Business Strategy Report: Analyzing Virgin's Macro Environment

This report provides a comprehensive analysis of Virgin's business strategy, focusing on its macro environment and internal capabilities. It begins with an introduction to business strategy and the telecommunications sector in the UK, highlighting Virgin as the chosen company. Task 1 applies PESTLE analysis and Ansoff's Growth Vector Matrix to evaluate the impact of the macro environment and inform strategic management decisions. Task 2 delves into the internal environment, assessing strengths and weaknesses. Task 3 applies Porter's Five Forces model to evaluate competitive forces and proposes strategies for improving competitive edge. Finally, Task 4 applies strategic planning theories and concepts, culminating in a strategic management plan with tangible priorities. The report concludes with an interpretation of information through competitive and environmental analysis, drawing on frameworks and models to provide a thorough assessment of Virgin's strategic position.

Business Strategy

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Application of frameworks to analyse impact and influence of macro environment............1
M1 Critical evaluation of macro environment to determine and inform strategic management
decisions......................................................................................................................................5
TASK 2............................................................................................................................................5
P2 Analysis of internal environment of the company.................................................................5
M2 Evaluation of internal environment to assess strengths and weaknesses of the company....8
TASK 3............................................................................................................................................8
P3 Evaluation of competitive forces by applying Porter's Five Forces model...........................8
M3 Appropriate strategies to improve competitive edge and market position.........................10
TASK 4..........................................................................................................................................10
P4 Application of theories, concepts and models for strategic planning..................................10
M4 Strategic management plan with tangible and tactical priorities........................................14
D2 Interpretation of information by applying competitive and environmental analysis..........14
CONCLUSION .............................................................................................................................14
REFERENCES..............................................................................................................................16

INTRODUCTION
Business strategy is the term that describes all the strategic actions that are taken by an
organisation in order to achieve growth and predetermined objectives. For all the business
entities it is very important to formulate appropriate policies so that operational activities can be
performed in effective manner (Burlton, 2015). Organisation's managers, directors and other
executives are responsible to form impressive plan of action in order to smoothly run a business.
In UK, telecommunication sector is continuously growing that's why competition is this industry
is increasing. The organisation which is chosen for this report is Virgin which is a British
company and providing telecommunication services to the customers. Its Headquarters are in
Hook, Hampshire, UK and founded in year 2006.
This assignment aims at the concept of business strategy by covering various topics such
as impact and influence of macro environment on Virgin and its strategies, analysis of internal
environment and capabilities. Application of Porter's Five Force Model to analyse competitive
forces, range of theories, concepts and models are also discussed under this project report in
order to interpret and understand strategic directions.
TASK 1
P1 Application of frameworks to analyse impact and influence of macro environment
Macro environment: All the factors that are external and uncontrollable by the
organisation are the part of macro environment that may affect overall ability of the company to
execute business. All the conditions that are available in the economy rather than in a particular
sector or region are going to leave an impact on all the business entity.
PESTLE analysis: It is method which is used to analyse external market where the
operations are executed by organisations (PESTLE analysis, 2015). It is very beneficial for all
the business entities as it helps in environmental scanning and strategic management by
providing appropriate information of external environment. It is mainly used to determine the
impact of different factors such as political, legal, environmental, economical, social and
technological etc. It is also advantageous for Virgin as it guide managers to gain information
regarding valuable advantages and threats that may affect business execution process. All the
elements of PESTLE are described below:
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(Source: PESTLE analysis, 2015)
Political: Such factors that are related to government, its rules, regulations and policies that may
affect business of a company. In UK government supports such organisations which may
contribute a higher amount in national income. For example, these factors influence
telecommunication sector because various limitations are imposed by the government in this
sector. The policies changes with time and whenever it changes it will affect the functioning of
the industry. If a company wants to expand its business in other countries then they have to take
permission from government if it is not granted then it will be a negative impact of such factors.
