Vodafone Business Strategy: PESTLE, VRIO, and Competitive Analysis

This report provides a comprehensive analysis of Vodafone's business strategy, examining both its external and internal environments. The report begins with an assessment of the macro environment, utilizing PESTLE analysis to evaluate the impact of political, economic, social, technological, environmental, and legal factors on Vodafone's operations. The report then delves into Vodafone's internal environment and organizational capabilities, employing the VRIO framework to assess its resources and capabilities, identifying strengths, weaknesses, opportunities, and threats (SWOT). Furthermore, the report analyzes the telecommunication sector using Porter's Five Forces model to evaluate the competitive landscape of the UK's telecommunication sector. Finally, the report explores strategic directions and options available to Vodafone, including market penetration, market development, product development, and product diversification, using the Ansoff matrix. The analysis provides insights into Vodafone's competitive position and potential strategic moves.

BUSINESS
STRATEGY

Table of Contents
Introduction......................................................................................................................................2
Task 1- The external environment...................................................................................................2
P1 Impact and influence of macro environment on Vodafone...............................................2
Task 2- The internal environment and organization capabilities.....................................................4
P2 Assessment of Vodafone internal environment and capabilities......................................4
Task 3 – Analyzing the telecommunication sector:.........................................................................6
P3 Competitiveness of UK's telecommunication sector by using Porter's Five Force model6
Task 4...............................................................................................................................................7
P4 Strategic direction and options available for Vodafone....................................................7
Conclusion.......................................................................................................................................7
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INTRODUCTION
Business strategy is referred to high level plans formulated by the top management of the
firm which assist in gaining competitive advantages (Chen and Jermias, 2014).. It helps company
in the growth and development. In respect to survive in competitive advantage it is essential for
the firm to formulate effective strategies and implement them in systematic manner. Regarding
this, the focus of the firm will be on formulating various types of strategies which can be applied
in operational, tactical and strategic role of the firm. The present research is based on Vodafone
company is operating its business in telecommunication industry. This report will cover Impact
and influence of macro environment on Vodafone. Along with this Vodafone internal
environment and capabilities will be assessed.
TASK 1: THE EXTERNAL ENVIRONMENT
P1. Impact and influence of macro environment on Vodafone
Macro environment is known as the external environmental factors which can affect the
operations of the firm. In order to analyse the external environment, Vodafone can conduct
PESTLE analysis and Ansoff matrix strategy. The Vodafone business strategy will used these
both models in respect to know the impact on its strategies
Political factors: Political factors are known as the rules and regulations made by the
government. It can directly influence the business strategies and plans. EU roaming regulation is
one of the factors that affect Vodafone. It leads to reduce the changes for usage of mobile phone
out of the country by 60% and enhance the consumer rights in Europe (Goerzen, Asmussen and
Nielsen, 2014). The political environment can impact the business in many ways such as it can
add risk factor that can make company to suffer from loss. The political environment is known as
the factor which is least predictable. Government have power to change their rules and
regulations which can adversely affect the business strategies. Company can make purchase of
risk insurance which help them in managing the political risk. The firm who are operating
business at global level required to use such insurance in order to reduce risk exposure.
Economic factors: There are various economic factors which can directly and indirectly
affect Vodafone. It includes interest rate, recession, inflation, etc. All these factors can directly
affect the strategies of Vodafone. Impact of BREXIT on the UK is high due to which most of the
companies are affecting who are operating in the country. It is essential for the firm to ensure
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that strategies which are formulated do not get affected by the recession, GDP or any other
factors. Hence, to survey in unstable economic condition of the UK, Vodafone developed
strategies to expand in that country and target a large number of customers. Due to increase in
interest rate it made tough for the company to take loan for implementing strategies. Along with
this for the expansion of business company unable to take loan for carrying out business
activities.
Social factors: Social factors are those factors which has impacted the strategies of
Vodafone such as changes in lifestyle of customers, taste and preference, etc (Gray, Smart and
Bennett, 2017).. There are many companies who are providing high speed internet in less price
which easily divert the attention of customers. Hence, it is essential for Vodafone to consider this
factor while formulating strategies. The social aspect focused on the forces within the society.
Technological factors: In the present time there are many new technologies are
introduced in the market. Vodafone always make sure that all the contemporary trend get follows
in order to retain customers (Goerzen, Asmussen and Nielsen, 2014). Therefore, with the rise in
5g technologies business strategies of Vodafone is high affected. At present management of
Vodafone investing in order to provide 5g internet facilities to its customers in UK and other
countries. Adopting new technology can help company in saving cost and time. Along with this
it make easier to carry out day to day activities in an effective manner.
