Vodafone's Business Strategy: A Comprehensive Analysis Report

This report provides a comprehensive analysis of Vodafone's business strategy. It begins with an introduction to strategic concepts and then delves into an external analysis using the PESTLE model to assess political, economic, social, technological, environmental, and legal factors impacting Vodafone's operations. The report then analyzes Vodafone's strategic positioning using the Ansoff Matrix, exploring market penetration, development, product development, and diversification strategies. The VRIO model is employed to evaluate Vodafone's strategic capabilities, followed by a discussion of the company's strengths and weaknesses. Finally, the report concludes with an application of Porter's Five Forces model to assess Vodafone's competitive landscape. The report aims to provide a thorough understanding of Vodafone's strategic approach in the telecommunications industry.

BUSINESS STRATEGY

Table of Contents

INTRODUCTION
Strategy of company is the mix of various decisions taken by company which assist the
mangers to achieve its objectives. It is the plan that management used to secure its position in the
market to gain competitive advantage and to be ahead of the competition. It helps the companies
in pleasing its customers, carry on its operations smoothly and to achieve goals that were set up by
the company. To understand the business strategies better, the report will take UK's one of the
leading telecom industry that is Vodafone. It is headquartered in UK and has millions of
subscribers. The report for external analysis will do pestle analysis of the company which will
show impact of various political, legal, technological factors in the organization. To understand
the strategic position of the company, it will use matrix which will use four quadrant to show
different strategies. Further, the report will include Vrio model which helps the company in
analyzing strategic capabilities and then it will include strength and weaknesses of the company in
the report. At last the report will depict the porter's five force model which can be used to improve
competitive edge of the company.
TASK 1
Application of Pestle model in order to analyse the environmental
Vodafone is one of the World's largest and UK's third largest telecom company. It has its
business operations working in many countries which helped it in making place in global market.
It has great market value and large customer base yet there are certain factors needed for the
evaluation of the success of the company.
There are certain macro factors that affect the company and to provide information about that
factors the company need to do pestle analysis.
Pestle analysis of Vodafone:
Political factors – The important role in determining the factors that can impact Vodafone
UK are political factors which affects the company and its long-term profitability in the market in
which it operates. There are certain things like political instability, peace of the state which
directly impacts the company. There are various political factor which can create a negative
impact of company such as strict rule laid by the government for telecommunication industry.
(Higgins, 2015). Some rules laid by the government may prove beneficial for the company also
rules by the government does not always create negative impact on business.

The market in which Vodafone operates are Europe, Africa, Middle east and Asia.
The political stability in this areas affects the profitability of the company. Wiht the increase in
demand of technology the government control over various business activities has also been
increased(Bentley-Goode, 2017). The other political factor which can affect the Vodafone is the
tarrifs imposed by different countries. As the company operates in various region therefore it has
to face and pay different tarrifs to different countries.
Economic factors – The macro and micro factors constitute economic factors which
includes saving rate, inflation, business fluctuations, competition norms etc. The use of data and
various other mobile services have been increased now a days which has resulted in high
consumer demand. The economic condition of countries also plays a huge role in purchasing
behavior of customer. As Vodafone operates in various countries such as Spain, India, UK and
Italy the economic condition of these countries are quite well as a result the company is earning
good profit from these countries (Soltanizadeh and et.al., 2016).
Brexit has however created a negative impact on the profitability of Vodafone in UK and
it is expected that it will be continued like this.
Social factors- The social factor affect the company was class structure, and power
structure of the society. The class in UK is divided into poor, rich and middle class. The company
has to decide the policies and schemes according to that and it helped the company in growing.
(Swot and pestle analysis, 2018). Because of many social factors, many business organizations
engaged in the telecommunication sector get influenced and affects its business operations,
profitability and performance level.
Technological factor – Now a days telecommunication has not only become restricted to
voice calls but more than that. The advent of network technology has made it easy to share text,
images etc. Digital subscriber line is one of the most important technology which almost every
telecom company use. The customers across the world are attracted with more and more changes
in the Information technological factors such as introduction of cloud computing, tablets, 5G
network which has created more competition between telecommunication industries. These
changes have brought more competitive advantage and improvement in business operations.
Vodafone tries to find new ways in order to maintain the existing customers and
attract new ones in order to expand their customer base. According to Vodafone they are the