 Positive impact: it is good opportunity for Virgin to operate business in UK
appropriately because its profitability is high and it will increase the contribution of
telecommunication sector in GDP.
 Negative impact: It also affects negatively when any changes are made in the policies of
the government then it would impacts the overall decision making and leads to
modification under the future plans.
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Illustration 1: PESTLE analysis, 2015

Economic: The factors that are related to inflation, deflation, price of goods, interest and
foreign exchange rate, economic growth etc. are considered as economic factors. For example, in
UK the government is providing higher opportunities to the developing companies in order to
grow its economy hence these factors will influence telecommunication market because of low
taxation on the entities.
 Positive impact: These factors may leave positive impact on Virgin if inflation rate
decreases because at that time costs get decreased and purchasing power of customers get
increased.
 Negative impact Changes in such factors may affect business of Virgin as inflation and
deflation rates affect purchasing power of customers. It is very important for the business
entity to gather information of such factors so that appropriate strategies can be
formulated in order to reduce their negative impact (Torrent-Sellens, 2015).
Social: Customer's taste, paying capacity, age, preferences are considered as the part of
social factors. In UK people are very much socially aware hence it is essential for Virgin to focus
on all these elements in order to meet customer's expectations and operate business in effective
manner. For example, all these factors may influence the telecommunication sectors because for
companies it is not possible to meet all the requirements of the customers as they are segregated
in different segments such as kids, youngsters, old, millennials etc.
 Positive impact: If Virgin focuses on each requirement of customers then it will help to
gain their trust and enhance overall profits.
 Negative impact: In case, company is not able to meet customer's expectations then it
would directly impacts the internal performance of the company.
Technological: Latest technology and market trends are the variables falls under this
factor. Citizens of UK are very much interested in technology and get attracted toward such
products that have some latest feature. For example, it is very important for telecommunication
sector to be innovative as market trends always changes with time. If the sector is not using latest
technology then it will be not possible for the industry to sustain in the market.
 Positive impact: Virgin may take advantage of this by providing them unique
technological products so that profitability and market share can be enhanced (Teh and
Corbitt, 2015). Thus it is very crucial for managers of company to make decisions
regarding impressive use of technologies for the betterment of business.
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 Negative impact: If no technological factors are considered by Virgin then it will result
negatively for the company as it will not be able to meet customers expectations.
Legal: There are various policies that are imposed by the legal authorities of UK and for
all the business entities it is very important to follow all of them. For example, government
policies always changes with time and modifications in the regulations is done regularly. For all
the sector it is not possible to adopt all of them as it will affect their strategies. When these are
not adopted by them then legal parties may influence the business operations as they are not
following the regulations.
 Positive impact: In UK legal authorities support such business that may contribute a
higher amount in the national income. Mobile industry contributes a good amount in
GDP hence Virgin will have full support of government for its business execution which
is positive impact.
 Negative impact: In case if these policies are not examined by the manger of virgin than
it may have negative impact on the business. Thus they have to take valuable decision in
order to make strategies that support to run business in appropriate manner.
Environmental: Government of UK is highly concerned about the protection of
environment and implemented various acts. For example, if telecommunication sector is not
following the environment protection acts then it will affect it operations because UK's
government is highly concerned with environment protection.
 Positive impact: As Virgin is planning to mitigate the effect of telecommunication masts
on environment it is a good opportunity of the company to get support of government. It
will help to run the business smoothly in UK. Negative impact: If Virgin breaks any environmental protection rule then it will result
negatively for the organisation and government may take strict action against the
company.
Ansoff's Growth Vector Matrix: This model was introduced by H. Igor Ansoff and the
main aim of this matrix is to provide simple ways to the marketers in order to analyse risk of
growth (Ansoff's Growth Vector Matrix, 2019).
Purpose of Ansoff:
 Main purpose of using Ansoff's Matrix is to determine the best suitable strategy for the
business.
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 It directs managers and other top executives to choose one right strategy that may result
in attainment of organisational goals.
