Business Strategy Report: Virgin Media's Competitive Analysis

This report provides a comprehensive analysis of Virgin Media's business strategy. It begins with an introduction to business strategy and its importance, followed by an examination of Virgin Media's macro environment using PESTLE analysis and Ansoff's growth matrix to understand the external factors influencing its decisions. The report then delves into the internal environment, exploring Virgin Media's capabilities using models such as VRIO and SWOT analysis. It continues by applying Porter's Five Forces model to assess the competitive forces within the telecommunications market and devise strategies to enhance Virgin Media's competitive edge. Finally, the report applies various strategic planning theories and models to interpret strategic planning for Virgin Media, concluding with a strategic management plan that includes tangible and tactical recommendations. The report critically interprets data and information from environment and competitive analysis to produce valid strategic directions and objectives. The report highlights the competitive landscape of the UK telecommunications sector and the factors that influence Virgin Media's strategic decisions.

BUSINESS
STRATEGY

TABLE OF CONTENTS
INTRODUCTION..............................................................................................................1
TASK 1.............................................................................................................................1
P1 Analysing impact and influence of macro environment factors on Virgin Media and
its decision making.......................................................................................................1
M1 Critically analysis macro environment and how this determine Virgin Media
strategic management decision...................................................................................5
TASK 2.............................................................................................................................5
P2 Analysing the internal environment and capabilities of Virgin Media......................5
M2 Critically evaluating strengths and weaknesses of company.................................8
TASK 3.............................................................................................................................8
P3 Applying Porter's Five Force model in evaluating competitive forces of market of
Virgin Media................................................................................................................. 8
M3 Devising the most appropriate strategies to improve competitive edge and market
position based on outcome........................................................................................10
TASK 4........................................................................................................................... 11
P4 Applying range of theories, concept and models to interpret strategic planning for
Virgin Media............................................................................................................... 11
M4 Producing strategic management plan that is tangible and tactical.....................14
D1 Critically interpret information and data applying environment and competitive
analysis in producing valid strategic directions and objectives..................................14
CONCLUSION............................................................................................................... 14
REFERENCES...............................................................................................................15

INTRODUCTION
Business strategy would be based on vision and mission of the company which is
telling or guiding them to achieve their targets and objectives of firm over time period by
analysing what are strengths and weaknesses. This varies from company to company
as all of them are having their own internal and external factors which are influencing
their working and operational tactics. In this current assignment we would be focusing
on the telecommunication network or sector of UK which is the fastest growing sector
on worldwide level. This industry is providing service to about whole world and
generating £3.8 billion of service in year 2017 there are some major players in the
market of UK namely BT, Virgin, EE and Vodafone. In our part we would be focusing on
Virgin Media and their business strategies that they are following like what are the
internal and external factors of company which are influencing their decision making
process. At the end we would be learning about theories and models that are helping
company into their strategic planning.
TASK 1
P1 Analysing impact and influence of macro environment factors on Virgin Media and its
decision making.
Virgin Media is one of the famous telecommunication network provider company
which is British company providing service and products to UK and Ireland. It is the
subsidiary of Liberty Global and was founded in 2006 having its headquarters at UK
with the revenue of about £4.1 billion. Company is providing many products and service
to its customers all around UK and Ireland like that of digital TV, broadband internet,
fixed line telephone and mobile phones as well. After its formation in year 2006 it was
merged with NTL and Telewest and then forming Virgin Mobile UK then the signed a
deal with Sir Richard Branson to work under licence of Virgin Brand (Virgin Media
Business Strategy, 2018). In the market where it is currently operating is very
competitive one as they are having their rivals like that of Vodafone, BT and EE which
are amongst the top rated companies of UK operating on worldwide level.
Macro environment would be defined to as all factors which are existing outside
the company and that are not into the control of any firm which it is affecting. All these
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types of factors would not only be affecting one particular company but rather they
would be creating its effects on whole region or sector under which firm is operational.
There are various factors which are influencing organisation and its strategies which
they are formulating over specified time period so that their targets and mission is been
followed. There are models like that of PESTLE and Ansoff's growth matrix which are
commonly used by company so that they could analysis which are their external factors
and what impact they are laying onto firms strategies.
