Business Strategy of Three Mobile Network: A Strategic Management Plan

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Business Strategy

Table of Contents
Introduction....................................................................................................................................................3
Task 1 – The external environment...............................................................................................................4
i. PESTLE model for environmental analysis (M1)..................................................................................4
ii. Ansoff’s growth vector matrix to analyse the organisation’s strategic positioning (P1)......................7
Task 2 – The internal environment and organisation capabilities.................................................................9
i. Applying the ‘VRIO/VRIN’ model to analyse the strategic capabilities possessed by your chosen
organisation (P2)........................................................................................................................................9
ii. Strengths and weaknesses of the organisation (P2, M2).....................................................................10
Task 3 – Analysing the telecommunications sector.....................................................................................11
Devise appropriate strategies to improve the organisation’s competitive edge in the market using
suitable analytical tools and model of analysis (P3, M3)........................................................................11
Task 4 – Understanding and interpreting strategic direction.......................................................................14
Produce a strategic management plan for the organisation showing clear strategic direction and options
available to the organisation (P4, M4).....................................................................................................14
Conclusion...................................................................................................................................................19
References....................................................................................................................................................20
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Introduction
Every organisation has a mission and vision that it tries to fulfil through different business
operations. However, random operations would not be able to achieve the mission and vision of
the organisation because of the changing business environment. Hence, a business strategy is
formulated by the organisation that accounts for the changes in the business environment and
changing trends in the market. This business strategy takes into account the environment
variables, resources of the organisation, competition in the market and different government
policies to make sure that the goals of the organisation could be achieved.
The telecom sector in UK has been showing a tremendous growth in the last decade and many
large telecommunication companies such as O2, EE Limited, Virgin and Three Mobile Network
are competing with each other to grab the largest possible share of the market. These
organisations are using innovative technologies to provide better services on cheaper price to the
customers. According to the report by Ofcom, the Mobile Telephonic Industry generated £3.8bn
in the year 2017 which is a huge figure for the industry. The growth in the telecom sector is
being seen because of the entry of the 4G internet services in the sector that has increased the
internet use on the Smartphones by an exponential rate. Current report would study the business
strategy of Three Mobile Network and its environmental analysis would be conducted in the
report. In the end, a strategic management plan for Three Mobile would also be provided that the
organisation could use for the competitive edge in the UK Telecom Sector.
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Task 1 – The external environment
i. PESTLE model for environmental analysis (M1)
Three UK was established in 2003 and headquarter of the company is in Maidenhead, Berkshire,
UK. Three UK is a subsidiary of Hutchison 3G UK Limited. The company got initial success in
the market as it was the first commercial video network in UK and since then the company has
been growing at a good rate.
The PESTLE analysis of Three UK will help in understanding the macro business environment
of the company that affects its business operations. PESTLE analysis is a very useful tool that is
used by Three UK in the business strategy development.
PESTLE Analysis
Political
The government of UK defines the telecom sector policies such as spectrum approvals
and defining the base rates for the spectrum. The government of UK is promoting the
privatisation of the telecom sector in the country that has helped in the growth of the
private sector organisations like Three UK (Brandenburger and Stuart, 2017). The
government policy in the telecom sector allowed Three UK to access the BT network for
the national access. This provided a great benefit to Three UK as company now covers
approximately 98% population in the country. Government policies in the telecom sector
remove the monopoly of BT in the sector and Three UK became the main contender in
the industry after BT started losing its market share. However, there are certain political
decisions that could affect the growth of a business. BREXIT is one such move that has
created uncertainty in the market because there is no clear policy in place to handle
BREXIT as of now.
Economic
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The financial crisis in 2008 was a huge setback for the telecom sector because of the
heavy economic loss to the organisations in the sector. Cash borrowing by Three UK was
highest during 2008-2009 (Figge et al, 2015). But since then, the economy of the country
has recovered a lot which resulted in a good growth of Three UK. Even today, the threat
of BREXIT is looming on the telecom sector and Three UK is trying to address the
concerns by expanding its business in other countries such as Austria, Italy, Denmark and
Australia.
The fiscal and monetary policy of the government also greatly affects the economic
conditions. An increase in the Repo Rate by the Bank of England increases the borrowing
interest for Three UK and affects its expansion plans. Inflation is another key economic
factor that has to be considered by Three UK while deciding the tariff rates for different
plans.
Figure 1: Vodafone UK PESTEL Analysis (Ghemawat et al, 2014)
Social
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Telecom sector is closely related with the social conditions in the country. As Telecom
Sector in UK evolved, Three UK focused consistently in connecting the remote areas of
the country with its network. With its 2G partner Orange, Three UK became the first
company to cover 98% of the population of the country. Later, Three UK focused on
providing 3G only services to its customers as it had less operational and infrastructure
cost and company was able to pass on the benefits to the customers. In other words,
Three UK is an organisation that helped in connecting the people in the low income
group which is a great achievement for the company.