 Ansoff's matrix's purpose is to facilitate the organisation while strategic planning so that
appropriate option can be selected to achieve organisational goals.
Uses of Ansoff:
 It is used by various organisations such as Virgin to figure out different options that are
available in the market that can be chosen for growth and development.
 Ansoff's matrix is also used to identify possible growth strategies for an enterprise.
 Ansoff model is used by the companies identify the framework where growth can be
acquired.
 It is communication tool which is utilised to identify possible development opportunities
in different market segments.
All the four strategies of this model for Virgin are as follows:
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(Source: Ansoff's Growth Vector Matrix, 2019)
 Market development: In such type of strategy Virgin can launch its existing products in
new market segment in order to expand its business and increase market share. While
implementing this model the organisation needs to form new promotional strategies in
order to reach maximum number of customers.
 Market penetration: By using this strategy Virgin can offer its current products to
existing market by decreasing their cost. This step may help the organisation to increase
its sales and profits. Promotion and distribution cost of the company will get enhanced
because to attract more customers from same segment it is very important to use some
new promotional techniques (Spender, 2014).
 Product development: Virgin may use this strategy to offer some new products with
unique features to its existing market in order to attain higher growth. This may help the
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Illustration 2: Ansoff's Growth Vector Matrix, 2019

company to increase its profitability. This may help to strengthen the sustainability in the
market by developing new product range.
 Diversification: This strategy is implemented by such organisation which are willing to
offer new products to a new market segments in order to expand business, capture large
market area, increase profitability and sales. This option can be used by Virgin in order to
acquire more market share. There is a higher risk involved in this strategy because market
and product both developments are required. Organisation's cost for launching a new item
will be increased.
From all the above described options the best suitable strategy for Virgin is market
development because it will help to capture more market and also increase profitability and sales
because customers will get attracted towards the new product. As currently Virgin is operating
its business in UK and other countries now it can select a new country where it haven't yet
planned to offer its products or services. It will help it to expand its business in more locations
and also help to be achieve strategic position in the market.
If it is not used by Virgin then it would be very difficult for the company to find best
development and growth strategy. Not implementing Ansoff Model may result in higher
challenges to figure out the opportunities that are available in the market.
M1 Critical evaluation of macro environment to determine and inform strategic management
decisions
For the purpose of analysing macro environment of Virgin PESTLE analysis and
Ansoff's Growth Vector Matrix are used. It has helped to form best strategies for the company
because PESTLE guides to assess the factors that may leave positive and negative impacts of
different factors on business operations. Ansoff's matrix guides to find best ways to grow the
business in market and acquire large market share. The organisation has chosen market
development strategy in which it will offer its existing products in a new market. Both the
methods has helped the managers and top executives of the company to make strategic business
decision.
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TASK 2
P2 Analysis of internal environment of the company
Internal environment: All the factors that are available within the organisation and
affect operations positively or negatively are considered as the part of internal environment. It is
essential for all business entities to analyse all the intrinsic elements that may help to formulate
effective business strategies. Virgin is a telecommunication company that offers various products
and services to customers. VRIO model can be used by the managers to identify capabilities and
internal resources in order to achieve growth.
Strategic capabilities of Virgin:
 The organisation have a higher competitive advantage in the market of UK where it is
executing its business successfully.
 Future sustainability of the company is very high because currently a larger area of
market is being captured by the entity.
The VRIO model and organisation's strength with weaknesses are described below:
VRIO Model: it is a measuring tool which is used by most of the organisations to
determine that their products are able to attain competitive advantage or not. Four different
elements are analysed in this model that are valuable, rare, inimitable, organised. If a product is
having all these features then it may help to achieve sustainable agonistic benefits in the market.
An analysis of this model for Virgin is as follows:
 Valuable: First of all the Virgin needs to analyse that all of its products are valuable or
not. If they are not then it will lead the organisation towards competitive disadvantage if
it is valuable then the next factor of the analysis will be analysed. It is found that internet
leased line is one of the most valuable product of virgin as it help to increase the market
share for company in a short period (Oldman and Tomkins, 2018).
