Giffgaff Business Strategies: A Comprehensive Analysis

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BUSINESS STRATEGIES
GIFFGAFF

Contents
INTRODUCTION...........................................................................................................................2
TASK 1............................................................................................................................................3
EXTERNAL ENVIRONMENT..................................................................................................3
PESTLE ANALYSIS..................................................................................................................3
ANSOFF MATRIX.....................................................................................................................5
TASK 2............................................................................................................................................7
INTERNAL ENVIRONMENT...................................................................................................7
STRENGTHS AND WEAKNESSES.........................................................................................8
TASK 3..........................................................................................................................................10
PORTER’S FIVE FORCE MODEL.........................................................................................10
ANSOFF PRODUCT MATRIX................................................................................................12
BALANCE SCORECARD METHODOLOGY.......................................................................13
TASK 4..........................................................................................................................................15
STRATEGIC MANAGEMENT PLAN USING PORTER’S GENERIC STRATEGY...........15
EXTENDED MODEL BY BOWMAN.....................................................................................16
EVALUATION OF STRATEGIC PLAN.................................................................................18
CONCLUSION..............................................................................................................................20
REFERENCES..............................................................................................................................21
1

INTRODUCTION
Mobile telecommunication is playing a very crucial role in the entire world. By the Mobile
telecommunication sector is also growing fast in the world. In a survey of the UK which is done
by the Deloitte, it is found that youngsters and old people are using their smartphones at the time
of walking. According to this survey, this study will discuss on the Telecommunication company
of the UK, whose name is Giffgaff. In Europe, the telecom market is one of the largest markets
in the UK. It is highly competitive in the mobile and broadband sectors. Giffgaff company is one
of the best companies in the UK. It was established in November 2009. The company is owned
by Telefónica.
Here the assignment is going to discuss the company details, what kind of the products and
services provided to the customers by the company. The first product which is launched by the
company was prepaid SIM which is comfortable with the 2G and 3G mobile phones. After
introducing this they came to the "Goody bags" which is also known as the bundles of minutes,
texts and data.
1. After these, the company announced that the customers those who are using the Goody bags
they can renew them by the debit or credit card which is saved on the site.
2. On 17 October 2012, the data which was added by the Goody bags called gig bags.
3. In March 2014 Giffgaff also added the 4G LTE goody bags and it is available from April
2014.
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TASK 1
EXTERNAL ENVIRONMENT
Let's discuss the external environment before going forward we have to understand the term
External and Environment as well. External means the outside of the organization and
Environment means the things which are around the organization. The external environment is
everything outside of an organization. The external environment consists of two layers-The
general environments and the task environment.
1. The general environment: - This kind of environment refers to the nonspecific
dimensions and forces which affects the surrounding of the organization which includes
the economic, technological, socio-culture etc.
2. The task environment: - This kind of environment refers to the specific organization. It
consists of the competitors, customers, suppliers, regulators etc.
PESTLE model for environmental analysis: - This kind of analysis is a framework or tool
which is used by the marketers for analyzing the facts and observe the macro-environmental.
This model is playing a very crucial role in the external environment. PESTLE has its own full
form which means-Political, Economic, Social, Technological, Environmental, Legal.
PESTLE ANALYSIS
1. Political: -Politics means the government factors which affects the policies of the
organization because of the changement which occurs by the government. In this part of
the model where government takes place and changes the rules and policies of the
organization. Forex. tax policies, fiscal policies, trade and tariff etc. The government of
India intervention more in the organization sector because everything depends on the
rules and policies and these are in the hand of the Government which can be changed
according to them.
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2. Economic: - These factors are related to economic performance, which has long term
impacts due to its direct impact on businesses. In this, the rate can fluctuate, which affects
the price of any organization, their products and services, consumers attraction and this
factor also affects the demand and supply of the products of the organization by this the
results can be changed of the demand and supply. The crisis also arose due to the
changement of this by which many people lost their jobs during 2008 and 2009 only 6%
of the workforce were there at that time.
