth vector matrix for analysing organization's strategic positioning
Virgin Mobile offers 'pay as you go', mobile broad-band services, contract airtime and
mobile phones. This matrix is strategic framework which helps in defining two important factors
for the marketing element, what is to be sold and who it is sold to. This matrix pertains on
products and markets and also enables to provide four alternative growth strategies and actions
(Ansoff Matrix, 2019).
Market Penetration: This strategy describes that business organization needs to focus
on increasing the sales of current products and services into the current markets. This strategy is
considered as the least risky method for growing the business. Virgin mobile can implement
market penetration strategy for maintaining or increasing the market share of existing products
within the existing markets. This will help the company to gain market leadership, increase
awareness among existing customers and even change the competitive process in the matured
markets.
Product Development: This strategy describes that business organization needs to focus
on developing new products and services and introducing it into current markets (Haselwanter,
Muskat and Zehrer, 2016). Virgin mobile can implement this strategy for increasing competitive
advantage in the existing markets through introducing new products such as Virgin Retail or
Virgin Cola, Virgin laptop, etc.
Market Development: This strategy describes that business organization needs to focus
on introducing the current services and products of company into new markets. Virgin mobile
can use this strategy and focus on leveraging the existing products into new geographic regions
using new channels for distributing products, using various product dimensions and even it can
adopt different pricing strategy.
Diversification: This strategy describes that company can focus on introducing new
products and services into new markets. This strategy can be used when the market has become
saturated and limited profits are there. Virgin Group is a typical example that has consistently

diversified products into the new markets. Virgin Group already diversified into Virgin Money,
Virgin Airlines, Virgin Megastores, Virgin Mobile, etc. But the company is not a market leader
for any of its markets (Desai, 2019).
Therefore, it can be concluded that Virgin Mobile can focus on product development
strategy for growing its business further. The company may focus on introducing Virgin Laptops
into existing markets. This strategy is considered as the challenging strategy as it includes
introduction of new products into the markets. But, this leads to bring great benefits for the
company in terms of increased market share, improved customer base and overall profitability.
TASK 2- The Internal Environment and Organization's Capabilities
Application of VRIO model in order to analyse strategic capabilities of Virgin
Value:
Virgin group provides a variety of telephone, internet and television services. The
company provides valuable services to its customer. The company apply differentiation strategy
and thus is able to attract customer toward its. Company is also successful in operating e-
commerce platform.
Rare:
The Virgin media has invested so much in order to create a strong customer loyalty. The
company has also a strong and flexible supply chain network. The other company may find it
difficult to set such a flexible and strong network(Explaining the VRIO Framework, 2019). The
company is also create a healthy and strong relation with retailers and wholesalers. The company
has a dedicated channel partners.
Imitation:
The pricing strategies of a company is quite common and this can be easily copied by its
competitors. The digital strategy which the company is using can also be easily copied.
However, the in-house analytics which the company is using is difficult for other companies to
copy. Many competitors of the company has try to imitate the customer loyalty and network but
were unable to do so. Brand extension is however can be done by any company. As the company
have good relation with the company it can be impossible for the other companies to have the
same thinking or thought process as that of the management and employees of the organization.
Resources:

The company is having many marketing expertise with them which help the company to
effectively promote its product and services. The company also has an effective sales force and is
capable of managing the different channel(Chatzoglou, and et.al., 2018). One of the major
resource which the company use effectively is use of digital strategy which made other
companies to defeat the v(Haselwanter, Muskat and Zehrer, 2016)irgin media.
Customers are the key factor for the success of an organization. And virgin media is able
to get the customer loyalty about 23 % customers contribute in the 84% of sales revenue. The
company is also able to create its image in the market. It has the advantage of its strong brand
image as compare to its competitors.
Strength and weakness of Virgin media
Strength:
 The customer of a company are satisfied with the product and services provided by the
customers. Virgin system holds a strong force of customer relationship management
which maintain a good relation with its employee to build high level of customer
satisfaction. Automation process has improved the quality of products of virgin media.
 The company has a successful track record in innovating new products.
 Virgin media provide proper training to the employees in order to create a strong
workforce(Safak and et.al., 2017). The company spend a lot amount in order to provide
quality training to its employees.
 The company is successful in creating a strong dealer community. The dealer does not
only promote product of the company but also spend money in order to train the sales
team so that they can effectively sale the product to the large number of customers. Virgin media also involved in the activity of mergers and acquisitions. The company is
also successful in working jointly with the large number of technology companies in
order to make its operation process efficient and build a strong supply chain (Faccio and
Zingales, 2017).
Weakness:
 The product demand and supply forecast is not accurate which results in missing large
number of opportunities (Lowrey, Armenta and Brooks, 2016).
 The amount invested by a company on research and development is high in comparison
of other competitors in the market. But the company is not able to defeat the leading

players in the industry. Company tries to introduce the product in a market which is tried
and tested rather than introducing innovative products.
 The company need to invest more on technology in order to manage its working in the
large area.
 The company is unable to make an effective financial plan. The different ratios such as
current asset ratio and liquid asset ratio shows that the company can make proper
decision regarding use of cash efficiently (Cooper, 2017).
 The company also suffers from the large number of employee turnover in comparison to
other companies in the same industry.
 The company is not successful in operating in different work culture. The merger of a
company with small company has proved a great failure of share for the merger company
who are from different work culture.
TASK 3- Analysing Telecommunication Sector
Porter's five forces model
This framework can be used by company for analysing competitive advantage in the
markets. Porter's five forces model helps logically for evaluating potential opportunities, risks
and profitability depending on the five components of the environment.
Threat of new entrants: Telecommunication industry requires high capital investment,
barriers to entry includes patents and copyrights and there are various restriction policies from
the side of government. Thus, Virgin mobile has less threat from the new entrants in the
telecommunication industry. It will be difficult for new entrants for accessing to distributors and
suppliers, gain customer trust and loyalty from existing established brands.
Threat of existing competition: Virgin Mobile faces high level of threat from the
existing competitors and major mobile networks like EE, Vodafone, Giff-gaff, O2, Three and BT
(Rastogi and Trivedi, 2016). All these major telecommunication companies provides similar
services within the same capabilities. Therefore, threat from the existing competitors is very high
for the Virgin Mobile.
Bargaining power of buyers: The bargaining power of customers is relatively high for
the Virgin Mobile. This is because there are various other telecommunication companies in UK

which provides similar services and this leads to make low switching cost for customers. They
may switch for better quality, rate and coverage.
Threat of substitutes: There are few substitutes available who offers mobile and
immediate communication services to customers. The substitutes of mobile phones are pagers
which is outdated and this current target market is not capable for affording sophisticated PDA
services. Therefore, Virgin Mobile has low or weak threat from the substitutes.
Bargaining power of suppliers: This force of the environment is relatively weak and
low for the Virgin Mobile. This is because there are various cell phone provider companies.
Virgin Mobile has effectively made its image and reputation in the markets and it also meets the
standards and this can help the company to lower down the bargaining power of suppliers.
Stakeholder Analysis
Stakeholder analysis is another strategic management tool which helps the company for
assessing system and various potential changes to its (Widya Yudha, Tjahjono and Kolios,
2018). This relates with the relevant parties of company i.e. Stakeholders. This strategic
management tool acts a mechanism which helps in identifying the interest of stakeholders. There
are four types of stakeholder, which are explained as follows:
Primary stakeholders: These stakeholders gets highly influenced and affected from the actions
and strategies of company. The impacts can be both positive and negative. Primary stakeholders
of Virgin Mobile are Board of Directors, investors and shareholders.
Secondary stakeholders: These stakeholders are considered as the intermediaries, and they get
indirectly influenced and affected due to the actions and strategies of company. The secondary
stakeholders of Virgin Mobile are suppliers and distributors.
Tertiary stakeholders: These stakeholders gets least affected and influenced due to the actions
and strategies of company. The example of tertiary stakeholder of Virgin Mobile includes
government bodies (Moro Visconti, 2016).
Key Stakeholders: These stakeholders are considered as the main and major stakeholder of the
company who gets directly and indirectly affected and influenced due to the actions and
strategies of company. The key stakeholders of Virgin Mobile are employees and customers.
Virgin Mobile needs to focus on following actions while developing growth strategies.
Keep them Highly satisfied: Shareholders, Investors and Board of Directors.
Keep them Satisfied: Employees and Customers.