 Rare: In this step Virgin needs to assess that its products are rare or not. If the items sold
by the company are not extraordinary then it will lead the organisation toward
competitive parity. If the products are rare then the business entity will analyse the net
feature of the analysis. Management of virgin found that voice over IP solution is one of
the rare product for company. As there are various unique feature such as voice over
internet protocol or VOIP that add to digital alternative to traditional phone line.
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 Inimitable: This is the third part of VRIO analysis in which the organisations are
answerable for a question to them selves which is that the items that are sold are
inimitable or not. If the products can be manufactured by other companies then it will
provide temporary competitive advantage to Virgin. When answer of the question is yes
then next factor will be analysed in context of the organisation.
 Organisation: It is the last component of the analysis in which organised nature of the
products that are offered by Virgin is analysed. Different product such as business
broadband, Phone line, business mobile and connecting site & VPNs are analysed so that
they provide the required satisfaction to user. Manager also check that if there are enough
resources to manage different services offered through various product of virgin.
It is very important for Virgin to incorporate all the above described features in the
products so that competitive advantage can be achieved by the company. It may result in
increased profitability and market share (Leonidou and et.al., 2017).
Strengths and Weaknesses: It is very important for all the business entities to analyse
both strengths and weaknesses in order to formulate future decisions so that business can grow
faster. If the company is not able to determine the strengths and weaknesses then it is not
possible to achieve success as impressive strategies cannot be formulated in this situation. For
Virgin it is essential to gather information of these elements so that it can be assured that the
business will attain success . All the strengths and weaknesses of the company are as follows:
Strengths:
 The customers of Virgin are highly satisfied with the services and product quality. It has
helped the organisation to capture large market share. The organisation is concerned with
good customer relationship management which helps to meet their expectations and also
satisfy them.
 The organisation is concerned with automation which has resulted in consistency in the
quality of products of Virgin (Lehmann, 2016).
 As Virgin is expanding its business in various locations and segments and its
performance in new markets is outstanding. It has helped the company to achieve success
and increase its profitability.
 It has a successful track record of product development which helps to attract large
number of customers and provide them such products that they are willing to buy.
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 Virgin has strong dealer community that help to promote its products and also investing
in training of their sales team so that they can provide appropriate information to the
users.
 The organisation have skilled workforce who work hard to achieve organisational as well
as personal goals (Lai, Melloni and Stacchezzini, 2016).
Weaknesses:
 The organisation has a higher rate of loosing market opportunities of growth as compare
to competitors. Virgin has to face this situation because it is not good in demand
forecasting.
 Virgin is not good in financial planning which creates financial issues for the company.
These are unplanned expenses, sudden requirement of fund and losses.
 The company is expanding less amount in the research and development activities. It has
resulted in decreased competitive advantage of Virgin.
 Virgin's attrition rate in work force is very high as compare to other organisations in the
same industry. The company is spending a higher amount in the training and
development of employees which is not required (Kossyva, Sarri and Georgolpoulos,
2015).
Virgin is a leader in its market because its services are very good and it has captured the
large market area. It track record is very good in service development which has helped the
organisation to be the leader. If VRIO model is not implemented by the entity then it would be
impossible for it to analyse that its services are valuable, imitable, rare and organised or not.
When the organisation does not have such information then in such situation company may losse
its market share.
M2 Evaluation of internal environment to assess strengths and weaknesses of the company
In Virgin VRIO analysis is used to analyse internal environment in which four different
types of elements are analysed. All the products that are sold by Virgin are of good quality and
customers are satisfied with them. It is providing training to its employees which is good but a
higher amount is invested in training and development programs that are not required. Virgin's
liquidity is high but the managers are not good in financial planning and forecasting that affects
its operational efficiency. It is very important for the company to form new strategies to
overcome all the weaknesses.
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