Environmental factors: At the time of carrying out business it is essential for the firm to
focus on preventing the environment from any type of harm. Vodafone focused on keeping
environment safe, therefore it is using renewable sources of energy in most of its departments.
Along with this, the firm is part of social corporate responsibility so it carried out many
campaigns in respect to make conscious people about environmental protection (Chen and
Jermias, 2014).
Legal factors: Legal factors incorporate the national laws and corporate, legislation and
policies. Therefore, carrying out the business in UK it is essential for Vodafone to ensure that all
rules and regulations are get followed strictly. Company can focus on employment rights laws,
health and safety act etc.
Hence, the above following factors shows that company can easily impact the firm and its
operations. It is important for the firm to develop various strategies so that it can easily overcome
issues and carry out business successfully.
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Ansoff growth vector matrix
Ansoff growth matrix is known as the strategy that provides a path through which
company can innovate new product or enter in new market . Here below are the Ansoff growth
matrix
Market Penetration: Market penetration take place at the time when company wants to
advertise its existing produces which assist them in gaining market shares. It is known as the
minimal risk strategy of Vodafone. It is because the firm need to put efforts in marketing for
capturing high market shares (Chen and Jermias, 2014).. The company need to keep efforts for
making sure its leverages the current capabilities, resources and skills.
Market Development: Market development takes place at the time when firm wants to
expand its business in new market through selling its existing products. For instance, Vodafone
wants to enter in a new market with the current products (Buckley and et.al., 2016).. For
instance, company wants to enter in Indian market with its current products that clearly reflect its
market development strategy. However, it is considered as a risky strategy as compared to
market penetration strategy. As because firm need to put efforts in identifying its target market,
marketing etc.
Product Development: This is the strategy in which company focuses on developing a
new product in its existing market. Vodafone can use this strategy in UK through introducing
new product in the market. However, this strategy is known as the optimum strategy which help
company in sustaining competitive market. Through leveraging the brand name, Vodafone can
easily develop new product and gain success.
Product Diversification: Product diversification in which company focus on launching
new product in the new market. This strategy is very risky because no one know about the firm
and its products which reduces the chances of sales. Vodafone need to put lots of efforts in order
to develop its impact in the market so that people will come to know about it and make purchase.
TASK 2: THE INTERNAL ENVIRONMENT AND ORGANIZATION
CAPABILITIES
P2. Assessment of Vodafone internal environment and capabilities
To survive in competitive market, it is important for company to robust internal
organisational structure with proper allocation of the resources and appropriate use of internal
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capabilities. With the help of VIRO, company can easily analyse its resources in order to
determine the strategic position of the firm (Madrigal, Jiang and Roy‐Chowdhuri, 2017).
VRIO model for analysing strategic capabilities of Vodafone. VRIO framework model is known
as the specific model. To analyse the internal capabilities of Vodafone, VRIO model will
optimum and accurate. Here below are provided are the analysis:
Value: There are many resources which are used by the Vodafone such as human resources,
financial, technological and physical resources (Madrigal, Jiang and Roy‐Chowdhuri, 2017). All
these resources are important for the firm in order to carry out business activities and gaining
competitive advantage. Vodafone is operating its business in UK and it is essential for them to
use all these resources in an effective manner.
Rare: In present time mobile communication market growing fastly in all over the worlds. It
leads to make difficult for the firm that they use rare resources which support them in gaining
competitive advantage. It is analysed that Vodafone company is using its own resources and
patented information which assist them in gaining competitive advantage. Apart from this, there
are various mechanical resources which is used by other firm who are operating business in same
field such as O2 and Giff Gaf etc (Wollenberg, 2017)..
Imitate: The firm is using patient information and highly advance technology which can is not
easy to be imitate by other companies. Further, robust structure and appropriate manpower help
company in sustaining in competitive market of United Kingdom.
Organised: The firm is using its resources in an effective manner and due to this reason, they
thrive in the competitive market. Therefore, all the resources which are used by the firm help
them in gaining competitive advantage.
Here below are some strength and weakness of the Vodafone.
Strength: One of the main strength of the firm is that it is operating its business in all over the
world. It has large number of customer base due to which company is making huge profit in the
industry. Though providing a advance network which help in aiding quality of the network.
