Business Strategy Analysis: Macro Environment and Vodafone's Strategy

This report provides a comprehensive analysis of Vodafone's business strategy. It begins with an introduction to business strategy and its importance, followed by a PESTLE analysis to evaluate the macro-environment factors influencing Vodafone. The report then examines Vodafone's strategic choices using the Ansoff Matrix, exploring market penetration, product development, market development, and diversification strategies. Further, the assignment conducts a VRIO analysis to assess Vodafone's internal capabilities and competitive advantages, followed by an evaluation of its strengths and weaknesses. The report also applies Porter's five forces model to analyze the competitive landscape and concludes with a strategic management plan, outlining recommendations for improving Vodafone's performance. The report emphasizes the importance of strategic decision-making in the telecommunications industry.

BUSINESS STRATEGY

Table of Contents
INTRODUCTION .........................................................................................................................1
TASK 1............................................................................................................................................1
Critical evaluation of macro environment...................................................................................1
TASK 2............................................................................................................................................3
VRIO analysis of the Vodafone...................................................................................................3
Strength and weakness of Vodafone............................................................................................5
TASK 3............................................................................................................................................6
Porter's five forces model on Vodafone.......................................................................................6
TASK 4............................................................................................................................................8
Strategic management plan..........................................................................................................8
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Business Strategy is a method of course of action or set of judgments which help the
businessperson in achieving particular enterprise goals. However, it's miles the grasp plan that
the management of the company use to comfy an aggressive role within the market, carry on its
transaction, satisfy customers and reap the desired goals of the organization. Hence, it outlines
how enterprise must be carried out to attain the favored ends (Scholes, 2015.).
Moreover, the report will highlight about the pestle analysis of Vodafone company which
is the biggest international telecommunication company headquarted in London and along with it
will frame the Ansoff matrix of the company which is inclusive of four components namely;
market penetration, product development, diversification and market development. Further, the
assignment will highlight about the VRIO analysis of the company and also comment on the
strength and weaknesses of the Vodafone group. Moreover, the project will highlight about the
competitive strategy used by the company to improve its performance and stand out in a
competitive environment.
Eventually the assignment will highlight about the strategic management plan of the
organization that shows direction and alternatives available to the company for improving its
performance (Akter and et.al., 2016).
TASK 1
Critical evaluation of macro environment
Pestle Analysis
Pestle analysis is a method which is used by companies to analyse the impact of macro
environment factors on their operations. Wherein, Pestle acronym for political, economic, social,
technological, legal and environmental which will impact the Vodafone group (Ang,2016).
Political: The primary political elements affecting Vodafone encompasses of EU
Roaming rules that pursuits to lower prices for mobile usages overseas by way of around 70%
and increasing stage of consumer rights within Europe, and selections made with the aid of EU
Union Regulatory Structure for the communications quarter. On the other hand, the political
stability within the country positively impact the company's strategic decisions by helping them
to build strong infrastructure of network within their organization so that they can operate
worldwide.
1

Economic: This is one of the very crucial dimension for the organization like Vodafone.
However, as the states will broaden, the better will be the possibilities for company to enlarge
and open its new segments in the newly developed domains (Aithal,2016). Further, the higher
GDP of the country means people are earning higher revenue and could be more prone in
adapting the new advanced technology. Thus, the overall earnings of the organization may be
extended and the organization will constantly be in a position to amplify globally. On the flip
side, if there are economic crises within the country like crises in 2017-18 had directly impacted
the company's strategic decision process due to which company have changed all their strategies
and make their decisions in order to gain profits.
Social: There are number of social factors that affect working of Vodafone. For example,
changing their working techniques and methods which are turning popular that make people earn
a living from home an increasing number of depending in conversation technologies. On the
other hand, If company is not adopting the regulations of going green or not abiding with the
beliefs and norms of the environment then it will negatively impact the strategic decision process
of the company which in turn reduces the revenue of the organization (Dawes, 2018).
Technological: Due to the technological advancement like online chatting, various
shopping apps etc., Vodafone has to form various strategies with other developed companies in
order to develop more innovative technology to remain top in the telecommunication industry.
On the other hand, Vodafone can be negatively impacted by the rising competition like jio or
airtel which are adopting or developing various advanced technology to remain ahead, thus it
will impact the strategic decision making of the company as they have to adopt such methods
they will cope up with new technologies.
Legal: There are various legal frameworks that the Vodafone have to follow but it has
been observed that the company is not abiding by the legal policies regarding the infrastructure
of network and also the company is not paying salary to their employees on time which lead to
high employee turnover, thus impact the company's strategic decision making process through
which in turn leads to the loss of the company (Schawel and Billing,2018). On the other hand, if
the company is following the policies and legal framework proposed by the government then it
will increase their customer base which in turn leads to profitability.
Environmental: Today people have become more ethical and thus they expect that
companies should be socially responsible and participate in the activities that benefits the society
2