PESTLE analysis:
Political: virgin media face a challenge of government policies in foreign countries like
Australia, USA (Dessart, 2018). It influenced by the taxation policies, labour law, trade
restriction imposed by the political bodies. Its challenging to set a business in foreign
due to there licensing bureaucracies set by the government. Virgin media influenced to
the increased regulation and control of business operation by foreign government.
Economic: economic factor include economic growth, inflation rate, interest rate
charged on capital and investment, foreign exchange rate. Global crises negatively
affects the business operation of Virgin Media in recession period. Globalisation and
liberalisation of consumer market, increase the cost of production and decrease the
level of customer income also affects the business of virgin media.
Social: social factor is important to success of every business because it impact on
business by the behaviour of buyers the company is serves a service to there
customers according to the that ,behaviour and social trend. The society is changed
according to region and the demand is also increase according to the place and there
peoples .
Technological: technological factor relates to technical advancement. Its important to
virgin media to upgrade their technology to sustain in market because the competitors
are highly technical to the virgin media and it is lose of the company (Hjalager, 2018).
Innovation of technology is must for virgin media to provide quality in the services to
customer and also helps in decrease the technological challenge. Use of high quality
technology may increase the profit of the company and achieve the goals & objectives
of company and individuals.
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Legal: It is necessary to complete some other laws apart from labour law. Legislation
issues is always affects telecommunication industry. The market is spread on global
level so it is challenging attaining al legislation rules at global level. The market is open
door so it import and export is also the increasing the technology and enhancing the
profit of company. Law of employment also to increase the level of productivity in
market it helps to get the objective of employees and company goals.
Environment: environment factor play a major role in telecom industry because it is
connect to everywhere. It can helps to customer at everywhere to helps them for
communication. Virgin media operate under the competitive and dynamic environment.
It facilitates to its customer by providing services at exceptional and quality material at
lower price than its competitors (Murphy, 2018). Communication is general need and
want of every person so virgin media helps to provide the services at all type of climate.
It is challenging to company because the services of company may be disturbed by the
global warming, climate and weather
Ansoff's growth vector matrix:
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This strategic model is underpinned as four specified way to grow or develop the
company into market were there are many tough competitors operating into. This
particular model would be analysing on products and service of company so that they
could easily gain market competitive advantages. Ansoff model is based on how
company using their existing products or market and new products or market could be
able to grow and develop as that they are gaining profits and ultimate mission of firm
(Evens and Donders, 2018). Through this model we need to maximise the strength and
minimise weakness of company and its products so that they would easily garb
opportunities which are prevailing into market.
Existing market and new products- this first element of matrix would be helping
company to launch their brand new products or service into their own existing
marketplace which would be that of UK and Ireland only. This is helping them to grow
their existing customer base leading to increase in profits and revenue generation of
company. This is basically the product development strategies which is used by Virgin
so that they could easily launch their new products and their existing markets only as
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Illustration 1: Ansoff's growth vector matrix: Virgin
Media
[Source: Ansoff Growth Matrix, 2018]

they would be having knowledge and skills of dealing with their customers into that area
or region.
Existing products and Existing market- under this element they would be increasing
their base of customers with putting extra efforts into their development and research
strategies. This strategy would be called to as Market penetration which would be used
by Virgin media to capture more customers and that too not introducing any new
product to them (Ansoff Growth Matrix, 2018). Company would be doing this by making
some suitable changes into features or methods of their products or could also be done
using more advertising and marketing functions of that company. Like Virgin Media
used new techniques at the time when broadband service of company was launched
which was done in order to take over BT and its market share. They also laid down
stress on use of good marketing and advertising campaigns which is offering their
customers services at cheaper rates.
New market and Existing products- this could be defined to as most effective market
strategies which is used by company in order to grow their market share or profits of
company (Stål and Corvellec, 2018). Market development strategies deal out with the
current products but they are expanding their market into some other region or area.
Their target is new market with their already profitable products which are there into
market. For instance Virgin media launched their broadband service that was focusing
on their existing market customers only so that they would be able to gain higher profits.
This was done by utilizing the current customer base and their service in these efforts
they initiated to re launch their B2C Virgin Media business to take over BT which is the
top rated company in market of UK telecommunication.
