Business Strategy of Vodafone: A Comprehensive Analysis

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BUSINESS STRATEGY

TABLE OF CONTENTS
Introduction......................................................................................................................................1
Task 1...............................................................................................................................................2
P1 Apply appropriate frameworks analyse the impact and influence of the macro environment
on given organisation and its strategies.......................................................................................2
Task 2...............................................................................................................................................6
P2 Analyze the internal environment and capabilities of a given organisation using appropriate
frameworks..................................................................................................................................6
Task 3.............................................................................................................................................10
P3 Applying Porter's Five Forces model evaluates the competitive forces of given market
sectors for an organisation.........................................................................................................10
Task 4.............................................................................................................................................14
P4 Applying a range of theories, concepts and models, interpret and devise strategic planning
for a given organisation.............................................................................................................14
Conclusion.....................................................................................................................................18
References......................................................................................................................................19

LIST OF FIGURES
Figure 1: Vodafone mobile network logo........................................................................................2
Figure 2: Ansoff's growth vector matrix..........................................................................................4
Figure 3: VRIO or VRIN framework..............................................................................................7
Figure 4: Porter's framework for five forces..................................................................................11
Figure 5: New entrant’s threat.......................................................................................................12
Figure 6: Bowman's strategic clock...............................................................................................15

Introduction
Business strategy refers to a high level and updated plan of organisation for accomplishing and
fulfilling particular business aims. The plans that established strategically achieve financial
results, business growth and strong competitive edge in the market. The UK is gaining economic
stability through the telecommunication sector by creating networks for connecting with people
throughout the world. The report will aim at discussing strategic plans of Vodafone from the
telecommunication sector through PESTLE tool and will also initiate matrix of Ansoff's growth
vector for analyzing the strategic position. It will also emphasize Vodafone's internal
environment through different models that will easily determine its strategic capabilities by
interpreting the strength and weakness of the organisation. Furthermore, the report will analyze
several competitive forces through different model such as Porter's Five Forces in Vodafone.
Moreover, the study will provide a strategic plan through various theories or concepts that help
in determining an organisation's market position at the domestic and international market.
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Task 1
P1 Apply appropriate frameworks analyse the impact and influence of the macro environment on
the given organisation and its strategies
The telecommunication sector of UK has helped in earning higher volumes, subscribers and
revenues that are operated by various service providers in the country that is constantly
increasing retail revenues world widely. Vodafone has been determined as British
telecommunication service provider in the UK that is positioned at a fourth number that serves
approximately 313 million customers across the world. It has been globally providing services
such as broadband, fixed-line telephones, mobile phone, internet television; etc helps the sector
for the growing stable economy of UK. All business operations are being managed by aiming
important strategies that provide long term success by determining various factors present
externally and internally (Schaltegger and Wagner, 2017). It is essential to determine the
influence and impact of external factors through various models for strategizing Vodafone's
business activities.
Figure 1: Vodafone mobile network logo
(Source: Vodafone, 2016)
It is important to identify the meaning of types of environment that comprises micro and macro
that functions in the business environment and plays an important role. The macro environment
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is determined as external sources that impact business and are not controllable by the business
firm and people associated with them whereas microenvironment affects business from internal
factors that can be managed by the organisation (Amin, et.al, 2017). The environmental analysis
of Vodafone can be enhanced by PESTLE model that helps in improving performance in the
organisation by maintaining strategic position through Ansoff's growth vector matrix.
Vodafone Environmental Analysis from PESTLE Model
 Political Factors – The factors puts great influence on organisations like Vodafone for
establishing operational infrastructure. Political circumstances are an essential aspect that
has also added political instability and peace of state that is important for consideration.
War and tiresome work occur through political fluctuation. For example – Europe has
faced several conflicts recently that have impacted Vodafone as the whole.
 Economic Factors – Focusing on economic factors will provide several benefits from a
developed state that will help in business expansion and bringing chances of opening
fresh units in developed areas or zones. If a country has a high GDP rate it means people
have sufficient income sources and are adaptable to purchase the latest technology for
communication (Scholes, 2015). The economic crisis in the country impacts Vodafone in
terms of changing its strategies regularly.
 Social Factors – The factors are dependent on local culture and belief which is operated
by the organisation. The domain is determined as a dynamic that requires flexible policies
that should be matched with local culture for obtaining success in Vodafone. Basically,
the organisation is European but it has aimed at changing its preferences that associates
with local social factors that increase its sales. For example – iPhone is top seller phone
in the UK that forces Vodafone to work within local factors.
 Technological Factors – Vodafone has an innovative strategy that is followed by
communication and technological spheres. As competition is high in the UK market, the
strategies of Vodafone must include products with advanced technology by focusing on
policies and features of product or device. The organisation has a fundamental maxim
that determines it as technology driven that focus on the latest technology trends that
needs to be initiated regularly.
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 Legal Factors – Vodafone has several competitors that require it to get more vigilant for
issues such as pirated and copied products. The UK has found Vodafone as guilty in legal
matters that included infrastructure sphere. Moreover, it was also found that Vodafone is
not paying correct compensation when compared to its competitors. Hence, the
