Business Strategy Analysis Report: Virgin Telecommunications Overview

This report provides a comprehensive analysis of Virgin Telecommunications' business strategy. It begins with an introduction to business strategies and their importance, focusing on Virgin as a case study. The report then delves into a PESTLE analysis to examine the macro-environmental factors influencing Virgin, including political, economic, social, technological, environmental, and legal aspects. Following this, an Ansoff growth matrix is applied to evaluate Virgin's growth strategies, concluding with a recommendation for product development. The report then examines Virgin's internal environment, including a SWOT analysis to assess its strengths, weaknesses, opportunities, and threats. The report concludes with an analysis of the UK telecommunications sector, and an interpretation of strategic direction using relevant theories, concepts, and models. Overall, the report offers insights into Virgin's strategic planning and its position within the telecommunications industry.

BUSINESS STRATEGY

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK1.............................................................................................................................................3
P1. ..........................................................................................................................................3
TASK2.............................................................................................................................................8
P2. The internal environment and capabilities of Virgin.......................................................8
TASK3...........................................................................................................................................12
P3. Analysing the telecommunications sector of UK...........................................................12
TASK4...........................................................................................................................................14
P4. Understanding and interpreting strategic direction. ......................................................14
CONCLUSION..............................................................................................................................15
REFRENCE...................................................................................................................................16

INTRODUCTION
Business strategies are the means by which organisations set out to achieve its desired
ends. It can also be defined as a long term business planning. These organization strategies play
a major role in planning, analysing strength and weakness, conducting environmental scanning,
gaining competitive advantage, etc. An effective business strategy will clearly identify where the
business is and creates cohesion within an organisation to accomplish business goals.
Organisation undertaken in this report is Virgin which was founded in 1970 in London UK and
deals in telecommunication sector (Amran , 2016). This report will analyse the impact and
influence of business strategy on the organisation. It will also analyse the organisations internal
environment and its capabilities. This report will also depict the competitiveness of UK
telecommunication sector. Then the last part of the report will use appropriate theories, concepts
and models to analyse strategic direction.
TASK1
P1.
Macro surroundings of the organisation is concerned with the external business
environment which is uncontrollable and company has to respond with efficient care. For this
purpose, environmental scanning is to be done which helps in analysing the impact and influence
on Virgin by conducting PESTLE analyses.
PESTLE analyses of Virgin
This is the tool or framework which is used to interpret and study the macro factors
which can have a intense outcome on an organisations performance. It involves study of
information about external factor and their respective implication on the business. (Buckley and
Ghauri, 2015). The primary purpose of this is to find out about the present external factors which
are affecting the organisation. This is also done in order to asses the opportunities in the market.
This is a very energizing tool because it facilitates easy inclusion of fresh constituents that can
focus on one or another critical force affecting the company. It is a simple technique which
pertains to the cross functional skills and expertise. It helps to minimise the impacts and
influence of upcoming or expected threat to the organisation. This further helps in encouraging
the employees to involve strategic thinking mind set and renders a mechanism which allows an
organisation to identify and exploit the new opportunities.

 Political factor : This factor is concerned with how and to what extent the government
intervenes in the economy or industry. It relates to the pressure and opportunities
brought by political institutions (Cavusgil, 2014). It includes factors like government
policy, stability, overseas market, foreign trade policies, terrorism, corruption, etc.
Therefore organisations will have be prepared to respond to the current and future
unanticipated future legislation and will have to adjust with their merchandising policies
accordingly. In Virgin UK, the ministry of telecom industry has raised FDI limits which
enables the promoters to activate competition and consolidation that can be done by
selling current stake to foreign consolidation. Also due to increase in foreign direct
investment in this industry enabled Virgin to inflect the foreign stakes in their companies.
 Economic factor : These factors have a significant impact on organisations business and
profitability. It is related to the economies policies, structure and to what extent the
economy affects the company. This includes various factors like growth rate, inflation
rate, interest rate, stages of business cycle, credibility, fiscal policies, etc. These factors
will have direct or indirect impact on organisations as it affects the buying behaviour of
the customers and this could change the demand and supply models in the economy. As
there is exemption from excise duty on primal mater for the production of the specific
hardware items has been availed than this has led to decrease in the network equipment
costs which will be beneficial to Virgin as this enabled them to increase their network to
reach out to rural areas as well at a lower cost (Chang, 2016). Apart from this, during the
recession period, the policy of government for minimising the custom duty on
convergence has helped in developing parity devices which are used in communication
which also helped Virgin in minimising the DTH expansion (PESTEL Analysis, 2018).
 Social factor : These factors looks at the social environment of the market. This helps the
market to understand the customer needs and preferences. It includes factors like
demographics, media, work ethics, consumer role models, ethical issues, lifestyles,
purchasing behaviour, social classes, etc. In Virgin, by raising the FDI limits which has
led to better infrastructure has improved telecommunication infrastructure and services
which will minimise the separation, maximise business viability, farming productivity
and accession to learning and medical services. Virgin is one of the qualified bidder in
the auction of 3G and BWA spectrum. which will be conducted by government and it has