Along with this company can easily make good profit through selling its product around the
world (Wutzler, Weissbach and Springer, 2017).. Apart from this, marketing of the Vodafone is
fabulous. The pub of Vodafone is known across the globe in respect to follow Vodafone users
everywhere. Along with this, Vodafone Zoooo is also effective which help in gaining the
attention of large number of customers.
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Weakness: The weakness of the firm is that its subscribers in US and UK getting reduced. Along
with firm also face heavy losses in India too because of the network issues. Due to large number
of competitors such as Giff Gaf etc has affected the overall business and especially fall in the
European market (Madrigal, Jiang and Roy‐Chowdhuri, 2017).. Hence, value of brand is
reducing because of new companies entering in the market. One of the main reason for dropping
in the subscriber based of Vodafone is known as the brand valuation of the firm which was very
strong in the beginning. But its brand valuation was dropped in last year due to which it sales are
highly affected.
Opportunities: Vodafone company have opportunity to expand business in emerging market.
There are many roles that can be played by the firm in emerging market. One of the major issues
which customers of Vodafone are facing is due to network issues (Harrison and Wicks, 2013).
The firm is known for its poor network . Therefore, keeping an eye on the network and make
improvement in it is one of the best opportunities that firm have in respect to increase customer
base.
Threats: One of the major threat of the Vodafone is known as mobile phone portability. It is
because whenever any competitor provides cheap plan then customer easily switch from its
brands to another (Gray, Smart and Bennett, 2017).. Large number of competitors are one of the
major threat due to which company unable to make good profit. It is essential for the firm to
focus on premium pricing strategies so that it can easily give tough competition to its
competitors.
Through conducting SWOT analysing it become easy for the firm to understand its
weakness and opportunities. Vodafone can overcome the weakness of the firm through focus on
factor which are impacting the firm. Along with this, company can use new technology as the
opportunities so that it can easily survive in competitive market.
Task 3 – Analyzing the telecommunication sector:
P3 Competitiveness of UK's telecommunication sector by using Porter's Five Force model
Porter five force model is effective enough in order to analyse the competitiveness of the
telecommunication industry UK. The provided model is effective enough in order to understand
the forces which can impact the firm. Here below are the competitive analysis of the industry
Bargaining power of buyers (High): Bargaining power of buyer is known as the high in UK as
because of there are many new companies who are entering in telecommunication market. It
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leads to provide wide range of choices to the customers as they no need to depended on one firm
(Blackburn, Hart and Wainwright, 2013).. This implied that company need to device new
strategies and plan which help them in retaining customers for longer time. Regarding this,
Vodafone can formulate new pricing strategies and focus on the quality of services which help in
grabbing the attention of customers.
Bargaining Power of suppliers (Low): Suppliers are those who provide resources to the firm. In
the UK, telecommunication sector has provided partnered with the suppliers so that barriers
can be removed in the in supply chain management process. Suppliers play important role
because if company do not get resources on time then it will become tough for them to
deliver product on time (Gordon, 2017).. On telecommunication industry supplier power is
low. Therefore, Vodafone should keep strong relationship with its customers in order to
increase productivity and sales.
Threat of new entrants (Moderate): In telecommunication sector threat of new firm is not high
nor low as because of Brexit. The firm is surviving due to because of governmental policies
and increase in advance technologies (Burke, 2017). New firm need to face so many
restrictions while entering in this market such as competitors. Laws, etc. Therefore, to
survive in new marketing companies need to focus on adopting strategies of existing
companies. For instance, Vodafone company need to make new strategies so that it can
easily survive without getting affected from new entrant.
Threats of Substitutes (Low): In telecommunication sector threat of substitutes are low as
because of lack of alternative customers (Blondiaux and et.al., 2017).. There are less
substitutes available who can give tough competition to the firm. However, the company
should not underestimate its substitute channels. It is because there are many social
networking sites which are offering free calling option such as WhatsApp, Facebook etc.
However, these applications are not mostly used by the user because they need internet
connection of calling. Hence, Vodafone company should focus on these issues and try to
devise strategies accordingly to overcome all these problems
Rivalry within the market (High): In present time it is not easy for the firm to survive in
competitive market. There are many strategies which company need to formulated in respct
to remain in global market client (Amato and et.al., 2017).. There are many orgisation who
are operating there business in the same market such as Giff-gaf, O2 etc. it is essential for
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Vodafone company to make innovative products and services which are different from its
competitors. Along with this firm can focus on devising new strategies so that it can easily
grab attention of customers.
Task 4
P4 Analysis bowman's strategy clock model for determining strategic direct and available option
for Vodafone.
