Business Strategy of Vodafone: A PESTEL and SWOT Analysis

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Business strategy

Table of Contents
Introduction......................................................................................................................................1
LO1..................................................................................................................................................2
P1Applying appropriate frameworks, analyse the impact and influence of the macro
environment on a given organisation and its strategies...............................................................2
M1 critically analyze the macro environment to determine and inform strategic management
decisions......................................................................................................................................4
LO2..................................................................................................................................................6
P2 Analyse the internal environment and capabilities of a given organisation using appropriate
frameworks..................................................................................................................................6
M2 critically analyse the internal environment to assess the strengths and weaknesses of the
organisation’s internal capabilities structure and skill set.........................................................10
LO3................................................................................................................................................12
P3 Applying Porter’s Five Forces model evaluate the competitive forces of a given market
sector for an organisation...........................................................................................................12
M3 Devise appropriate strategies to improve competitive edge and market position based on
the outcomes..............................................................................................................................14
LO4................................................................................................................................................15
P4 Applying a range of theories, concepts and models, interpret and devise strategic planning
for a given organisation.............................................................................................................15
M4 Produce a strategic management plan that has tangible and tactical strategic priorities and
objectives...................................................................................................................................17
Conclusion.....................................................................................................................................18
References......................................................................................................................................19

LIST OF FIGURES
Figure 1: Various factors of PESTEL Analysis...............................................................................5
Figure 2: Reduction of Brand Value of Vodafone in different years..............................................7
Figure 3: Reduction of subscriber base in different countries.........................................................7
Figure 4: SWOT Analysis of Vodafone..........................................................................................9
Figure 5: VRIO Analysis of Vodafone..........................................................................................10
Figure 6: Elements of Porter Five Forces Model...........................................................................12
Figure 7: Positioning strategy under Bowman Model...................................................................15

