Vodafone: Business Strategy Analysis, Planning and Recommendations

This report provides a comprehensive analysis of Vodafone's business strategy. It begins with an introduction to business strategy and then delves into a PESTLE analysis to assess the macro-environmental factors impacting Vodafone, including political, economic, social, technological, legal, and environmental factors. The report then utilizes Ansoff's growth vector matrix to evaluate Vodafone's strategic position and potential growth strategies, such as market penetration, market development, product development, and diversification. A VRIO model is employed to analyze Vodafone's internal capabilities, focusing on value, rareness, imitability, and organization. Strengths, weaknesses, and a SWOT analysis are also included. The report culminates in a strategic management plan, outlining strategies to improve Vodafone's competitive edge and achieve its objectives. The report provides a detailed understanding of Vodafone's strategic approach, encompassing both external and internal analyses and offering recommendations for future strategic direction.

BUSINESS
STRATEGY

Table of Contents
INTRODUCTION ..........................................................................................................................1
TASK 1............................................................................................................................................1
PESTLE model for environmental analysis................................................................................1
Ansoff's growth vector matrix to analyse strategic position of organisation..............................3
TASK 2............................................................................................................................................5
VRIO model to analyse strategic capabilities possessed by chosen organisation.......................5
Strengths and weaknesses associated with organisation.............................................................6
SWOT analysis............................................................................................................................6
TASK 3 ...........................................................................................................................................7
Appropriate strategies to improve competitive edge of organisation in market.........................7
TASK 4..........................................................................................................................................10
Produce a strategic management plan for organisation showing clear strategic directions......10
CONCLUSION..............................................................................................................................13
REFERENCES................................................................................................................................1

INTRODUCTION
Business strategy is the means by which an organisation formulate plans so that desired
objectives can be attained in an effective manner. It is defined as a long term business plan. An
appropriate business strategy can be implemented for about three to five years depending upon
the targets and aims of company (Bentley,Omer and Sharp, 2013). This assignment is written in
context with Vodafone which is a Britain based telecommunication conglomerate, situated in
London. Registered office of company is in Newbury, Berkshire, England. Company is
successfully operating at global level and operate in around 75 countries. This report will cover
frameworks to identify the impact of macro environment on an organisation along with internal
environment and capabilities of an organisation. Beside this, to evaluate competitive forces
within given market sector, porter's five force model is used. At last an effective strategic plan is
prepared so that an organisation can achieve its desired objectives.
TASK 1
PESTLE model for environmental analysis
Environmental analysis is a strategic tool which is used to identify different internal and
external elements which can impacts the performance of an organisation. This analysis will helps
in analysing the risks and benefits associated with an business. Evaluation form these analysis
are then interpreted into decision making process by aligning the formulated strategies with
environment of organisation. Vodafone is a leading company in telecommunication sector.
Vodafone listed in London Stock Exchange and have the largest revenue among
telecommunication companies. According to report 2010, Vodafone is the biggest service brand
because of its efficient services and excellent signal strength. It's global presence and strong
brand image make it popular in telecommunication industry (Bharadwaj and et al., 2013). In case
of Vodafone which is a multinational telecommunication company, PESTLE analysis is carried
out below so that environmental analysis can be carried out in an effective manner:
 Political factor: These aspect involves stability of government, trade policies, tax and
custom duties which can impacts the overall business productivity of any company. In
case of Vodafone, the company operates in wireless communication at global level due to
which it exposes itself to different political system risks and environments. It is essential
for manager in Vodafone to consider rules and regulations formulated by governments of
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different nations to run business in a smoothly manner. For example, Operating business
in war prone area like Middle East Asia, is a risky task and can results in heavy loss of
revenue to company. Recent conflicts in Europe has also impacted the profitability of
company but as government in UK is stable, hence company have wide opportunities
there to achieve high growth and profitability.
 Economic factor: These factors are related with per capita income, GDP, economical
growth of a nation. As Vodafone operate in more than 75 countries, it is important for
the management of company to consider these aspects before initiating business project
in a region or state. More developed regions will offer more profitability to the company.
Good GDP of a nation will indicate good disposable income of population due to which
they will prefer to spend more on latest communication technology. Beside this, global
economic crisis have impacted the working of Vodafone in a negative manner but to
overcome that company has formulated different strategies and plans (Bharadwaj and et.
al., 2013).
 Social factor: These factors totally depends upon the culture and beliefs of people where
company is operating or planning to expand its business operations. As Vodafone is a
European company and it sets its regulation and pricing policy in accordance to European
mindset, company is performing well in European nations like UK, France etc. But
company can face issues while operating in other countries such as Africa, Thailand etc.
which are not financially and socially developed as compared to European nations. To
manage social factors in a positive manner, Vodafone is required to be flexible in its
policies and regulations so that targets of company can match the aspirations and
preferences of local people.
