Strategic Analysis of EE Limited in the UK Telecommunications Market

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Business strategy: Telecommunication Sector (UK)
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Table of Contents
Introduction...................................................................................................................... 2
Task 1.............................................................................................................................. 3
P1 Analyze the impact and influence of the macro environment has on your chosen
organization and its business strategies..........................................................................3
M1- Critically analyse the macro environment to determine and inform strategic
management decisions....................................................................................................8
Task 2............................................................................................................................ 10
M2 Critically evaluate the internal environment to assess strengths and weaknesses of
an organisation’s internal capabilities, structure and skill set.........................................13
Task 3............................................................................................................................ 15
P3, M3 Analyzing the telecommunication sector............................................................15
Task 4............................................................................................................................ 19
P4, D1 Understanding and interpreting strategic direction of the chosen organization..19
M4 Developing strategic management plan...................................................................23
Conclusion:.................................................................................................................... 25
References.....................................................................................................................26
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Introduction
Business strategy may be defined as different moves and ideas that a particular
organisation uses as a tool to achieve their organisational targets by attracting
consumers. It is an essential part of any business and involves decision making by the
company in order to determine their way of functioning. In this study, different kinds of
strategy are being discussed on the basis of operational, tactical and strategic role of
any organisation. It would include wide range of theories, models and concepts that
would provide a clear view and knowledge of an organisation’s strategic choice and
decision. The organization that has been chosen for this study is EE Limited, which is
the largest internet service provider and mobile network operator in UK (EE, 2019). It
also provides internet service options and it is a division under the BT group. It has a
customer base of 26.9 million and it operates as the largest service provider of 4G
connection across Europe. Its headquarters is situated in Hatfield, UK.
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Task 1
P1 Analyze the impact and influence of the macro environment has on your
chosen organization and its business strategies.
The external environment
The factors of an organization which are related to its external environment are known
as macro economic factors. These are the factors on the basis of which an organisation
carries out or plans its business activities in a particular country. The organizations need
to assess the political, economical, social, technological, environmental and legal
factors with respect to the country in which they are conducting their business activities.
PESTEL Analysis of EE
PESTEL analysis is a strategic tool that helps an organization to formulate its business
strategy. It also helps any organization to overcome the hindrances that may be faced in
the near future with respect to its business operations in a particular country. The
PESTEL analysis of EE is given below, which can help the respective organization to
analyse its macroeconomic environment.
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PESTEL ANALYSIS
Factors Description
Political EE, which is already accustomed with the political
environment of UK, finds itself comfortable to carry on their
proceedings in the same country. For example, UK is a
politically stable country with a stable government. EE,
being the largest mobile network service provider of the
country is aware of the current situation.
There are many advantages in this regard. UK is a country
which is more flexible than many other countries. As there
is no specific constitutional provisions which mentions any
specific set of rules, so it is easier to adapt and can be
changed as per requirement. As executive is formed by the
largest political party, so the stability of the government is
guaranteed (Moutinho and Phillips, 2018).
Besides having these advantages, EE faces many
disadvantages also. For instance, sometimes, un-codified
constitution can become vague or unclear to the
organisation which can lead to a serious problem.
Secondly, UK has the permanent civil service system
which means that the government would find it hard to
implement new changes as required for future
transformations in the changing scenarios of UK.
Economical UK, being a powerful and economically stable country is
having $2.808 trillion GDP and is the 5th largest economy
in the world. So, there is no dearth of money for the
common people which ensure that EE has a very high
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prospective customer base. The main advantages that EE
has from UK economy is that UK has a separate regulation
for monopoly firms, which would ensure that EE limited
would definitely have a separate space in the market and
can conduct its operations. Secondly, the economic
policies adopted by the government are investor friendly
and encourages existing businesses to invest more and
more. (Lei, 2017)
Besides having these advantages, it also has certain
disadvantages. For instance, one of the disadvantages can
be collision between capitalism and socialism which is very
common in any mixed economy. The other disadvantage
being that it endangers freedom as sometimes government
interventions can affect the functioning of the organisation
in an extremely negative way.
Social The societal culture of a country is seen to impact over the
culture of an organization located in that particular country.
UK is a country with high social standards and there is no
discrimination on the basis of caste, society or gender
(Zaldivar et al., 2018). It gives certain advantages to EE,
being located in UK. One of those is its population which is
64.1 million that offers the company a strong customer
base which is about 26.1 million customers. Secondly, the
people of this country are having a very high standard of
living, which motivates the organization to offer a good
quality of service. Besides these advantages, it also has
certain disadvantages. For example, some social unrests
in regards to migration issues. The other being high
expectation on quality of service from their customers.
Technological There is a significant advancement with respect to the
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needs and requirements of the telecommunication
services. UK being a developed country has good access
for technology which helps mobile network service
providers like EE in a big way. For example, the
Technological advantages that EE is having include
internal competition to stimulate growth and the other
being that the respective organization has several skilled
employees in the field of Information Technology (IT) and
science.
The disadvantages being that if compared with big nations
like USA, the technological advancement is slower in UK.