3. Social: - This factor depends on the lifestyle, culture, domestic structure organization
needs to study about all these factors so this cannot affect more to the organization. By
understanding all these things, the organization will continue their products and the
services because the understanding the consumers' needs and trends of the market the
organization continue with the services because if it is not like then the organization will
in trouble.
4. Technological: - This factor of the model is playing a very crucial role for the
Technologies because technologies are very important in any organization so the
organization must take care of these technologies. Development of the technologies is
very necessary according to the time. New participation of the Technologies open the
new doors for the organization products and services.
5. Legal: - This factor of the model is playing a very crucial role in the field of the Law
because the term Legal related to the Legislation and the legislation means the Law.
Legislation change time to time so the policies and Law also change according to this
Legislation. By the changement of the Law, it affects the Labour law, Company law, food
safety law etc.
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6. Environment: - This factor of the model is playing a very crucial role in the
surroundings of the organization because this external factor depends on the natural
environment and affects farming, water, agriculture etc.
ANSOFF MATRIX
This also comes in the External Environment which is playing a very crucial role for thinking
about the risk because in every business there should be a risk which we have to reduce by
the planning, innovative ideas, taking the decision etc. So, let's discuss this Matrix who
brought this, it came in which year?
The Ansoff Matrix was developed by H. Igor Ansoff and first published in the Harvard
Business Review in 1957, in an article titled "Strategies for Diversification." This matrix is
very helpful to the marketers and business leaders for taking the quick and simple way to
think about the risk of growth.
Market Development: - Development of the Market is giving new opportunities to the
organization where the business seeks to sell its existing products into new markets. By the
development of the market, the businessman can get innovative ideas and sells their products to
the new market. There are so many ways for understanding the strategy for the development as
per the below following ways: -
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1. New Geographical markets, this is the market where the products can be export from one
country to other or we can say that by this the businessman can spread their business as per their
mind or as per the capital.
2. New packaging of the products, this is the market where the businessman can easily change
their packaging in the new version so the products will look attractive and effective to the
customers, changing their size.
3. New distribution channel, this is the market where the businessman can move their products
from one retailer to the other retailer for selling in a large number of the products.
4. Different pricing strategy for the attraction of the customers and different products have a
different price so the customers can attract to the products and purchased more.
Diversification: -It is the name which gives the birth of the strategy where a business can start or
gives the birth to the new market by the Diversification, in this the idea must be very clear about
the business and products as well.
Market Penetration: - Before going forward with this topic let’s understand the term
Penetration. Penetration means the enter. Where someone is going to enter into the new things.
Market penetration is a place where the businessman can sell their existing products to the
existing markets.
Product development: - In this factor of this model we can discuss the products development. A
businessman must select a suitable strategy for the development of the products. For doing the
development of the products organization must select their innovative ideas in the following
ways: -
 Research and Development
 Needs of the customers
 First into the markets
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TASK 2
INTERNAL ENVIRONMENT
In this environment we will discuss the Internal Environment before going forward with this
Environment let's discuss the term Internal, it means that which the businessman observing
inside the organization. Internal Environment includes the employees, corporate culture, which
defines employee behaviour. Although some elements affect the organization as a whole, others
affect only the manager.
There are 7 factors of the Internal environment which we can understand by the figure and the
theories:
Value system: - Value system of the organization defines the ethical beliefs of the organization
which helps to achieve the mission and objective of the organization. The value system of a
business organization also determines its behaviour towards its employees, customers and
society at large. By the contribution, the value system in the organization can achieve success
and prestige in the world of the business.
Mission and Objectives: -Mission means what the organization will achieve in the organization.
The mission is also defined as the overall purpose or reason for its existence which guides and
influences its business decision and economic activities. The objective of all the firms is to run
for the long term and earn the maximum profits in the future.
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Organization structure: -In the organization structure where the businessman can discuss the
rules and policies of the organization. Organization structure plays a very crucial role in the
organization. In this structure board of Directors decides about the structure of the business.