leader in the global technology. The company is making regular effort in order to provide best
network which can connect large number of peoples across the countries.
Vodafone has partnered with a Scope technology which is leading company wh
provides hardware and softwares and has introduced a new intelligent mobile app which can be
connected to the car known as Drivexone.
Environmental factors – Many factors of environment such as climatic changes, global
warming, bad weather, heavy rainfall etc. can affect the services of Vodafone Company. These
factors can influence the facilities that are provided by Vodafone to its customers across the
nation such as mobile networks, signals, etc. Also because of various environmental factors,
customers have to face issues of bad and poor mobile networks, no signals' availability etc. which
indirectly affects the profitability of EE company as well if company is not able to resolve these
issues with time (Dranove and et.al., 2016). The laws regulating environment pollution can also
impact the company depending upon its flexibility or rigidity.
The company is also taking various steps in order to avoid negative impact of
company on environment the company has taken a step towards reducing carbon footprints. The
company recycles and reuse waste material which is generated during the business operation .
Legal factors – Vodafone need to evaluate and analyze legal framework of the company
which can help the company in getting competitive edge. The company need to consider
discrimination law of the country, employment law related to their incentives, time of work,
salary, minimum wages etc so that the company do not get stuck in legal complications.
Vodafone give equal opportunity to its every employee it does not give preference to any
caste, religion, gender and everyone is treated fairly under discrimination law. The company
ensure to provide safe environment to the people who are working within the organisation under
health and safety law.
M1 Critical Analysis of macro environment to derive inform strategic management decisions
Macro environment leads to major influential changes in strategic decision of Vodafone like
increase in tariff has influenced expansion plan of Vodafone. The firm is now focusing managing
stability in profit earning ability due to increase in taxes which has impacted strategic decision of
market expansion of telecommunication firm. Gaining stable return in changing politic al
condition is the major change faced by Vodafone in growing business environment. Adaption of
new communication technology is an economic change which has proven to be beneficial for the

Vodafone but has influenced investment decision of management for a long run. Further,
Vodafone is purely European company and therefore is focused on changing its preferences for
managing innovation in telecommunication services. Changes in social factors has created
beneficial influence on operations of Vodafone by making changes strategic decision like market
research. Also, technological changes also led to beneficial changes in telecommunication
services which has impacted strategic decision of Vodafone like the company is producing and
assessing the forthcoming launching of devices and the features of the devices and scheme of
services which is assisting firm in meeting customer expectations.
Analyse organization's strategic positioning by using model
The Ansoff matrix is a market strategy that helps the organization in analyzing its product
positioning. The ansoff matrix consist of four parts which assigned as a market penetration,
market development, product development and diversification. These four areas combined the
matrix. Ansoff matrix is a communication tool which helps Vodafone in selecting one of the
strategies for the organization to achieve growth and sustainability (Teh, 2015). The four
strategies are:
Market penetration – It is used as strategy by the organization when it has existing
product in the existing market in which the company operates and seek to achieve growth in that
market. Vodafone provides various services such as mobile tarrifs and data bolt which helps in
manageing telephone system with help to run mobile. As Vodafone is most popular in UK
therefore the company should try to attract its existing customer towards it by taking help of the
TV advetisment, print media etc. The company should try to attract the customers by promoting
their existing product in a different way. By increasing its advertisement expenses, promotional
tools the company can increase its market share and can retain its customers as well as can attract
new customers. For this purpose, the Vodafone need to ensure that it leverages and increase its
current capabilities, resources and can work towards attainment of its goals. The company can
hire new employees who have technical knowledge and can introductory new and innovative
techniques in the organization which can give competitive advantage to the company.
Market development – It is the second market growth strategy which can be used by the
company when Vodafone is targeting a new market with existing product. The company continues
to expand in global markets to increase its reach and profitability (Orr, 2017). It is suitable for
Vodafone as the company has the capability and enough resources to enter into the new market. It

has good reputation among consumers and opportunity to grab more customers. It is riskier than
market penetration as the company needs to go through a process before entering into new market.
The Vodafone already uses market development strategy and has its operations in India, Pakistan,
Japan, Australia, New Zealand etc. which helps the company in increasing its brand image as well
as profitability. The company should try to provide its various services such as pay as you go
plan, monile broadband, international calls and 4 G network and other type of services to the new
market.
Product development – When the company have good share in the existing market and
want to introduce new product in the existing market, company choose product development
strategy for the purpose of expansion. This strategy is performed when the company has a strong
customer base and the markets in which the company is operating has reached the stage of
saturation(Ans off matrix, 2019). Vodafone has adopted this strategy by entering into Internet of
things market (IOT) of consumers with the lunch of 'V' by Vodafone which will allow consumers
to connect millions of home and electronics product, it is new and simple system to manage IOT
devices and product range which will include connected 4G security camera, bag location tracker,
car dongle, etc.
Diversification – When company lunches new product in the whole new market is what
diversification stands for. It is the riskiest of all the strategy (Lozano, 2018). The company's
experts recommend diversification only when the company has loyal customers with high base
and satisfaction. Also, in case of new product and market the customer needs to be sure that they
get the money value of what they are spending in. Vodafone has adopted this strategy and has
diversified into new areas like IT solutions, mobile payments to drive growth in different
countries
TASK 2
VRIO model for analysing the strategic capabilities.
Vrio model is used to analyze strategic capabilities in the company by analyzing resources
of the company. VRIO Analysis of Vodafone group is a strategic analysis tool designed to help
the organization to protect the resources and capabilities to gain long term advantages. In these it
mentions at each and every stage that how these resources could be improved to provide greater
competitive advantages. It is basically based on four component such as Value, Rare, Inimitable
and organized.