already cracked a deal with Ericsson to upgrade their network for 3G. It will also assist
the company in several social initiative of government such as e-education, tele medicine
and e-health and e- governance .It will also help in providing affordable mobile services
and broadband connection to rural and semi rural areas.
 Technological factor : These factors are concerned with innovation in technology which
affects the operation of the company. It includes factors like rate of technological change,
innovation, automation, technological change and amount of technological awareness,
etc. These factors influences the decisions of whether to enter the market or not. In
Virgin, it will help in producing new structure for production process of goods and
services and also in their distribution and communication in the potential market (Evans,
2017).With the Launch of mobile number portability it has enabled the consumer to keep
their present old numbers in case they do not want to change their service provider. This
has maximised the competition among the service providers and Virgin has the edge over
their competitors as their services are better compared to others. When government
announced the introduction of 3G than this allowed company\ to provide their customers
high quality videos and other multimedia services along with the facility of high data
transmitting ability.
 Environmental factor : These factors are important because the increasing scarcity of
resources, pollution and emission of carbon di oxide. Presently, majority of the customers
are demanding the products which are sourced ethically and assures sustainability. It
includes factor like weather, climate change, air and water pollution, waste management,
endangered species, etc. On sustainability, Virgin involves strategies like community
well being and empowerment. In this strategy the company is emerging with the
initiatives of the government to empower backward society of the nation by rendering
services of education, employment generation, sanitation, health care, environmental
protection, etc.
 Legal factors : It is concerned with the various laws and legislation that affects the
Virgin’s decision making. It includes factors like current legislation, future legislation,
employment law, tax regulation, consumer laws, copyrights, patents, etc. The telecom
industry is impacted by legislation issues. Virgin protects the privacy of customers
throughout the world.

Source : PESTLE Analyses. 2018
Ansoff growth matrix
It is a growth strategy which is presented on a matrix which stresses on firms present and
potential products and markets (Higgins, Omer and Phillips, 2015). It takes into account various
ways to grow its business either through existing products or introducing new products in the
present or new markets. It considers four types of business strategies which Virgin can consider
and they are discussed below :
 Market penetration : This strategy of business emphasis on selling present products into
the existing markets. The firm company has a motive of maximising its market share
through market penetration strategy. So for this purpose, Virgin can do this by reducing
the economic worth so that they can easily attract large number of customers as well as
fresh customers, With the use of accelerative promotional efforts ,extensive distribution
efforts and by acquiring a challenger in the identical industry. For instance, the
introduction of 3G was an initiative of organisation to introduce its existing product in the
existing market.
Illustration 1: PESTEL Analysis. 2018

 Product development : This strategy is used by organisation in order to harvest in new
product in existing market. Which involves the study, interpretation and expansion of
product range. Virgin will employ this strategy when organisation will have greater
understanding of present market and when they want to provide innovative ways of
solving problems related to fulfilment of current market demand. This can be done by
investing in research and development department that can help in development of new
products in the existing market, they will also acquire competitors product and blending
resources to develop a innovative commodity that will fulfil the demand of current
market in a better way. For instance, Virgin launched new products apart from telecom
like DTH, broadband, mobile tv, etc.
 Market development : In this strategy the organisation aims to enter a new market with
their existing product. This means expansion of business into new geographic area,
customer segments, regions, etc. This strategy is most successful for the Virgin when it
owns proprietary technology which can be leveraged into new markets and also when
consumers are more profitable (Klettner, Clarke and Boersma, 2014).
 Diversification : In this the firm enters a new market with new product. This type of
business strategy is most risky because it is difficult to predict the new product and new
market. But it is useful in focussing the need and starving market. Virgin can use this
strategy by adopting the related diversification which is realisation of synergies between
current business with new products. And by unrelated diversification which is completely
opposite of the earlier. For instance, the outsourcing product of Virgin will be considered
under this strategy.
After the above analyses of ansoff matrix, the Virgin will be adopting the product
development strategy because it will be most suitable strategy and has the strong brand
awareness which will help them in quickly gaining access of customer for their new products
in the existing market.