organisation must be abided from legal issues that help in boosting positive image and
potential customers that grow trust.
 Environmental Factors – The working conditions and ethical business practices plays
important role in gaining consumer loyalty and trust (Abushova, et.al, 2016). Vodafone
must focus on several factors while conducting its operations by maintaining proper
environmental standards that include climate, weather, recycling, waste management etc.
For example – In Florida and Texas the government has prepared various liability clauses
if the country faces environmental disaster or mishaps.
Ansoff’s Growth Vector Matrix
Figure 2: Ansoff's growth vector matrix
(Source: Ansoff Matrix, 2018)
The matrix helps in deciding a firm's market growth that focuses on growth strategies of
products. According to the model, it comprises four business strategies which are as follows:
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Market Penetration – it determines as a major strategy that prepares a growth strategy for an
existing product or market. It helps in uplifting the market of Vodafone by achieving the aim of
becoming a global telecommunication firm.
Product Development – It aims at producing new products and services within the existing
market for increasing consumer base that develops and expands the Vodafone business.
Therefore, the organisation must focus on establishing bets products (Gurcaylilar-Yenidogan and
Aksoy, 2018).
Market Development – This targets in a new segment with existed product or service. It helps
the business to grow at a higher level through identifying most liked and purchased the product.
In case, Vodafone plans to have an entry in the new or fresh market they should promote other
complementary plans and services.
Diversification – Vodafone has been planning to enter in electronic equipment market that
requires best diversification strategy. Complete market knowledge and research will provide the
best outcomes when entering into another field that makes its effect on consumer increments.
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Task 2
P2 Analyze the internal environment and capabilities of the given organisation using appropriate
frameworks
Strategic capability is defined as the ability of business that employees successful competitive
strategies which helps in boosting and surviving organisational value over time. The term is a
major constituent that makes the organisation viable and grows freely in a tough competition that
monitors business activities for achieving global success. Similarly, Vodafone is determined as
telecom sector that requires implementing VRIO or VRIN model for identifying its strategic
capabilities that are discussed below (Hao and Song, 2016).
VRIO or VRIN Model
The framework was developed by Barney that was improved by the VRIN model. The
framework was developed for analyzing an organisation's internal capabilities and resources for
determining sources of having sustained competitiveness. Using this model, strategies can be
enhanced by Vodafone that focuses on objectives, environmental analysis, strategic execution or
choices and vision. Vodafone is initiating this model for meeting up competitive advantage and
success in telecommunication sectors. The framework carries four questions that mean value,
rarity, imitate an organisation that stands for VRIO acronym.
Value – First question include adding value to resources that help dispenses surviving
opportunities and prepares strategies against threats (Lopes, et.al, 2018). Getting answer is yes
depicts the valuable resource that boosts customer value through low pricing or high product
differentiation. Low-quality resources give a competitive disadvantage. Hence, it is important to
regularly review resources as fluctuated internal or external situation may lower the use or value
of resources. Vodafone requires having valuable resources for achieving competitiveness by
focusing on present resources that may not impact business position. Even the high competition
will also become a barrier in gaining competitive advantage.
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Figure 3: VRIO or VRIN framework
(Source: VRIO, 2016)
Rarity – The sources that are acquired by fewer organisations is determined as rare. Valuable and
rare resources bring huge success but when all resources are similar to other firms than it
introduces competitive parity. Identical and similar resources are being moulded and given
finished product shape from common strategies that eliminate superior performance chances
from all firms (Butler, et.al, 2016). In a case similar resources are present organisation must not
forget the importance of required resources as losing such resources will create to compete in the
market. In Vodafone, products are determined through its rarity that makes it unique from its
rivals. It provides quality stuff and materials for high-quality mobiles.
Inimitable – Precious and rare resources are utilized that cannot be acquired by other firms as
they do carry strategies to sell it at affordable prices to customers. Imitation has two types that
include duplicating resources or substituting a similar product. The organisation that holds rare,
costly and valuable resources helps in imitating resources for achieving sustainable competitive
advantage. While imitating resources there are several barriers such as historical conditioned are
costly resources, social complexity issues and casual ambiguity as easy identification of
important resources is tough. Therefore, Vodafone has to acquire imitate resources with rare and
valuable sources for getting constant sustained growth.
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Organized – The resources that are selected for achieving competitive advantage cannot be used
if they are not properly organised for capturing the firm's value. It is essential for Vodafone to
manage and organise management processes, systems, structure, culture and policies for
realizing the potential and calibre of costly, rare and valuable resources for imitating. Vodafone
will easily achieve all success for competitiveness if three steps are properly practised and
fulfilled by the organisation (Barney and Mackey, 2016).
Therefore, the VRIO framework is beneficial for Vodafone that helps in acquiring capabilities
and resources for gaining a competitive advantage by dealing with several competitors. For
initiating VRIO model, the organisation must aim at determining strengths and weakness which
will help in determining the areas of improvements.
Vodafone’s Strengths
 Vodafone is highly capable of getting success through strategies of Go To Market.
 A strong track record that integrated complementary organisations by acquisitions and
mergers.
 Expert performances while entering into new markets for new product identification.
 Successful in executing new projects that provide good returns and free cash flow on
capital expenditure.
 Wider market coverage in more than 25 countries that are ranked as a 2nd largest telecom
operator.
 Holds high exposure of brand valuation and recall.
 Advertising and promotion techniques from ZooZoo created a huge customer base.
Vodafone’s Weaknesses
 Limited in getting success while shifting to other core business or product segmentation.
 Gets setbacks when merges with another firm which impacts its internal organisational
structure (Prajogo, 2016).
 It gets constant attacking from rivals due to its similar promoting techniques that affect its
positioning.
 It incurs a high rate of attrition on its workforce as employee training and development
needs huge requirements.
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 Missed several opportunities due to low rate and skills of product demand predictions and
forecasting.
 In the last four years, Vodafone has faced low subscriber base and brand evaluation.
 Recorded poor results from Europe and also acquired loss of market share under the
USA.
Therefore, strengths provide core objectives and competencies whereas weakness brings hurdles
and disadvantages to business. Internal capabilities of Vodafone are achievable through its
technical and professional employees.
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