New market and new products- this particular strategy is wholly called to as
diversification of company and its products which is launching new product into whole
new market only. The market or area is new for company with their products or service
also being new one but at present Virgin media is only operational into UK and Ireland
and not operating into any new market with any products (Ansoff Growth Matrix, 2018).
This tells that company is currently not utilising this diversification strategy.
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M1 Critically analysis macro environment and how this determine Virgin Media strategic
management decision.
All these underpinned macro environment factors as per the author like that of
either legal or environmental or that of technological would be affecting the strategic
decision making of Virgin media (Heinze, Fenton and Fletcher, 2018). Like if they would
be at anytime planning to launching their product into new market then they could
analysis and note down all these factors which would be affecting their planning and
decision making process as well. For instance if they are not identifying increasing
inflation rate or decreasing GDP growth rate of country then they would not be able to
set up their price according to them. Author also mentioned that if Virgin Media is
identifying all those important factor that are impacting their business the most then only
their decisions could be made properly.
TASK 2
P2 Analysing the internal environment and capabilities of Virgin Media.
Internal environment are on the other hand are defined to as those factors which
are included within company itself and they could be easily controlled by management
of firm. They could be introduced like those which are pointing from company like their
management policies, brand value, advertising and marketing plan etc., By word
strategic capability it would be meaning that ability of firm that is allowing them to focus
on competitive strategies of company and which is helping them in increasing their
sales and to survive into market for longer duration of time. So in order to identify which
are the factors that are internal for company and that could be used by them to make
decisions on strategic capabilities as well (Turban and Turban, 2018). The models
which could be used by firms could include like that of VRIO or SWOT analysis both of
them are helping Virgin media to determine what are the capabilities which would be
used by them to enhance their profits.
VRIO model:
This model frameworks would be used by most of the companies to evaluate
their skills, capabilities and resource that are there with them so that they could be
choosing and applying them to gain more competitive advantage. Under this model
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there need to be involve mentioning 4 questions which are to be asked so that company
is finding out answer to them and relating that with skills and resource which they are
having.
Value- under this question firm would asking themselves that whether they are able to
explore all sorts of opportunities that are relevant into current scenario. They also need
to analysis that whether all threats that are there into market could be overcome by firm
is they having that many capabilities or not (Parast and et.al., 2015). Hence, it is
included that are all the resource which Virgin media is having like that of human
resource or capital would be capable enough to value or grab all opportunities and limit
their threats from market or not. Identifying which factor is helpful for them and which
could be regarded to as useless must be important task for them so that it becomes
easy for them to relocate their strengths and weakness.
Rarity- this includes the rare or unique feature or skill which only company is having
and no one is having that at present. This rarity is forming part of most valuable and
important source which only that firm is having and no one other could be making or
imitating this but this rarity could be vanished over time period. Thus, helping others to
find competitive advantages which once only that company used to have. Like in case
of Virgin media they are having 1 unique combination that includes TV, Broadband and
fixed telephone line which is having no other reliance of the other competitors.
Imitability- this is the ability or value of companies that factor which is not easily
imitable by any other firm into market. The current company is having absolute cost
advantage over that product or service of firm and the rival firm could not copy or obtain
the same resource or capabilities for their company (Du Plessis and et.al., 2015). As
Virgin Media into markets of UK and Ireland are having benefit of quadruple play as
they are offering television, mobile and telephone and internet service as well into the
market. If any other company into same telecommunication network providers are trying
to imitate this USP of Virgin media then they would be need to incur huge cost for this.
Organisation- this is the planning and organising function of management which tells
us about that whether company is easily manageable and all their planning are
organised or not. If the company is very well organised then they would be easily
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exploring all their capabilities and opportunities which are there in both external and
internal environment. So at first if company is able to recognise their value, rarity and
Imitability then they should be capable enough to organise and implement all planning
of company in an organised way out.
Strengths:
These need to also identified on the part of company so that they would know
what impact strengths are having on their profitability and increased in sales revenue.
There are various strengths of Virgin media which are helping them to utilise all their
resources so that they can gain more customers (Matt and et.al., 2015). Virgin media is
having high speed next generation optic network which is also regarded to as their
backbone of company and the greatest strength. Other than this they are also having
triple play which is their USP as well having TV, Broadband and Fixed telephone line
with having strong 2009 business results. They are also having brand loyalty and
recognition into market which is helping into their competitive advantages over other
rivals into market. Company is regarded to as providing all solutions for problem of
networking to their all type of customers including business and others as well.