as whole, thus, such ethical practices will increase the customer base of the company and help
them to make strategic decisions. On the other hand, if the company is not participating in the
ethical practices then it may lose its customers and leads to reduction of revenue and thus, will
impact the strategic decision making of the company as the company have to form new policies
and decision regarding their participation in environmental activities.
Ansoff Matrix
An Ansoff matrix is a structure that helps the company to form their growth strategies
within the market. Further, there are four components of this matrix which includes market
penetration, market development, product development, diversification.
Market penetration: Within this factor the Vodafone will provide existing products to the
existing customer with more enhanced feature that means they have introduced 4G network for
better speed to existing customers (Gurcaylilar-Yenidogan and Aksoy,2018).
Product development: In this factor Vodafone will offer new products to existing
customers like Vodafone have reduces the prices of data plans for their existing 4G customers as
they are facing the massive competition from rival companies like Jio, airtel etc.
Market development: In this factor the Vodafone will form data plans or strategies for
new customers like they have planned to expand their services at lower rate to rural area people
so that they can access internet and other plans of the company.
Diversification: In this factor the company to expand its services in other markets as well
by providing new offers to new customers in different market like the company can outsource it
services internationally by providing premium plans for new customers at lower rate (REZAEI,
KHAVARIAN and GHAFURZADEH,2016).
Furthermore, in order to stand out in competition the Vodafone will adopt product
development strategy by providing new products to their current users so that they can maintain
strong customer base which in turn will lead to increased profitability and revenue of the
company.
TASK 2
Internal analysis is the analysis of the internal environment of the business and
organization. This analysis is very necessary for the success of the organization because with
help of this analysis the company come to know about their strengths and the weaknesses of the
organization.
3

VRIO analysis of the Vodafone
The VRIO analysis is a type of strategic tool which is helpful for all the companies in
order to know the capabilities and opportunities present for the company. It is an analytical tool
which is used by the company or the organization in monitoring, analyzing and evaluating the
company's own resources and analyzing all the micro factors that is all the internal factors which
affects the working and the profitability of the business and affects its competitive position.
VRIO is an acronym for four questions for which the company needs to find answers to attain a
competitive advantage over its competitors. These questions are as questions of Value, Rarity,
Imitability and the Organization.
The question of value – This question of value tries to find answer that whether the company is
capable of exploiting the opportunities and the resources or not (Bozkurt, Kalkan and Arman,
2014). This is the very first and the foremost thing to determine that whether the resources are
valuable for the Vodafone or not. The valuable factors of Vodafone are as follows -
 With the help of VRIO analysis, the Vodafone company came to know that the
employees are more valuable resources for the business organization because if the
reason that the employees are the only medium is the only source with the help of which
the company is running. If the workforce is highly trained then it will lead to more
productive and efficient output for the organization (Grayson and Hodges, 2017). With the application and findings of the VRIO analysis, the company concluded that
distribution network is also a major valuable resource for the company. This is because of
the reason that it helped Vodafone in reaching to more and more customers and resulting
assisted in increasing the consumer base. Because of this increase in the consumer base
the sales also increased and revenues as well.
The question of rarity – This question tries to find answer about the rarity of the resources which
means that whether the resources are available in rare or in abundance. It also tries to find that is
control of resources is in the hands of relatively few people or more. The rare factors of
Vodafone are as follows -
 With the application of this model the company that the resources of financial nature are
very rare for the company. These resources are very rare because the competition is very
tough and hard so there is limited number of finance provider.
4

 Also, with the use of this VRIO model, it was found that the patents and copyrights are a
rare resource for Vodafone because these patents are not easily available in the market.
For taking the patent and copyrights the company has to follow some guidelines
published by the government.
The question of imitability – Imitable refers to the capacity of the resource to be get copied and
used by the other competitors. The question of imitability answers that whether it is difficult or
easy to imitate the resources or will there be any cost advantage or disadvantage of using the
resources. The factors of imitability are as follows - With the help of the VRIO analysis, the company was able to find that the financial
resources of the company are very costly and because of this it cannot be imitated and
these resources have been acquired by the company through high profits over a period.
The question of organization – This is the stage where the company is able to organize and
structure its operations and is ready to exploit the resources (Wu, Gao and Gu, 2015). The factors
of the organization are as follows -
 With the application of this analysis, the company was able to simplify and standardize
its processes like for example IT system of the company by whole analysis of the market
and external environment has implemented new, improved and latest technologies to
improve the networks of the company (Dinwoodie, Quinn and McGuire, 2014).
Strength and weakness of Vodafone
This is a method of internal analysis which helps the company in knowing the strengths
and weaknesses of organization and also opportunities and the threats which occurs due to
external or macro environment. This is an analytical tool which is used by the companies and
business organization in order to assess their internal environment. The macro environment is
very dynamic and ever changing so it is very necessary for the companies to timely study the
environment and make changes according to it in the organization relating to the changes
happening in the external environment and the market.
Strengths - It refers to the traits and characteristics which gives the advantage to the company.
These are the positive points which helps the company in getting a competitive advantage over
its competitors. The major strengths of Vodafone are -
 It is the popular cellular service provider all over the world.
5