 Technological factor: Vodafone is popular for technological advancement and
innovation as company prefer to follow contemporary trends. As company have many
rival companies performing well in same sector, it is essential for Vodafone to be one
step ahead in Technology so that high customer base can be sustained. As company deals
in wireless communication, high investment is required in innovating and upgrading
technology (Blackburn Hart and Wainwright, 2013). In case company avoids
technological up-gradation, this can results in less sales, low revenues and reduced brand
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popularity of company. As company is technology driven and focus on latest trends, this
has resulted in high revenues and profitability.
 Environmental factor: As globalisation is increased, with this people have become more
ethical and environmental concerned. People prefer to use facilities and services of those
brands which are socially responsible as they want betterment of society. As Vodafone is
dynamic in nature, company follows aforementioned facts which are sustainable in
approach. If company will not consider environmental concerns then customer base of
company can reduce considerably, due to which company can face shortage of revenues
and sales. To
 Legal factor: Company is required to be vigilant about the legal aspects and issues such
as pirating or copying. In this regard, company has many time blamed for different legal
aspects due to which they have faced several penalties. Also, company has been accused
of paying less attention to the welfare of employees. This has resulted in employee
turnover and ex-employees have joined rival firms. This has impacted the reputation and
revenue of company in a negative manner. It is vital for firm to abide by legal issues and
take decisions after considering legal aspects so that high revenues and customer base of
company can be sustained (Chang, 2016).
Ansoff's growth vector matrix to analyse strategic position of organisation
Ansoff growth vector matrix is a tool which assists an organisation in determining its
strategic position within marketplace. It helps a company in portraying alternate growth
strategies in accordance with the present and potential market so that objectives can be achieved
in a profitable manner. In context with Vodafone, Ansoff matrix is defined below:
 Market penetration: In this growth strategy, business organisation emphasize on
increasing sales of existing products in existing markets. Market penetration will benefit
Vodafone in enhancing market shares associated with current services with the help of
adversing, competitive pricing strategies, sales promotion etc. This strategy will results in
restructuring a mature market by driving rival firms out as usage of service by existing
customer will increase. This strategy will require high investment for research purpose
which can impacts the profit margins of company.
 Market development: It is a growth strategy in which an organisation tries to sold its
existing services and products in a new market. In this regard, Vodafone can expand its
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business presence in new regions and nations by offering their already existing services.
This will results in increased revenues and profitability. Beside this, company can
partnership with some other networking company in a new region so that customer base
of company can be increased. But it is a risky strategy as company targets new markets
and customers, if expectations of customers can't be satisfied according to their choice or
perception, company can face business failure (Grant, 2013).
 Product development: In this strategy, a company introduces new products and services
into existing markets. This kind of strategy needs formulation of new competencies and
modified products which can appeals the customers in an appropriate manner. This
strategy will benefit Vodafone in those situations where their services will differentiate
the services of rival competitors. For this strategy, Vodafone will be required to focus on
innovation, R&D, detailed analysis on customer needs etc. If company fails to do this
then it will results in failed business strategy that can leads to loss of revenue and
profitability.
 Diversification: In this growth strategy a company introduces new products in new
market. This is the most risky strategy as company operates in new market by introducing
a new product (Higgins, Omer, and Phillips, 2015). In this case, company have very little
experience in new market due to which risk factor is high. But high risk results in more
returns due to which Vodafone can achieve desired outcomes if all the strategies related
to diversification will be implemented properly. In case, newly launched service fails to
gain attention of new customer base, it will results in business failure for company.
Out of all these strategies, in case of Vodafone implementing product development
strategy will be most beneficial for the company. In this strategy, a new service will be launched
by company in an existing region due to which sales of company will enhances. To achieve
positive outcomes, manager in Vodafone will be required to invest in R&D of additional
products or company can go for acquisition of rights to offer service which is already offered by
other companies to customers. Due to this, their new launched service will be introduced after
understanding the perception and opinions of customers in a desired manner
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TASK 2
VRIO model to analyse strategic capabilities possessed by chosen organisation
VRIO model is a framework which helps in analysing the strategic capabilities of an
organisation. This model will benefits Vodafone in forming part of strategic scheme so that
competitive advantage over rival firms can be gained in a profitable manner. It is an internal
analysis but results in evaluating all capabilities and resources of the company. VRIO stands for
value, rareness, imitability, organization. This analysis helps in understanding the weaknesses
and strengths of company which is complementary with the PESTLE analysis which analyse
external environment in a detailed manner. To formulate strategic capabilities which will be
advantageous for Vodafone, VRIO model is defined below:
 Value: Valuable resources in respect with Vodafone are employees, financial resources,
mobile towers, fast communication connectivity, networking towers in difficult terrains,
other intangible resources such as trademark, logo, patent etc. these resources enhances
the value of Vodafone (Khalili Shavarini and et. al., 2013). Most of the customers prefer
to use Vodafone due to their high network viability and fast internet services. In this
regard, company has establish their network tower within small distance so that
customers can enjoy high connectivity.