Bowman model is used by company to derive its competitive position as per competitors
such as Virgin, Giff-Gaff etc. The framework of this model is divided into eight strategic option
which will help in developing critical understanding over Vodafone and its strategic directions.
The analysis with the help of model is described under:
 Position 1: Low Price / Low Added Value: As per this, it can be said Vodafone holds
competitive position because the schemes offered by telecommunication brand are
complete different from competitors. Moreover, the pricing strategy of firm is also not on
the basis of competitive pricing instead it is focused on unit pricing where the
management first calculates profits and then develops different. Offering schemes with
profits plans is the action which represents competitive spirit of organisation. Thus, the
company and its services are not focused low price and low value added index for
attaining competitive advantage.
 Position 2: Low Price: The company do not offer services at very low price to maximize
sell instead the pricing is done the basis of consumer requirement and ability to pay.
Moreover, to make pricing strategy successful the firm offers pre play plans like monthly
contracts, pre phone bill etc. However, with the help of this management derives possible
and suitable pricing option which can assist the organisation in serving consumers
satisfaction and to maintain profits.
 Position 3: Hybrid (Moderate Price & Moderate Differentiation): The core product of
Vodafone is its Voice services from which in 2010, it companies has earned 28.0 billion
pound of revenue (Products and services, 2010). Apparently, the firm has managed to
maintain the reputation of highly précised valued services but at fair value according to
schemes. The pricing scale of company does not change as per competitors instead the
strategies are focused on serving quality tele communication services to consumers. This
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goal and objective of the firm is the technique which allows the firm in maintaining
standard of services.
 Position 4: Differentiation: Tele communication is the sector which undergoes huge
competition in services and voice schemes. Therefore, to make differentiation in services,
the organisation focuses on segregating services and schemes on the basis of customers.
Like, with the emergence of 4G network, the competitors of Vodafone has started
offering different schemes and plans of voice calling and messaging at low prices to
attract consumers. However, in this situation the firm did not lower its prices instead the
management planned to offer schemes at high price but with quality connection. This
strategic plans of company assisted the business in developing consumer base and serving
satisfactory services (Parnell, 2010).
 Position 5: Focused Differentiation: This is related to market position of company from
where it can be said that organisation is known for its exclusive services worldwide and
therefore offers high quality services at high price. Consumers are price sensitive but
these days due to increasing competitive pricing the focus of firm has shifted to quality.
Thus, it is the strategy which helped at company in attaining advantage and making focus
differentiation in tele communication products and services.
 Position 6: Increased Price and Standard Product: Increasing pricing and standardizing
product is the situation of risk because in this firm can not determine response of
consumers towards organisational products and services. In this, of consumer accepts the
price offered by firm than the situation leads to profits otherwise it can lead to shift in
consumers. Therefore, in this situation, the ultimate objective and strategy of Vodafone is
focused on maintaining quality of services. Thus, it can be said that this strategy of firm
is effective because there are situation where buyers cut their losses because of quality
products.
 Position 7: High Price / Low Value (Monopoly Pricing): Monopoly pricing is the another
strategy of Vodafone which helps the organisation in managing profits as well as
consumers. Despite of increasing competition the management do not offer products at
low price because it will degrade its quality (Martin, 2013). Moreover, in this the action
plan for Vodafone differentiate between its own product and services like the handset
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offered by firm are offered at low price to seek consumer attention but the voice schemes
and services are always higher than competitors. The monopolistic market of enterprise is
based on monthly contract and voice plans in which the schemes and plans are offered
according customer requirements.
 Position 8: Low Value / Standard Price: This reflect position of firm where the company
offers product at high price by degrading products. As per this the firm attain advantage
in model because the services of Vodafone are successful because of high price and high
quality regardless of competition, because the focus of Vodafone is to assist customers in
meeting their communications needs.
Conclusion
From the above report it is concluded that in modern time there are many companies in
are operating their business in the telecommunications sectors. All the firms are giving tough
competition to each other through making innovating products and services. To survive in global
market, it is essential for the firm to formulate effective strategies. There are various economic
factors which can directly and indirectly affect company such as interest rate, recession, inflation
etc. To survive in competitive market, it is important for the company to robust internal
organisational structure with proper allocation of the resources and appropriate use of internal
capabilities. Further it is concluded that, porters five force model is effective enough which help
in determining forces that can impact the firms. Company should focus on making changes in
products and services so that customers do not switch to another brand. Through making a good
relationship with supplier’s company can easily increase its sales and productivity. In
telecommunication sector threat of substitutes are low as because of lack of alternative
customers.
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