Environmental The environmental factors can also affect the functioning of
telecommunications industry. Global warming and changes
in climate can affect the reaching of telecommunication
services among the customers (Leal, Avarello and Garcia-
Perez, 2018). UK is having a weather which is usually
good and it mostly enjoys a rainy season throughout the
year. Mobile service providers like EE can face problem in
UK when the weather conditions are bad. For example, it
often rains in cities like London, so the quality of service
becomes poorer and it is really a disadvantage for the
company.
Legal The legal factors need to be analyzed by the
telecommunication organizations before expanding in a
new country (Sammut‐Bonnici and Galea, 2015). EE must
comply with certain legislations. They are fair labour
standards act, occupational safety and health act, safety
and health organisation act. EE is benefited from these
regulations as this would ensure proper employee safety
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and would also guarantee good return from employees.
Table 1: PESTEL Analysis of EE Limited
(Source: Created by author)
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M1- Critically analyse the macro environment to determine and inform strategic
management decisions.
Ansoff’s growth vector matrix to analyse the organisation’s strategic positioning
Strategic positioning is defined as the approach in which the company can build and
create a strategy which is completely distinctive from its rivals. It includes a set of
morals and values on the basis of which EE limited formulates the plans and the
strategies. Its main objective is to strategically position the products as successful
brands which would create a brand value and would also create a customer base. The
strategic positioning of the present organization i.e. EE can be analysed by using the
Ansoff’s growth vector matrix.
Figure 1: Ansoff’s growth vector matrix
Source: (Zinovchuk, 2016).
Igor Ansoff presented this model which shows various different approaches to growth
strategy. It shows 4 distinctive strategies regarding the growth of an organization. This
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includes Market Penetration, Market Development, Product development and
diversification (Zinovchuk, 2016). They are explained below:
Market penetration: It focuses on the viewpoint of an existing firm in a market where it
focuses on its market share which would ensure it with growth (Medarac, Vignali, and
Vignali, 2016). Here, EE falls under this category as it is already an existing company in
UK and it focuses on market retention. The main strategic planning approach of EE is to
retain its authority in the telecom industry of UK.
Market Development: It is a strategy which is implemented by a company when it
expands its business in a new geographical segment and it focuses to capture the
market in that new market segment EE being a leader of the market segment in Europe,
has not yet planning to expand its operations beyond Europe, so EE is not adopting this
strategy.
Product Development: It is a strategy which is followed by an organization when it
focuses to retain existing customers while developing a new product or service (Simões,
2016).Currently, EE is providing mobile network service and internet services in UK,
and it has no such plan to expand its product line. As EE limited is having a huge
customer base, so it is not possible for the company to provide some customers with
some special benefits.
Diversification: It is the most challenging among all the above mentioned strategies as
it focuses both on market development as well as product development. It is also known
as suicide cell as it is very difficult and risky to be implemented by any company
(Christopher, 2016). EE certainly does not follow this method as it is not planning to
expand its business across other countries outside Europe. Though, it is planning an
expansion of 4G network within UK but not outside Europe.
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Task 2
P2 Analyse the internal environment and capabilities of a given organisation
using appropriate frameworks.
Internal environment of an organization includes all those factors, which are affecting its
internal environment. It includes directors, managers and all other employees together
with all other parties that affect the organization internally.
Strategic capability is being referred to as the ability of business for harnessing its skills,
abilities and resources to achieve competitive advantage and thus to build and sustain
its value over time. With the help of VRIO model, the analytical behavior and the way by
which an organization portrays its strategic framework can be analyzed (Medarac,
Vignali, and Vignali, 2016).
Figure 2: VRIO Model
Source: (Eloranta and Turunen, 2015).
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VRIO model is mainly a business analytical model, which helps in strategic decision
making of an organization. It is comprised of 4 factors namely value, rarity, inability and
organization (Knott, 2015).They are discussed below:
Valuable -This includes that whether the organization is adding any value to the
customers or whether the organization can exploit the opportunity which it is having. If
the company is having a competitive advantage over its competitors or not, if they are
not having a competitive advantage then they should focus on the next issue that is
rarity (Frynas, 2015). For EE Ltd., the primary focus of the organization is customer
satisfaction; they are giving extreme importance to the consumers thereby gaining
competitive advantage.
Rarity-Rarity is the concept through which a company identifies that the product or
service they are selling is unique or not (Eloranta and Turunen, 2015). Therefore, EE
limited need to analyze that whether they are controlling scarce resources or not or
whether the company is actually providing the service which is unique and not easily
available. If the company is in a competitive parity position then there is no need to do
any further research, if not then it must focus on the next issue of imitability. They are
actually not giving any such scarce resources, competitors and alternatives of EE
limited is available in the market but they are still the top leading mobile service
providers in UK.
Imitability- Imitability is the concept through which the company checks that whether
the product, which it is selling is imitable or not (Chang, 2016). The company should
analyze that whether it is possible to imitate the organisations service or not or whether
there is any competitor of the company existing in the industry. If not, then the company
would temporarily gain competitive advantage and if yes, then it should focus on the last
constraint that is organization. The service offered by EE limited is not easily imitable as
it uses unique software, which prevents piracy and thefts.
Organization - It is a concept, which shows that whether the organization is capable of
tackling all the obstacles or not. The basic question is that whether the company has a
basic organisational structure comprising of all technological, organisational factors or
not. If not, then it will gain an unused competitive advantage and if yes then it will gain
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