Business Strategy of Giff-Gaff: A Comprehensive Analysis

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Business Strategy

Table of Contents
Introduction......................................................................................................................................1
LO1..................................................................................................................................................2
P1 Applying appropriate frameworks analyse the impact and influence of the macro
environment on a given organization and its strategies...............................................................2
M1 critically analyse the macro environment to determine and inform strategic management
decisions......................................................................................................................................5
LO2..................................................................................................................................................6
P2 Analyse the internal environment and capabilities of a given organisation using appropriate
frameworks..................................................................................................................................6
M2 Critically evaluates the internal environment to assess the strength and weakness of the
organisation’s internal capabilities, structure and skill set..........................................................8
LO3..................................................................................................................................................9
P3 Apply Porter’s five forces model and to evaluate the competitive forces of a given market
sector for an organization............................................................................................................9
M3 Devise appropriate strategies to improve competitive edge and market position based on
the outcomes..............................................................................................................................10
LO4................................................................................................................................................12
P4 Apply a range of theories, concepts and models, interpret and devise strategic planning for
Giff-gaff.....................................................................................................................................12
M4 Produce a strategic management plan that has tangible and tactical strategic priorities and
objectives...................................................................................................................................15
D1 Critique and interpret information and data applying environmental and competitive
analysis to produce a set of valid strategic directions, objectives and tactical actions..............16

Conclusion.....................................................................................................................................17
References......................................................................................................................................18

LIST OF FIGURES
Figure 1: Factors under PESTEL Model.........................................................................................3
Figure 2: Ansoff Growth Matrix model...........................................................................................4
Figure 3: questions under VRIO Model..........................................................................................6
Figure 4: Five Force model by Porter..............................................................................................9
Figure 5: positioning strategy according to bowman model.........................................................12
Figure 6: Porter’s Generic Strategies.............................................................................................14

Introduction
The internal and external business environment consists of different factors that are required to
be considered by the organisations while framing their business strategy. The present report
focuses on the business strategy of Giff-gaff which is a telecommunication organisation. Giff-
gaff runs as a Mobile virtual network operator that uses O2’s British network to serve its
customers in the UK. Giff-gaff intends to improve its current services through strategic planning
as a part of business strategy with the introduction of advanced technology and innovation in
trends. It supports the business strategy of expansion with enhanced profitability and brand
value.
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LO1
P1 Applying appropriate frameworks analyse the impact and influence of the macro environment
on a given organization and its strategies.
The analysis of vision, mission, and objectives of Giff-gaff along with the macro environmental
factors can help to make informed decision regarding its business strategy of expansion.
The vision statement of Giff-gaff is to become the most efficient communication leader in the
world of connectivity. The mission statement is to provide better lives to the people with the
availability of improved communication via unique and innovative power of the mobile network.
Hence, Giff-gaff is committed towards its goals, and objectives with the help of continuous
innovation in its services to make it superior.
The objectives and aims of Giff-gaff:
• Establishment of an accountable and reliable relationship with the customers with the
consideration of health and safety in products and services (About Giff gaff, 2011).
• To provide the best network for effective communication.
• To improve the quality of services in terms of communication and already established
network.
PESTEL analysis
Political factors: These factors in the context of the communication sector include various
government initiatives, policies and plans that are needed to be considered by Giff-gaff before
investing in any country. For example, countries that have liberal policies regarding technology,
infrastructure, and network availability provide wide scope to Giff-gaff in capturing the market.
However, high tax policies on communication channels in the host countries may affect the
revenue of Giff-gaff adversely.
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Figure 1: Factors under PESTEL Model
Economic Factors: The economic conditions of the business can be affected by the big picture
of the economic conditions of a country. The factors that influence economic conditions include
inflation rate, growth rate, borrowing rates, economic cycle, etc. Hence, favourable factors will
influence positive economic conditions of a country and in turn of businesses (Dockalikova and
Klozikova, 2014). For example, Venezuela has the highest inflation rate and therefore the
spending power of people is highly volatile that may be a risky investment strategy for Giff-gaff
in terms of investment in the country.
Social Factors: Different countries have different people with diverse culture, background and
beliefs. Hence, to cater to the needs of different people across the globe, socio-cultural factors
are required to be considered by Giff-gaff. Consideration of socio-cultural factors, like,
customers’ behaviour, attitude, interests, preference, tastes, etc. acts as the foundation for making
decisions regarding telecommunication products.
Technological Factors: Technology is the fundamental need of telecommunication organisation,
like, Giff-gaff. Hence, it is essential to analyse the technological factors, like, internet speed, cost
of technology, etc (Oliveira and Welch, 2013). For example, Japan has the best potential to
develop advanced technology that may support the Giff-gaff in effectively entering into the new
global market.
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Environmental Factors: Environmental consideration is essential for telecommunication
organisation to establish their ventures into a new foreign market. Compliance of laws,
regulations and rules in terms of environmental conservation also support the Giff-gaff in
gaining value and brand awareness from societal perspectives.
Legal Factors: Every country has its own regulatory framework to ensure effective regulations
of the telecommunication sector and its relevant sectors. There might be some restrictive
regulations in some host countries while flexible regulations in others that may relate to antitrust
law, employment laws, discrimination laws, etc. Hence, analysis of these factors supports the
Giff-gaff in making its business profitable in future with its business expansion strategy.
Ansoff Growth Matrix Model
This model provides a roadmap to the Giff-gaff in the matrix form that provides the combination
of strategy that organisation can pursue to enhance its market capitalisation and share (Hussain et
al., 2013).
Figure 2: Ansoff Growth Matrix model
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Market penetration: It is a strategy with minimal risk that forces Giff-gaff to improve its
marketing efforts with its existing telecommunication products so that large market share can be
grabbed. For example, innovation can be a helpful source to improve the existing market share
and profitability of Giff-gaff.
Market Development: In this strategy, Giff-gaff is required to utilise its resources effectively so
that new market can be captured. This strategy requires alignment of existing products and
services of the organisation with its core competencies.
Product Development: This strategy can help the organisation to leverage its brand value and
image with the introduction of a new variety of products and services in the market. For
example, 5G internet services of Giff-gaff may help the organisation to explore new market
opportunities (Verhoeven and Johnson, 2017).
Diversification: To sustain high growth and development in the market, Giff-gaff can introduce
new telecommunication products and services in new foreign markets. To pursue such a risky
strategy, Giff-gaff requires appropriate cash, expertise, and technical personnel so that long term
standing can be attained.
M1 critically analyse the macro environment to determine and inform strategic management
decisions
The macro environment analysis plays an important role in making strategic decisions
effectively. For example, the stable political and economic environment in the host country will
support the Giff-gaff in expanding its business; however, instability may bring negative
consequences for the organisation. The socio-cultural needs and preference of host countries are
essential to analyse to produce and market the products accordingly. Wireless industry requires
continuous improvement in the telecommunication industry, and hence, it is an analysis of
technological factors support the management of Giff-gaff in making strong and informed
decisions (Rudnicki and Vagner, 2014). In addition, the competitive tools are also helpful for the
Giff-gaff to improve its network coverage and enhance more customer base.
5