Technological
Three UK always tries to use the latest technology and when company started 3G only
services the move was criticised by the experts. But 3G technology played an important
role in the growth of the company. In the year 2013, Three UK launched 4G services
starting with 4 locations London, Birmingham, Manchester and Reading (Majluf and
Hax, 2018). Later the company extended the 4G services to more than 1000 locations in
14 months.
Three UK uses “Ultrafast” technology for the seamless connectivity through its 4G LTE
and DC-HSDPA service. Ultrafast helped Three UK in providing unlimited 4G as
company became the first telecom provider in UK that gave free unlimited internet to its
users.
Environmental
Telecom sector is always concerned by the impact of its operations on the environment.
Three UK has installed radiation detection sensors in some of its signal towers to assess
the negative impact on the internet. Waste management is another big challenge for Three
UK. The company has established some of its own waste management plants to minimise
the negative impact on the environment. The Research and Development department at
Three UK has been trying to keep the negative aspects of its operations on the
environment to a minimum level. The zero carbon emission is also in the strategy of the
company and a target of 2022 is set to achieve this goal.
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Legal
The tough competition in the telecom sector in UK has resulted in fierce legal battle
among the service providers over the use of their network charges. Similarly, there are
other legal concerns such as competition policy of the company that works to ensure a
monopoly free market. Three UK also has to manage the data security because of the
increase in cyber-crimes. There are also employment related legislations such as Equality
Act and Employment Act that Three UK needs to follow.
ii. Ansoff’s growth vector matrix to analyse the organisation’s strategic positioning (P1)
Ansoff’s Growth Vector Matrix is used by the organisations to assess the strengths of the
different markets and then use their products accordingly. The strategic positioning of the Three
UK as per the Ansoff Matrix is provided below:
Ansoff Matrix Three UK
Figure 2: Ansoff Growth Vector Matrix (Majluf and Hax, 2018)
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Market Penetration
Three UK is already present in UK, Ireland, Austria, Denmark and Australia. In these
markets the company is providing its 2G, 3G and 4G services with different tariffs. This
strategy would be used by Three UK in expanding its market share in these existing
markets using the current products company is already providing. Excellent marketing
and distribution of the services is a good choice for this strategy to fetch some of the
market share from competitors like Vodafone and EE limited.
Market development
Three UK already has a strong 3G and 4G network and some of its products are in high
demand in the existing markets. Company could use the same products for expansion
purpose by introducing these products in new markets such as emerging markets where
Three Mobile does not have any presence (Miller, 2016).
Product development
In this strategy, Three Mobile UK will be developing new products and then use these
new products to increase its customer base in the existing markets. Three Mobile UK is
working on its Ultrafast Technology and also on the 5G network so that it could have a
competitive advantage in the market. Through these new products, Three UK will be
trying to cover the remaining 2% population of UK.
Diversification
Entering into an entirely new market with a new product is the basic diversification
strategy that Three Mobile UK could use for its expansion. 3G and 4G data services are
already in use in many countries. But if Three Mobile UK enters a new market with
revolutionary 5G data service, it would help in capturing the new market at a good pace.
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Task 2 – The internal environment and organisation capabilities
i. Applying the ‘VRIO/VRIN’ model to analyse the strategic capabilities possessed by your
chosen organisation (P2)
Strategic capability of an organisation could be defined in the terms of the resources an
organisation possesses, its current products and market share and its ability to use the existing
resources for its expansion. The uniqueness of the products and customer loyalty is very
important aspect of the strategic capability of an organisation.
The VIRO model is used below to assess the strategic capability of Three Mobile UK:
VRIO Model of EE limited
VRIO model uses the below described 4 variables to analyse the strategic capabilities of an
organisation
 Valuable
How customers value the products and services of Three Mobile UK defines the value
indicator. The technology in 4G LTE technology provides a competitive advantage to
Three Mobile UK over other telecom providers in UK Rareness
Three Mobile UK was the first company to provide unlimited and free 4G services in UK
that made the products of the company rare. Three Mobile UK launched cheapest mobile
internet service in UK and it helped in exponential growth of the company. Its
“Ultrafast” technology is rare and not yet possessed by any other telecom provider in
UK.