Corporate Culture: -In this, the culture top managers are playing a very crucial role in the
corporate sector. Corporate culture is generally considered as either closed and threatening or
open and participatory. In the closed markets the decisions have taken by the top managers while
in the open markets the decision was taken by the lower level managers.
Quality of Human Resource: -In this then we will discuss the employees because employees
are the main factor of the organization for achieving the goals, targets and the goodwill in the
market. This is the main function of the internal environment it includes the employee
qualification, skills, capabilities, attitudes etc.
Labour Unions: - Labour unions are another factor determining the internal environment of a
firm. Unions collectively bargain with top managers regarding wages, working conditions of
different categories of employees.
Physical Resource: - This is the resource by which the organization can easily determine the
efficiency and unit cost of production. R and D capabilities of a company determine its ability to
introduce innovations which enhance the productivity of workers.
STRENGTHS AND WEAKNESSES
Strength and weakness are the opposite words, these opposite words of an organization's
strengths are its internal weaknesses. Some examples of an organization's weaknesses are
underpaid employees, low morale, or poor direction from upper management. Upper
management needs to minimize its weaknesses.
 Strength: this means the power of an organization which helps to achieve the mission and
vision of the organization or in other words, we can say that A strength is a resource or
capacity the organization can use effectively to achieve its objectives.
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 Weakness: this means the frailty which helps to find out the weak point of the
organization or in other words, we can say that A weakness is a limitation, fault, or defect
in the organization that will keep it from achieving its objectives.
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TASK 3
PORTER’S FIVE FORCE MODEL
To determine the performance of an organization and position of it in the external market,
Porter’s five force analysis can be effective. The current, as well as the future prospects of the
company, can be estimated by using this model and decision could be made based upon the
profitability (Martin, 2018).
COMPETITION IN INDUSTRY
The rivalry is based upon the capacities of the competitors and the number of total competitors in
the present market scenario. In the telecom business, every organization is aiming to make
powerful business decisions to ensure a top rank in the industry. In British telecom market,
giffgaff has many competitors such as EE, Vodafone, BT, O2, Virgin, Three and BT. Due to an
increase in the use of smartphones, demand in the customer is on the rise, companies including
Giff-gaff are surviving in the market as well as competing in the telecom industry. Due to the
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same reason, aggressive tariff war with the context of calling plans, data pack rates and customer
service has been observed.
The strategy of crowdsourcing and co-creation proved to be one of the best decisions of the
company to increase profit levels and market shares to become one of the UK’s leading mobile
brand.
THREAT OF NEW ENTRANTS
In the case of the telecom industry in which Giff-gaff has its business, it is difficult to enter as
huge infrastructure is to be built. Exit from the market is equally difficult as diversification of
business is risky after blockage of capital (Aithal, 2017). This fact can be leveraged by Giff-gaff
as the level of operation is higher as compared to the new entrants. Some of the legal rules such
as the need for license and permission to operate also acts as a barrier to new entrants. Still,
Giffgaff can compete with new entrants if any by investing in innovation while building a strong
brand name by active marketing. This will help in retaining its existing base of consumers also.
THREATS FROM SUBSTITUTES
This refers to the threat of losing the consumer base or switching of its customers to other
companies. As such, there exists an average level of risk associated with gift-gaff as it has
successfully created a brand name and induce loyal customers.
BARGAINING INFLUENCES FROM SUPPLIERS
Since, in the case of the telecom sector, there are a number of suppliers available for the
procurement and services for different types of equipment, so Giffgaff can have more than one
supplier for different geographical locations. This would tend to increase the capability and
productivity of the supply chain. Since Giffgaff also has the option to switch the suppliers, they
can choose the best deal and negotiations are possible.
DISCOUNTS GIVEN TO BUYERS
The number of existing companies is very small if compared to the size of the consumer market.
But since the buyers have limited choice to choose among a particular organization, they have
price control. The buyer would more likely to subscribe to plan giving them more benefits and
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