Source : Ans off Matrix. 2019
TASK2
P2. The internal environment and capabilities of Virgin.
An organisations internal environment is a combination of the elements inside the
business. In order to determine employee behaviour it considers current workforce, management
and business firm culture. Although some elements may effect the entire organisation while
some may only effect managers. (Leonidou, 2015). The strategy needs to be in alignment with
the fundamental deals of internal environment in order to compete in the market. The
approximation for the accurate magnitude of interior resources present in the environment
needes to move forward and pick a task or else the outcome may be in form of undesired
consequences.
SWOT analyses
It is a tool which is utilized to develop strategic plan for business in order to maintain its
competitive position. This techniques will be useful for Virgin in assessing the performance,
competition, risk and potential of a business. It stands for strength and weakness which exist in
the internal environment of the company and opportunities and threat which exist outside the
Illustration 2: Ans off Matrix. 2019

organisation that can affect the company. This helps I developing strong business strategy by
assuring that the company has considered the strength, weakness, opportunities and threats
effectively while facing the marketplace. The following is the SWOT analyses of Virgin:
Strength
 Renowned telecom industry as it is the
worlds third largest telecom industry.
 High brand equity as it has a high brand
recall.
 Extensive infrastructure with the
formation of indus tower.
 Strategic alliances with Ericsson, sintel,
etc.
 Torch-bearer of the telecom industry
with its exclusive and efficient services.
 Strong brand portfolio ratio which is
beneficial for the firm in expanding its
operation and product line.
Weakness
 Outsourcing operations helped in
minimising cost but at the same time it
has increased the burden of dependency
on other organisation.
 Price competition with other telecom
player has minimised or limited the
market share of the company.
 Virgin also has high labour turnover
rates and spends lot of expenses on
training and development to its
employees compared to other
companies.
 They have limited success in business
apart from its core business.
Opportunities
 Depreciating expenses incurred on
transportation because of lower
shipping prices which will also reduce
the cost of Virgin products thus
rendering an opportunity to the
company.
 The fresh taxation policy can
importantly effect the manner of doing
business and can open new opportunity
for established players such as Virgin to
increase its profitability.
 Strategic partnership with mobile phone
Threat
 Intense competition has increase the
number of player in the telecom
industry like Vodafone, reliance, etc.
which directly affects the profitability
of the Virgin.
 Increasing strengths of national
distributors also presents a threat in
some markets as the competition is
salaried higher margins to the local
distributors.
 Latest and innovative technologies
formulated by the challenger or market

companies will be advantageous as far
as MNP is of greater concern.
 Innovation in technology can provide
Virgin an opportunity to introduce
distinguish market pricing strategy .
Which will help company to maintain
the customer loyalty by providing good
services. It will also help to attract new
customers through other programmes
that are based on value orientation.
disruptor can serve as an important
issue to the business in current and as
well as in future.
VRIO Model
It is framework or tool which is used by the company to identify and analyse firms
internal resources and capabilities. This is most widely used technique for evaluating the
companies resources and competitive advantage. It is a planning tool and provides information
and the results will provide competitive benefit for the company. The term VRIO stands for
valuable, rare, imitability and organisation (Mi, 2015). These terms are discussed below in
detail :
 Valuable : This step in the model helps in determining that whether the resources will be
valuable or adds value to the firm by allowing exploiting opportunities and defending
threats. The valuable and worthy resources of the organisation will render the advantages
and effectiveness and efficiency which will accomplish the business goals and objectives
of the Virgin by attaining competitive advantage for the company.
 Rare : Resources which are acquired by few companies are considered rare and they
provide temporary advantage to the company. The competitive advantage accomplished
from a resources which are both valuable and rare is normally sustains for shorter
duration. Rivalries will rapidly recognize and can simulate the resources without bearing
a lot of difficulty. Therefore it will serve only as impermanent competing advantage.
 Imitability : A resource is costly to imitate and it occurs in two ways that is duplicating
in which resources are directly imitating and substituting in which it provides the

comparable products or services (Moseley, 2017). In this Virgin can attain a sustained
competitive benefit with its valuable, rare and costly to imitate resources.
 Organisation : The resources cannot attain any advantage if they are not recognised
enough so that the value can be captured. For this Virgin must organise its management,
processes, policies, structures, culture which will enable to completely realise the
capabilities of the organisations, valuable, rare and costly to imitate resources. This will
enable the Virgin to accomplish the sustainable competitive advantage.
Strategic capability is the set of numerous skills, resources and capabilities which
develops long term competitive advantage for the firm. Its emphasis will be on organisations
assets, marketing position and resources through the Virgin will be able to gain competitive
advantage.
Source : VRIO Model PowerPoint. 2019
Illustration 3: VRIO Model PowerPoint. 2019

Source : VRIO Analysis of IKEA. 2019
Illustration 4: VRIO Analysis of IKEA. 2019