 Imitation
There are other telecom providers in UK such as EE Limited, Vodafone and BT that are
also providing the 4G services to the customers in UK. Many of these have also tried to
match the tariff plans offered by Three Mobile UK. However, Three Mobile UK still has
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the competitive advantage as company covers 98% of the population in UK which is very
difficult for other organisations to achieve in the near future. Organisation
Three Mobile UK has a hybrid organisational structure that helps the company in
managing the different divisions and different types of services (3G, 4G, Volte, Calls
etc). It has automated supply chain management and excellent customer service. A highly
trained and experienced work force is an added advantage for the Three Mobile UK.
ii. Strengths and weaknesses of the organisation (P2, M2)
The strengths and weakness of Three Mobile UK are analysed below:
Strengths
1. The biggest strength of Three Mobile UK is that the company has an excellent research
and development department that the organisation uses in creating a faster and cheaper
network (Rumelt, 2015).
2. Three Mobile UK is a market leader in UK telecom sector and the company covers 98%
population in UK
3. Its international presence in Ireland, Austria, Denmark and Australia provides cushion in
case there is weak economic condition in UK
4. High speed and unlimited 4G data services.
5. Unique security features that enables the company in tracking cyber-crimes.
Weakness
1. Three Mobile UK is facing tough competition from Vodafone, EE Limited, Virgin and
BT which could lead to a tariff war in the sector. It would reduce the net profit margin of
the company.
2. Weak infrastructure to implement 5G service which could be a game changer technology
in near future.
3. BREXIT could result in a volatile market and affect the service consumer in telecom
sector.
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Task 3 – Analysing the telecommunications sector
Devise appropriate strategies to improve the organisation’s competitive edge in the market
using suitable analytical tools and model of analysis (P3, M3)
Porter’s five forces model:
The Porter’s Five Forces Model focuses on five different parameters that play an important role
in the competitive environment in the market. These 5 parameters with respect to Three Mobile
UK are analysed below:
1. Bargaining Power of the Buyers
The consumers in the telecom sector hold great power over the organisations. Customers
are looking for excellent services from the service providers and they are also looking
and comparing the prices of the similar services by different service providers.
Consumers need excellent data speed, interrupted internet across various locations and
also good customer care (Shapiro, 2017). The Internet Neutrality initiative of Facebook
is already threatening the domination of the internet service providers which further
enhances the bargaining power of the buyers in the telecom sector.
2. Bargaining Power of the Suppliers
In telecom sector, service providers like Three Mobile UK are dependent on some
suppliers such as organisations that supply hardware such as modems, organisations that
install telecom towers and suppliers of optical fibres. Three Mobile UK needs to develop
a strong network of these suppliers and also get the reasonable pricing from these
suppliers so that it could provide quality services on cheaper rate.
3. Threats of the New Entrants
Even though the UK telecom operator is dominated by the large organisations like
Vodafone, Virgin, BT and Three Mobile UK, there are still opportunities available for the
new organisations in the sector. The government of UK is also promoting the new start-
up organisations to come up in the market and bring some innovation and creativity. At
this point, this might not be a big threat for Three Mobile UK but in near future, these
organisations might increase the competition in the market.
4. Threats of Substitutes
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Substitutes are always available in a competing sector like Telecom. When an
organisation like Three Mobile UK launches a new tariff which is cheaper or has more
services in the pack, other organisations will follow the lead and launch a similar tariff in
the market (Schwartz and Davis, 2018). Hence, there is always a challenge for Three
Mobile UK to continuously changing its tariff plans. Three Mobile UK also needs to
upgrade its network and include some elements in their service that are difficult for the
competition to imitate.
5. Rivalry Within the Market
Competition in the UK Telecom sector is tough and Three Mobile UK has to constantly
face the challenging situations created by the competition in the market. However, Three
Mobile UK was the first organisation to provide unlimited 4G data to the consumers in
UK, the same is now provided by almost all the telecom organisations. Vodafone has
adopted an aggressive expansion strategy and the company is taking over smaller
providers in the remote areas to increase its coverage. EE Limited is similarly growing at
a good rate and competing with Three Mobile UK for 5G spectrum.
Strategies to improve the competitive edge in the Market for Three Mobile UK
First of all, Three Mobile UK needs to focus on the customer satisfaction. Company already
covers 98% population in UK but it has to make sure that the services it is providing to its
existing customers are excellent and unparalleled to the services from other service providers.
Three Mobile UK needs to conduct location wise customer satisfaction survey and then identify
the customer issues accordingly (Teece, 2016).
Secondly, Three Mobile UK needs to focus on creativity and innovation. The existing
“Ultrafast” technology by Three Mobile UK is an excellent technology when it comes to 4G
LTE and DC-HSDPA service. Because of this technology, the company has been able to provide
cheapest 4G services to its customers. But there is the new generation of speed coming in the
telecom sector in the form of 5G data speed. Three Mobile UK needs to step-up its efforts in
acquiring the 5G Spectrum so that the company is able to launch this revolutionary speed
services in most of the locations in UK.
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