Valuable
The value analysis of Vodafone group shows that the financial resources of Vodafone are
highly valuable as it helps to invest in the external opportunities. It also helps to overcome the
barrier threat in all possible manner. It also shows that the employees of the company are valuable
resources to the firm. As the employees are well trained and motivated in order to increase the
productivity of Vodafone (Schawel, 2018). The employees are very loyal towards the goals of the
company and also retention level is also high. The next valuable resources is its patent as these
allow the organization to sell its products with any intervention. This help to increase the
profitability of the company. Its valuable resources is its distribution channel which the company
to reach more number of customers and hence increase the sales.
Rare
The resources that are found rare according to VRIO model in Vodafone are is its strong
financial resources which are held by few companies. jjh The next rare resources of Vodafone
group are its patent as these patents are not easily available which help the organization to use
them without any hinders or interference and helps the company in giving tough competition to
new entrant s as well as existing competitors,
Imitable
The company has a good costumer community as the customers are co creating the
products and services, the company shares a strong bond with its customers. New entrants and
competitor would require similar profit for the long-term period. The employees of the
organization are not costly to imitate by the VRIO analysis. As the competitor of Vodafone can
hire the employees by offer better salary as compare to Vodafone. The next is patent which are
very difficult to imitate as define by other companies as it is not legally allow imitating a patent
product (Teh, 2015). The distribution network of Vodafone is very costly to imitate by the
competitor as the distribution network of Vodafone is the strength of the company and require
large investment as it is not an easy affair for other companies
Organization
This factor measures that how well the company is able to put this rare, valuable and
difficult resource at market place. The Vodafone is able to allocate well its resources at right place
in market which helps it to achieve the desired results. The patents of the Vodafone are not that
well organize as stated in VRIO model which makes it possible for the other companies to copy it.

On the other hand, the distribution channel of Vodafone is organized as it is the unique feature
which help Vodafone to increase the sales of the company as these resources helps Vodafone in
getting sustainable competitive advantages.
Strengths and weakness of the organisation
Strengths
As Vodafone is one of the leading companies of UK, it has various strengths which works
in the favor of the organization. One of the biggest strengths of Vodafone is that its brand image
which makes different from other competitors. The other strength of Vodafone is high level of
customer satisfaction as Vodafone gives priority to its customers and solve their problems as it
has dedicated customer relationship management department which gives there a hundred percent
to satisfy the customer to the large extent.
Vodafone has high skilled workforce through by training and learning programs which
helps the employees to work hard to meet the companies objective. Also, it has successful track
record as it always comes with the innovative ideas and develop and create products which attract
many of its customers (Bull and et.al., 2016). Vodafone also have strong cash flow as it helps to
provide resources in the hand of company to expand into new projects. It also spends large
amount on research and development which helps the company to bring innovative products in the
market.
It has excellent performance in new market as the company is expert in entering into new
market and developing its position and building revenue and profitability and also has the chance
to gain competitive advantages. It also has good returns on capital expenditure as it has excellence
in producing new products and the company is able to generate good returns. The last and most
important strength of Vodafone is it marketing strategies which make unique and helps to grab
many customers and also it helps to increase the sales of the company to a large extent.
Weakness
As apart from its strength it also has many weaknesses which need to be overcome as early
as possible so to work in the right manner and also for smooth working of the organization. The
one weakness of a company is that it has not been successful to hold the position in European
market(Soltanizadeh and et.al., 2016). Even though the company is has a good position in the
market it have to make continuous effort to face problem related to price. Also, Vodafone does
not have good product demand forecasting which leads to missed opportunities which helps to