 The Vodafone has a very strong customer relationship management which makes sure
that there is no unsatisfied customer among their whole set of customers. With this
customer relationship department, all the grievance are solved and handled appropriately
which ensures higher productivity as the customer base is increased.
 It posses very high brand visibility and also a strong brand recall.
 It has a very strong advertising agreement with the Zoo Zoo concept which made the
Vodafone Ads very creative and best-selling. The company has also highly skilled and competent work force and labor force which
works very efficiently and effectively. Also, the company invest much amount in
providing training and workshops to develop the skills of the employees working in the
company.
Weaknesses - These are certain traits and characteristics which stops or hampers the organization
to perform to its fullest capacity (Helm and Gritsch, 2014). The Vodafone's weakness are as
follows -
 As the famous global brand the company operates in many country so it has to follow the
rules and regulation of many governments and laws (PONIATOWSKA - JAKSCH, and
Pakulska, 2015.
 Because the company operates at global level so it also has to fight for the market share
with their customers.
 There are many new entrants and competitors entering into the market which can be a
serious weakness for the Vodafone because it has to now compromise the with the market
share. It means that now the company has to lose its market share and has to face more
competition.
 Also, another weakness of the Vodafone is that the demand forecaster of the company is
not good and because of this wrong forecasting the company fails to grab the
opportunities present in the market.
TASK 3
Porter's five forces model on Vodafone
The Porter five forces model is an analytical tool or framework which is used to study the
industry and to interpret the inherent factors of the success for a industry. It is a framework
which helps the company in analyzing and identifying the five competitive forces that influences
6

and shapes every industries and to determine the industry's strengths and weaknesses. It is
basically used as a tool to identify the structure of the industry to determine the corporate
strategy to adapt to accomplish the objectives and goals of the business. It involves analyzing the
new entrants, power of competitive rivals, customers, suppliers and substitute products which
influences the company's profitability and the productivity. By the thorough analysis of all the
factors comprising the Porter's model helps the company in devising business strategies.
Vodafone company is the most popular and major company in the telecommunication
industry. The company is also enrolled in the New York Stock Exchange (NYSE) and have a
market capital of approx 80.98 billion USD. The use of Porter five forces analysis of Vodafone
plc is it will help the company in analyzing natural and level of competition and will find
solutions in coping up with the competition (Teece, Peteraf and Leih, 2016). The factors of the
Porter five forces model affecting the Vodafone company are as follows -
Competitive rivalry - This is a factor which analyze that how much tough and hard is the
competition currently going on in the marketplace. The competition rivalry is decided by the
definite quantity of the existing competitors and what every competitor can do to go through the
competition. This factor is high when there are few numbers of businesses and they sell identical
products and services. The degree of rivalry is determined by the geographic area under the
company's business (Akdogan, Dogan and Cingöz, 2015). The increasing competition is one of
the major reason behind the fact that many mobile operators have diversified into the new
products and in order to beat the competition many operators have started using many services.
The major competitors of the Vodafine are T- Mobile, Telefonica and Orange.
Power of suppliers - It is a factor of Porter's five force model which analyses how much
power and control do the suppliers have over the increase in the prices. If the suppliers will be
low or fewer then the power relying in the hands of the suppliers will be more. The relations with
the suppliers can be improved by researching with the product and by designing it by using
different types of raw materials from different suppliers. Also, it can be improved by building a
cost-effective supply chain with different suppliers in order to maintain cordial relations with
those suppliers. Also, the Vodafone is one of the largest network operator having a global
presence and also has a significant purchasing power and for this it needs large number of
suppliers. So for this the Vodafone has to maintain good and cordial relations with the suppliers
so that they supply all the materials required at minimum cost.
7