Monitor them: Distributors and Suppliers.
Keep them informed: Government bodies.
This is important for Virgin Mobile to satisfy the primary stakeholders as they help in
creating and maintaining the positive business environment. The primary stakeholders are also
responsible for taking best decisions for the company's welfare. Virgin Mobile also needs to
focus on satisfying the key stakeholders of the company such as customers and employees.
Keeping employees satisfied is important because they help in generating high quality products
which can meet the demands of customers and further helps in creating revenue for business.
Virgin Mobile needs to ensure that it keeps informed the government about the new actions
being taken (Bush, 2017). The company also needs to adhere to various rules and regulations laid
down by the company on telecommunication industry in order to run the business activities in
smooth manner. Through keeping all the stakeholders satisfied, Virgin Mobile can gain high
competitive advantage in the markets and grow the business in smooth and systematic manner.
TASK 4- Understanding and Interpreting Strategic Directions
Strategic Management Plan for the Virgin Mobile
Bowman's Strategy clock model:
This model explores various options for the strategic positioning of the company. For
example, how a product can be positioned so that it gives most competitive position in the
market. (Bowman's Strategic Clock (Strategic Positioning), 2018).

 Low price and low added value: According to this strategy, product need to be
differentiated and customers perceives less value despite the low prices. This is not
considered as very competitive position for the Virgin Mobile (Cuppen, 2016).
 Low Price: Virgin Mobile needs to focus on cost minimization for being successful
according to this strategy. It is often achievable with economies of scale.
 Hybrid: This strategy describes that company needs to focus on some level of product
differentiation and some element of low prices. Virgin mobile can gain competitive
advantage through hybrid strategy as customers will persuade due to good added value
and also reasonable price and acceptable product differentiation.
 Differentiation: Virgin Mobile can focus on offering the highest perceived value to
customers as per the differentiation strategy. High quality products and strong brand
Illustration 1: Bowman's Strategic Clock

awareness and customers loyalty leads to bring effective and positive results (Cooper,
2017).
 Focused differentiation: As per this strategy, Virgin Mobile can focus on positioning
the products at highest price levels and customers will lead to purchase the products due
to high perceived value.
 Risky High Margins: This strategy describes that Business may focus on setting high
prices for the products without offering anything extra in terms of perceived value.
According to this strategy, if customers continue to buy the products and services at high
prices, company can achieve higher profits.
 Monopoly Pricing: According to this strategy, monopolist business can set the prices as
they wish because there is only one company offering the products in monopoly markets.
There are no alternatives available to customers.
 Loss of market share: This strategy describes that company may focus on setting
standard or middle-range prices for the products with low perceived value. This strategy
is unlikely to win over many customers because there are many better options available to
them in the markets who provide higher value of products at same prices.
Virgin Mobile can focus on Hybrid Strategy as this can help the company to achieve
sustainable competitive advantage. This strategy can help the company to increase trust and
loyalty of customers and also to gain sustainable competitive advantage (Mathooko and Ogutu,
2015).
Executive Summary:
Strategic management planning is the activity of the business which is used for setting
priorities, energy, focus and resources and also to strengthen the operations and activities of
Virgin Mobile. The strategic management plan will also help the company for ensuring that
employees and other stakeholders work towards common goals and objectives. This will also
help the Virgin Mobile to adjust the strategic direction and responses according to the changing
business environment.
Vision & Mission:
 The vision statement of Virgin Mobile describes that is changing business for the good (Our
Purpose, 2019).