 Rareness: Offering customers high internet connectivity is the rareness of company.
There are different telecommunication companies which offers internet facilities in cheap
rates but their connectivity is poor which leads to dissatisfaction among customers. But
Vodafone is a market leader in providing good networking facilities which is
advantageous as it results in enhanced customer base and sales for company. But high
prices for broadband service and fixed line shifts the preference of costumers towards
other telecommunication companies.
 Imitabiltiy: As Vodafone is financially stable company and enjoying good profitability
due to their innovative and technologically advanced approaches and strategies. To attain
same results, rival companies can imitate their strategies such as Airtel offering high
network coverage or Tata providing good internet facilities in less rates. To differentiate
themselves form rival companies, Vodafone have taken help of promotions and
advertisements (Kourdi, 2015).
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 Organisation: Vodafone is one of the top 5 telecommunication company in global
context and estimated brand equity of company is 31 billion dollars approximately. Due
to this, Vodafone UK has got several advantages in local region. Subsidiaries of
Vodafone operates in around 20 countries and due to this company enjoys a high
customer base. But the weakness faced by company is high churn rates due to which it
seems difficult for company to lock customer base for a longer time period. Due to this,
company can face problem if proper consideration is not given.
Strengths and weaknesses associated with organisation
SWOT analysis
It is refers to a planning tool used by mangers to do situational analysis of the company
for future perspective. Below is presented the detailed SWOT analysis of Vodafone Group
Private Limited Company:
Strengths
 Investing more on trainings of
employees and learning programs
resulting in workforce not only highly
skilled and competitive but also
motivated to attain more and more.
 Vodafone executed new projects also
completed it successfully and generated
more returns and revenues for the
company.
 Track record of innovate new products.
Through continuous service and
product innovation.
 Vodafone operates its business at
different part of world. Vodafone have
partners in more than 40 countries and
have prominent market share around
the countries.
Weaknesses
 Financial planning is not proper.
Vodafone uses its finance very
efficiently as represented by asset ratio
and liquid asset ratio.
 Higher rate of attrition. Spending more
on training and development of
workforce and also have higher level of
attrition as compare to its competitors.
 Subscriber base is dropping:- As
looking at global market scenario
Vodafone is dropping its customer base
from last 4 years (Oestreicher-Singer
and Zalmanson, 2013).
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Opportunities:-
 Improve the network coverage.
Vodafone have a very poor network
coverage and this is a golden
opportunity for Vodafone that if it will
work on its numbers of towers to
improve its network.
 The future potential for Vodafone is if
it will focus on rural segment as its top
competitors ( Reliance Jio and Airtel)
penetrates on rural market successfully.
Threats:-
 Changes in the buying behaviour of
consumer. Due to changing of
technologies in a very fast phase it is
also changing a buying pattern of
consumer .
 There is cut throat competition in the
telecommunication industry this is
much affecting brand Vodafone to
reduce this Vodafone trying to
differentiate its products and services
by keeping premium pricing.
TASK 3
Appropriate strategies to improve competitive edge of organisation in market
To improve competitive edge of companies within marketplace, there are different
models that will helps in formulating and implementing different strategies. Some of the models
and frameworks which can be implemented are porter's five force model, balance score card,
stakeholder analysis etc. In case of Vodafone, analytical tool and model that will be used to
acknowledge competitiveness are Porter's five forces and stakeholder analysis. These analysis
are mentioned below:
Porter's five forces
According to Michael Porter, the competition in the market of an industry lies on five
forces and those significant operating factors are identified and examined through the help of
porter's five forces analysis. It is a tool which is used to determine and analyse the attractiveness
in terms of profit and as well as the intensity of competition in the competitive environment of an
industry. Porter tool targets on how Vodafone Group Plc make a sustainable competitive
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advantage and how manage to develop a strategic position in telecommunication sector (Pisano,
2015).
Threat of New Entrants
Whenever any new competitor enter into telecommunication market as a result brings
innovation in a very unique way by providing value preposition, lower down the pricing and
reduce cost to the customer hence this create a pressure on Vodafone Group Plc. Thus, Vodafone
handle all these challenges and make a barrier how to overcome them like:- current
telecommunication industry require huge investment and survival of any new entrant in this
dynamic market where technology changes every minute is not an easy decision for any
competitor to enter easily in this sector whereas, Vodafone is already very strong established
brand. Vodafone keeps on modifying or innovating its products just not to brings new customers
but also provide a reason to existing customers to prefer Vodafone Group Plc products as
compare to its competitors (Reich and Benbasat, 2013). By continuous spending on research and
development for defining the standard regularities through this, Vodafone reduces the
extraordinary profits for new firms and discourage new entrants in the industry.