Bargaining power of buyers - This factor gives importance to the consumers and the
effect of their behavior on the quality and the pricing of the product. The consumers have power
in their hands when the number of consumers are less and the sellers are in large numbers.
Buying power is less if the customers buys products in the smaller quantities. With help of the
Porter's five force model the Vodafone was able to know that it has two types of buyers that is
individual and the corporate buyers. Also, with help of this analysis the company came to know
that the bargaining power of the individual customers is extremely low as compared to the big
corporate buyers. This is because of the reason that even the individual buyers are large but they
purchase in lesser quantity. On the contrary the big corporate customers are small but have larger
buying capacity.
Threats of new entrants - It is a factor which involves considering the level of new
entrants into the existing market. The easier it is for a competitor to join the greater is the risk of
the market share being depleted (Budayan, Dikmen and Birgonul, 2015). One of the major way
the Vodafone can cut the competition due to the entry of new entrants and companies is way of
acquisition or the merger.
Threat of substitute product - This factor studies how the consumers switches from one
business product to that of the competitors products and the services. This may be due to the
reason that the customer is not satisfied with the services provided by the company. This threat
can be avoided by Vodafone by developing and implementing some measures to better
understand the requirements of the customer so that the customer do not switch to another
product.
TASK 4
Strategic management plan
Strategic management may be defined as method or a branch of management which is
related to developing the strategic vision and mission for the business. Formulating some small
objectives in order to achieve the mission and the vision. Also, to make some strategies and to
properly implement the strategies in order to achieve the specific goals and objectives. It
involves the formulation and implementation of the different types of strategies which are made
and used by the company to achieve the organizational goals and objectives efficiently,
effectively and productively. It provides overall direction to all the employees and the enterprise.
8

Strategic planning is defined as a business activity which is used to set the priorities and
focuses on strengthening the business operations and on optimal utilization of the resources
(Yang, Kueng and Hong, 2015). It ensures that there is a relation between the employees
working and the objectives and goals of the company that is ensuring that is there any link
between the employees efforts and the organizations objectives. A strategic plan is a document
which is used to communicate with the organization the different types of the organizational
goals and the different actions and activities which are needed to be performed in order to
achieve the goals.
There are many ways of developing a strategic plan to accomplish the objectives of the
business. But the most common way of developing the strategic plan is as follows -
Clarify the vision – The first and foremost step in developing the strategic plan is to
make the vision and mission for the company. This is done in order to make a specific goal and
to acknowledge that goal to the employees so that everyone works in the direction of the
accomplishment of the goals. Here the first step to be followed by the Vodafone is to set a vision
and supportive goals and the objectives to accomplish the vision. The vision will be set by the
Board of Directors by analyzing the overall performance of the company.
Gathering and analyzing information - This is the most crucial stage in the process of
making the plan. In this stage the company tries to gather all the major information and data and
facts and figures which are relevant and related and important in accomplishing the above made
vision and mission (Mian, Lamine and Fayolle, 2016). For gathering information the Vodafone
carries on some techniques, methods and procedures to study and gather facts and figures
relating to the latest issues and trend. For this Vodafone used PESTLE analysis and Ansoff
growth matrix for gathering information regarding external factors. On the contrary for analyzing
and gathering information regarding the internal factors SWOT analysis and VRIO analysis is
done to gain insight for the internal factors.
Formulate a strategy - After gathering the data the next step is to create and formulate
the strategy by balancing the information, facts and figures with the objectives of the firm. For
example with help of SWOT analysis it was found that there is a weakness of new entrants and
competitors in the market. So this weakness can be overcome with the help of going for either
merger or acquisition with the new entrant or even the Vodafone can takeover that new entrant.
9

Implement the strategy - For the successful of the strategic plan it is very necessary and
critical to implement the strategy correctly so that objective and goals of the business are
accomplished. After formulating the strategies the Vodafone tries to implement the strategies.
After gathering and formulating the strategies Vodafone implements the strategies. Some
strategies formulated by the company are by building a sustainable and maintainable
differentiation, collaborating with the competitors in order to increase the market share. Also, it
can develop measures to understand the core needs and requirements of the customer so that the
customer do not switch to another product, it can also make a strategy of increasing the
switching cost for the customer which will discourage the customers from switching to
competitors product and many more strategies.
Evaluating and controlling - The last step in the process of the strategic plan is to
evaluate the strategy that whether the strategy implemented is accurate and correct or not. And
also to control the strategy by comparing the actual strategy implementation and the strategy
what we planned (Spieth, Schneckenberg and Matzler, 2016). For example with help of VRIO
analysis Vodafone was able to evaluate that its financial resources and the distribution network
provides a sustained competitive advantage and also the patents are the unused competitive
advantage which can be used in the future.
Position Name Description
Position 1 Low price & low value
added
This is not profitable position for the Vodafone due to the
reason that much substitute are available in the market.
Position 2 Low price In this position Vodafone charges low price in order to
become a low cost leader in the competitive market.
Position 3 Hybrid Within this position company uses combination of both
above position. This is done in order to influence the
consumers towards the product.
Position 4 Differentiation Here the company tries to differentiate its product by
adding some creativity and innovations into the product or
services.
Position 5 Focused differentiation This strategy focuses on product positioning at the highest
10