Weaknesses:
Other than all their above stated strengths company is also having many
weaknesses which are not allowing them to properly grow into market and gaining
competitive advantages over their competitions as well. Weaknesses would be defined
to as those limitations over the functioning of company that is stopping them to grow
over their rivals into market or that reason as to why firm is not able to perform in better
way. Amongst them high heaps of debt which company is having on themselves could
be regarded to as weakness of Virgin media from which some of them could be that of
acquisition purpose. In year 2009 company was having about $676 million of
indebtedness which in 2008 was about $8,946.6 million. Due to this factor the liquidity of
Virgin Media was affected on larger bases and this was not allowing them to grow in
market. They are also not making any efforts in creating or generating any awareness
for customers who not obtaining enough knowledge about their broadband service so
due to lack of this they are not been able to increase their market share (Meckling,
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2015). Virgin Media that is also providing TV to their customers should be concentrating
on how to increase their premium sports that is having more of the sports and news
channels onto. Company is also not having their connections or networking and
broadcasting in rural or semi rural areas so as compared to competitors of firm.
M2 Critically evaluating strengths and weaknesses of company.
As per the author it was noted that all strengths which Virgin media is having is
more than that of their other rivals as they could be concentrating on UK and Ireland
market more. Company should be focusing on how to overcome their weaknesses that
could be restricting them to their profits and increasing revenue of firm. Author said that
if Virgin media is concentrating on their broadband service then this could be good way
to incorporating their profits.
TASK 3
P3 Applying Porter's Five Force model in evaluating competitive forces of market of
Virgin Media.
Porter's Five Force model is regarded as to tool which would be helping
company or whole sector and industry to draw out to what extent factors like that of
rivalry, customers, suppliers, substitutes and other new entrants into market would b
affecting the profitability or company. At first company should be identifying what are the
factors that could be putting stress on their market share and then listing out ways to
tackle and handle them all (Sieger and et.al., 2015). So below mentioned are the 5
forces of Porter which are included into model telling the telecommunication sector of
UK that what are threats and to what extent company must include them.
Rivalry:
Rivalry is between two company is affect the result to zero profit margin. Rivalry
affects the negative result on a company by decreases the prices. Company makes a
plan to overcome a problem to rivalry by giving some offers in a market. The reasons
behind rivalry between two company are large numbers of firms in a market. Virgin
media also face the rivalry to increase competitors in a market. There are so many
companies which are providing same types of services in a market at the same price of
virgin media which can be affects on the profit of company. If the price of product is high
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than customers are moving to some other company. So virgin media has to put their
product at low price. High cost of product can be caused of rivalry. Market growth is also
the reason of rivalry because the virgin media want to grow fast by attracting customers
through there services but some telecommunication company try to increase their
market size.
Threat of substitutes:
Threat of substitute is refer to same type of product are serves by other
company and it makes competition in market. By the substitutes of product customer
moves to another product (Chen and Jermias, 2014). Substitute of product makes loss
of company because the company try to retain their customer by sell their product at low
margin and it makes loss of company substitute of product is threat to virgin media
because it makes competition in market.
Bargaining power of customers:
Bargaining power of customer is power of buyers by which they put firm under
pressure. Bargaining power of customer are high when there are so many alternatives
and substitute in market and they fulfil the need and want of customer differential and
uniqueness in product is necessary to decline the power of buyers power of customer
are high when the substitutes offer a product at low price and customer moves to them.
Bargaining power of supplier:
Power of supplier is more when the suppliers are few in market and customers
are many but the supplier are many in market to supply a goods and few number of
customer in market to consume a product (Bentley-Goode And et.al., 2017). This can
be loss for company power of supplier is also described as inputs of market supplier can
be refused to work with the firm and charged high prices for unique resource.
Advantages of supplier power are to strength of distribution channel.
Threat of new entrants:
This factor is also make huge competition to this company because in this market
demands are high and easy to entered in market. There are highly availability to make
profit in this industry to attracts the customers. New entrant’s give lots of offers to the
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