take advantage of competitor. The possible reason behind this is the company spend less in
research and development therefore the company should try to invest more on R & D department
as it is very important to bring innovation and improve product and services in the market to gain
competitive advantages. And the last weakness is its high attribute rate in work force as compare
to other organization as it is very important to spend in the training and development department.
M2 Critical evaluation to assess weakness and strength of organisational internal capabilities, skill
set and structure
The major strength of Vodafone is skilled and trained workforce which denotes its internal
capability to deal with changing business environment. Further, the services provided by
Vodafone are unique and innovation is managed according to technological advancement which
requires investment but is also helping company in managing strong competitive advantage and
value of services. The lack of service demand of Vodafone is the risk to its internal capability and
therefore firm has low competitive advantage against imitation and rarity of products and services.
Structure of Vodafone is influenced by strength of workforce which is motivated and is skilled.
This helps the firm in managing g smooth coordination between business activities regardless of
uncertainties and changes.
TASK 3
Porter's five force model to improve competitive edge
Porter's five force analysis is a tool to make strategy which is used to improve competitive
edge by analyzing industry and factors that influence the profitability of the company. The
Vodafone company uses porter's five force model to analyze the five competitive forces which
influence profitability of the company and can develop a strategy to enhance Vodafone
competitive advantage in wireless communication industry. It is a strategy framework that take
strategic decisions to analyze present competition. The porter's five forces are:
Threat of new entrants (Low) –
The threat of new entrant is low as Vodafone is already an established name in the telecom
industry therefore affecting its goodwill for the new entrants is not an easy task and does not
create threat for the company. However, introducing new services , discounts, new offers will help
the company to attract new customers. The company can also lower down its fixed cost and can
achieve economies of scale (Moreno-Izquierdo, 2016). To stay in the competition and to give
competitive advantage to other companies, the company can spend its money on research and

development so that Vodafone can define the standards for new entrants. Also, for entering into
the market the new entrants need huge investment and have to follow guidelines of government
which gets difficult for new entrants.
Bargaining power of suppliers (Low) – The company needed various technologies such
as network technology, software etc in order to run the business but the suppliers in the
technological sector are in higher position as a result they demand for the high prices. As a result
it creates a negative impact on company's profitability.
Vodafone has efficient supply chain with multiple suppliers therefore the suppliers cannot
affect its profitability and operations. The industry in which Vodafone operates is an important
customer for its supplies. These suppliers therefore have to provide their services to the company
at a lower cost. This is what weakens the bargaining power of supplier in the industry (Orr, 2017).
Also, Vodafone have multiple suppliers within its supply chain at different geographical locations
which ensures efficiency within its supply chain. In case, cost or products are not suitable for
Vodafone, it switches its suppliers as switching cost is low.
Bargaining power of buyers (High) – The numbers of company in the industry operating
are offering product with very less differentiation therefore the buyers have too many choices to
choose from. The income of the buyer is high in this industry therefore the switching gets easy in
case of new offers. The quality of the product is also important to buyers which makes buyers
insensitive towards the price and they pay Vodafone for efficient services even if they are
available in high cost. Vodafone can focus on innovation and differentiation to attract more
customers.
In order to tackle this problem the company should try to innovate new products in order
to attract customer. The company can also adapt the differentiation strategy which will help the
company to build strong position in the market and gain large share.
Threat of substitute (High) –
The substitute available for the products is high in the telecom industry. The leading
companies offering same products are threat to Vodafone as the other companies offer products at
low rates can affect Vodafone and its customer base.
The company can provide greater quality of products and services in lower price than its
substitutes to make them weak (Lozano, 2018). It can also focus on differentiating its products
which will ensure that the buyer take the product of the company as unique product and customers

do not switch to other products. The substitutes provide by the other company are 5G and 4g
phones, fiber broadband etc which gives tough competition to Vodafone.
Rivalry among existing firms (High) – The competitors in the industry are high and most
of them are large with high market share and customer base. This what increases the rivalry
among companies. The products produced in the industry are not differentiated and therefore the
competition even get more boost up to attract customers and to increase market share. Vodafone
needs to focus on differentiating its products so that the actions of competitors have less effect on
the customers. It can conduct market research to get a better view of supply demand situation in
the industry and it can focus on new customers rather than attracting the ones from existing
companies. The competitors of Vodafone are virgin, EE company etc.
M3 Appropriate strategies to improve competitive edge and market position on the outcomes
In accordance with Porter five force analysis it has been identified that threat from exiting
competitors to Vodafone is high and therefore it is important for the firm to make effective
strategic decisions like, increasing customer base by launching plan of services with regard to
competitors. This will help in gaining attention of customers and will aid in increasing demand for
services. Further, to manage threat f substitution and customer buying power firm can also focus
on researching market in order to develop new plan to attract customers on the basis of their
expectation.
D1Crtique and interpretation of information and data applying competitive and information
analysis
Gaining competitive advantage needs to be major focus of Vodafone for which firm can
focus on market and product development. It is the option which will allow company in increasing
market share and customer base. Apart from this, market research is the strategic direction which
can aid the firm in manging risks of substitute products and rarity o services. Objectives of firm
can be to increase market share by differentiating products. For this firm can fuss on tactics like
Vodafone 360 store i.e. set of internet services connecting all the contacts of phone in one place.
This is success tactical option of growth with the help of which firm can sustain in market for long
run.