LO2
P2 Analyse the internal environment and capabilities of a given organisation using appropriate
frameworks
The internal environment of Giff-gaff along with its core capabilities is also required to analyse
the organisational success in the upcoming future through its business strategy.
VRIO Model
This model helps to examine whether Giff-gaff is able to make its position competitive in the
market. Examination of internal capability is done on the basis of four questions, imitability,
rarity, value, and organisation (Afuah, 2014).
Figure 3: questions under VRIO Model
Value: Value relates to the potential of Giff-gaff in making value addition to its products and
services with its valuable resources. Valuable resources can be judged on the basis of customer
tastes, preferences, and their willingness to pay a premium for it. For example, the prime quality
of the network of Giff-gaff attracts its customers towards its products and services.
Rare: The resources must be rare and expensive so that other rivals cannot afford to make its
substitutes. Rare resources make the accessibility difficult for the other competitors and offer
Giff-gaff competitive parity.
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Imitability: It relates to the potential of resources in making substitutes and duplication. Hence,
those resources that are none or less imitable will help the Giff-gaff to make a distinct brand
image in the telecommunication industry (Štefan and Richard, 2014).
Organisation: All the valuable, rare, and inimitable resources must be organised in a manner to
gain the maximum extent of competitive edge in the global market. The organised processes and
systems are essential to make the venture of Giff-gaff profitable.
SWOT analysis of Giff-gaff
The strength and weaknesses of Giff-gaff can be analysed with the help of SWOT analysis.
Strength
 Giff-gaff has a strong financial position and a healthy balance sheet that ensures a good
amount of cash flows for its working capital and other requirements
 Giff-gaff has acquired a large market share in the UK resulted in a large customer base.
 Good quality of network communication has enabled the organisation to a better position
in the market and caters to the needs of customers.
 It offers a wide range of telecommunication products and services in terms of sim card,
broadband, 4G LTE goody bags, etc.
 It is continuously making efforts to improve its internet speed, and network available so
that better customer experience can be provided (Abubakar and Bello, 2013).
Weaknesses
 The other rivals of Giff-gaff have already developed a 5G network that affect the
connectivity network of Giff-gaff adversely.
 It has a limited market scope as it exists only in the UK market.
 It is lagging behind in technology as a comparison to the current trends followed by its
rivals.
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Opportunities
 Giff-gaff has the scope to expand its business units in the overseas market.
 Areas that are still untapped by other telecommunication industries can be covered by
Giff-gaff, like, rural areas
 Improvement in present network quality and technology usage can support the growth
and expansion of Giff-gaff business
Threats
 The new environmental regulations, and policies in certain countries may act as a
hindrance to the sale of telecommunication products and services (Sammut‐Bonnici and
Galea, 2015)
 Increasing competition in the telecommunication industry affect the revenue of Giff-gaff
M2 Critically evaluates the internal environment to assess the strength and weakness of the
organisation’s internal capabilities, structure and skill set.
The effective utilisation tactics of limited and scarce resources act as the foundation for increased
productivity and profitability of Giff-gaff. The availability of rare and valuable resources must be
organised in a manner that offers maximum benefits to the organisation. Also, the resources that
cannot be or likely to be substitutable are the strength of the organisation, and hence, it can be
effectively optimised to gain a competitive advantage in the telecommunication industry. Giff-
gaff has present strength that supports in long standing in the market; however, the weaknesses
are required to be considered and overcome before making strategic decisions (Sammut‐Bonnici
and Galea, 2015). There are wide opportunities for growth and expansion to the Giff-gaff that
can be grabbed by taking necessary initiatives towards technology and innovation trends.
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