Bargaining Power of Buyers
The bargaining power of customer is very high because high competition prevailing in
the telecommunication market and also lack of differentiation available among service providers.
Due to continuous innovation in products it will limit the bargain power of customer because
customer will bargain only on established products not on new innovative products. By framing
large customer base it is also beneficial to the Vodafone Group Plc because it will reduce the
bargain power of customers.
Bargaining Power of Suppliers
Bargain power of supplier is not that much high because few major suppliers are
available in the market for telecommunication sector, Powerful negotiation in the technology
sector by the strong suppliers can abstract higher prices hence as a result, the overall profitability
decreases in wireless communication sector. Vodafone Group Plc take necessary steps to
overcome from this problem like choose dedicated suppliers whose objective is similar with the
Vodafone. Developing supply chain network with multiple suppliers. Though, at the time of
emergency Vodafone shifts to another one.
Industry Rivalry
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The intensity of competition is very high in wireless communication sector because all
the companies are providing same services with almost same quality and capabilities. Vodafone
Group Plc control these intense competition by keeps on innovating new products and building
substantial development. Instead of competing in small market Vodafone decided to collaborate
with competitor ( Hutch) to increase the customer base and as well as the market share (Scholes,
2015).
Threat of Substitutes
Threat of substitute is medium to high is because there are many companies who is
providing same value preposition to the customer as Vodafone is providing. Vodafone controls
this particular threat by following ways like- understanding the foremost need of a customer at
each and every phase rather than concentrating on what customer is buying. Vodafone group Plc
trying to be service oriented rather than product oriented.
Stakeholder analysis
Stakeholder analysis is a strategic tool of assessing a business system and carrying out
potential modifications in accordance with the requirements of stakeholders. It is an vital part of
stakeholder management and helps in identifying potential stakeholders for a business and
organisation. This analysis will benefits Vodafone in developing a strategic view of institutional
and human landscape and the issues that can be faced by stakeholders by the operations carried
out by company. Different types of stakeholders for Vodafone are customers, suppliers, partners,
local authorities, shareholders, NGO, business partners, employees, regulators, community,
government and charity organisations etc. These stakeholders are divided into different
categories which are mentioned below:
 Primary stakeholder: These stakeholders are mostly impacted by company's activities
and operations. In case of Vodafone, business partners, customers, trustees and investors
are primary stakeholders (Verbeke, 2013).
 Secondary stakeholder: These individuals are intermediaries and indirectly get impacted
with the actions taken by Vodafone. In case of Vodafone, secondary stakeholders are
government, social communities, employees etc.
 Tertiary stakeholder: These individuals are least impacted by the activities and
operations carried out by an organisation. For Vodafone, territory stakeholders are
suppliers, NGO, charity trusts etc.
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From this analysis, it is analysed that the main stakeholders of Vodafone are its business
partners, trustees, customers and investors. Before taking any decision or implementing any
change, it is important for company to consider their perception and impact which will be faced
by these stakeholders. In case, company fails to do so then it can results in reduced outside
investments in business or decreased customers base. Other than that, to gain competitive
advantage, appropriate discussion will be business parters is must so that right decisions can be
taken in a timely manner. After that welfare and consideration of secondary and tertiary
stakeholders should be considered so that company can gain competitive advantage against rival
firms in a desired manner.
TASK 4
Produce a strategic management plan for organisation showing clear strategic directions
Management in Vodafone can use Porter's generic model in order to formulate an
effective strategic management plan for company. In this regard, the model is stated below:
Porter generic model
This model defines the manner in which a company can gain competitive advantage in
the market in which it is operating. In general, there are four strategies i.e. cost leadership, cost
focus, differentiation, differentiation focus. Relative position of Vodafone within industry will
define whether profit margin of company is below or above the average. Different aspects related
with Porter generic model are defined below:
 Cost leadership: In this aspect, a company formulate strategy to became a low cost
producer within industry. Vodafone can achieve this by having lowest price in market
regions in which company is operating. This will help the company in gaining
competitive advantage over rival companies as lower price will results in increased sales
that will results in high returns and profitability. By reducing the price of internet and
phone services, company can increase its customer base (Wheelen and et. al., 2017).
 Differentiation: This strategy denotes that the company is required to offer their
products and services with unique features so that consumes can easily differentiate their
services form the rival companies. To differentiate their services, manager in company
can provide special offer or festive discounts to their customers.
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