Introduction
Business strategies vary as per different business organisations and their goals. This report has
discussed various macro and micro factors that may impact the business operations of the
organisation. Micro environmental factors are analysed with the help of SWOT analysis, and
macro factors are identified through PESTEL analysis. In this report, Vodafone Group plc is
considered in the context f which the entire report is presented.
Vodafone Group, multinational telecommunication organisation which owns and operates its
network in more than 22 countries. Among the global mobile Group operators, Vodafone ranked
at 4th place as per the number of mobile customers. Vodafone has more than 400 million
customers across the world in mobile telephony, more than 10 million in fixed broadband, and
more than 10 million people in cable TV. Vodafone is a major player in the telecommunication
sector, as it has diversified its business with the availability of the internet, broadband, mobile
telephony, and cloud services.
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LO1
P1Applying appropriate frameworks, analyse the impact and influence of the macro environment
on a given organisation and its strategies
Business strategy
Business strategy referred to as long term goals of the organisation through which organisation
configure its resources in the challenging environment and gain a competitive advantage in the
telecommunication market. The business strategy of Vodafone is to expand its business through
innovative technologies so that market needs can be effectively fulfilled and the organisation
gain high profitability and competitive position (Ghezzi, 2013).
Macro environment and its influencing factors
Following is the PESTEL analysis of Vodafone through which following macro factors can be
considered:
Political factor
Political factors of a certain country can significantly impact the long term sustainable position
of the Vodafone Group Plc. The organisation operates its business in a wide political
environment of different countries and hence to gain success, the organisation is required to
diversify the systematic risks. Some of the factors are required to be analysed before investing in
the resources of any country: political stability, corruption level, intellectual property protection,
trade regulations, technological advancement, taxation rates, wage legislation, mandatory
employee benefits, etc.
Economical factor
The more the economic state of the country the more chances for the Vodafone to initiate for
new business units. The economic stability can be identified with the help of the GDP rate that
relates to the purchasing power of the people that leads them to adapt to new communication
technology (Haseeb, 2017). Vodafone can consider various economic factors through which the
growth of the wireless sector can be estimated. Some of the economic factors include exchange
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rates of the host country, financial market, efficiency, infrastructural states for the wireless
communication industry, education level, business cycle stage, economic growth rate, inflation
rates, etc.
Social factor
The impact of social factors relates to the cultural and local beliefs of the host country's people.
Hence, to gain growth and success in the business of Vodafone, flexibility in the pricing policies
is essential. Vodafone is basically a British organisation; however, it has changed its preferences
and considers various factors as per the local social factors of the host country. Social factors
which are required to be considered by the organisation include demographics level of
population, class and power structure in the social hierarchy, entrepreneurial spirit, leisure
interests of the society, etc.
Technological factor
The strategic business decisions of the Vodafone can be effectively implemented through
technological advancement. Technology is the foundation of wireless communication, and hence
to beat competitors, the organisation is required to analyse the technological advancement as
well as the speed rate of technology in the host country (Klauer, 2015). Following are some of
the impacts that affect the development of organisation through technology: impact on cost
structure in the telecommunication industry, the rate of technological diffusion, value chain
structure, technological impact on product offerings, etc.
Environmental factor
Different country poses different environmental standards that may impact the profitability of the
Vodafone. Customers always expect that organisation in which they are investing must be
socially responsible. Hence, the working condition of the Vodafone must be good enough to
support social welfare and environmental conversation. Before entering into the new market,
evaluation of some of the environmental factors include weather, climate change, recycling,
endangered species, air and water pollution, attitude towards renewable energy, etc.
Legal factor
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There are various challenges faced by Vodafone in terms of legal factors that lead it to pay a high
amount of penalties. In addition, Vodafone has been accused of not following employment laws
in some of the countries in which it is stated that employees are not getting the minimum wages.
This has increased the risks of high employees’ turnover. Hence, Vodafone is required to
consider various legal laws (Ho, 2014). Such as employment law, health and safety law,
discrimination law, data protection, etc. of host country before investing in any
telecommunication industry.
M1 critically analyze the macro environment to determine and inform strategic management
decisions
Whether the organisation need to expand its business or to introduce diversified products in the
market, business changes need appropriate strategy and planning which requires PESTEL
analysis. This analysis helps the Vodafone to identify the significant business changes needed to
be made to gain high profitability in the telecommunication market. Vodafone requires adoption
of latest technologies to enhance productivity and quality of its services. Therefore, along with
the effective management of internal policies, external factors are required to be aligned with it.
For example, technology is continuously advancing at rapid speed. Developers have developed
various artificial intelligence in the form of chatbots that help the Vodafone to communicate with
the customers directly. Hence, this requires the analysis of technological factors that support the
organisation in attaining long standing in the market ( Kiesha Frue, 2018).
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Figure 1: Various factors of PESTEL Analysis
Political factors of the country do not relate to the political influences but also to the legal laws
and regulators that impact the internal working of the business environment. The impact of
organisational business activities on the environment is required to be identified to create a
positive brand image of the Vodafone in the international market through responsible business.
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LO2
P2 Analyse the internal environment and capabilities of a given organisation using appropriate
frameworks
Vodafone has impressed the world with its smart marketing tactics for its worldwide network
distribution. However the growth of the organisation does not only depends on the favourable
conditions of the external forces, but also the internal working environment is needed to be
analysed. This requires SWOT (strength, weakness, opportunities, and Threats) analysis that
supports Vodafone ineffective attainment of its goals. Also, the internal capabilities of the
organisation play an important role in the international success, that can be analysed with the
help of VRIO (valuable, rare, imitate, and organise) framework
Internal environment analysis of Vodafone
Strength
 It has covered a wider market area in the telecommunication sector as it provides services
in more than 20 countries and has wide network coverage.
 The revenue of Vodafone is figured out in billions. As per 2016 survey, the revenue was
approximately 87 billion dollars that have helped the organisation to gain large market
share (Vodafone Group SWOT & PESTEL Analysis, 2019).
 The pug of Vodafone is known across the world that depicts that network of the
Vodafone is available everywhere. Hence, such type of legendary marketing strategy and
brilliant campaigns contribute to its high growth.
 In a survey conducted in 2016, Vodafone is considered as one of the top telecom players
in terms of brand valuation that accounts for approximately 28 billion.
Weaknesses
 When the Vodafone expanded its business in various countries, its brand valuation was
very high, but with the last 3 to 4 years, the brand values and equity both are reduced.
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Figure 2: Reduction of Brand Value of Vodafone in different years
The above graph shows reduction of brand value of Vodafone in terms of billion US dollars.
 Reduction of subscriber base due to high competition and other factors prevail in the
market.
Figure 3: Reduction of subscriber base in different countries
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The above graph has shown that in the last 4 years, the subscriber base of Vodafone is reducing
in different countries where it has highly occupied the telecommunication market (Hitesh
Bhasin,).
 In the USA, Vodafone was performing very well in the wireless communication industry;
however, there is a gradual decrease in the USA market share has seen in comparison to
AT&T, and Verizon wireless.
 The performance of Vodafone in its home market: the UK is also becoming poor that
leads to low revenue generation in comparison to earlier records.
Opportunities
 Vodafone is ore operating its business in urban areas, and hence, there is a wide scope of
telecom operation in rural areas.
 New and emerging markets of the countries like Africa have high disposable income, and
therefore, communication is essential for the growing network there.
 People more rely on smart phones, and therefore, there is a high demand for a cellular
network. However, Vodafone has to implement some changes in its business policies to
enhance its potential customer base.
Threats
 Vodafone has to face a big threat of competition in different countries. For example, In
the US it has to face competition from Verizon wireless and others while China has its
own China mobile
 The entire telecommunication industry is operating their business at penetrating pricing
strategy that leads to low margin of Vodafone (Shrestha, 2017).
 Whenever there is the availability of a cheap cellular network plan from competitors,
customers prefer to switch their brands
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Figure 4: SWOT Analysis of Vodafone
Internal capabilities analysis of Aldi
Valuable
This factor relates to value addition in the products and services offered by the Vodafone
worldwide. Vodafone is enhancing its internal capabilities through innovative technology
adoption in their business environment. The diversified network coverage can be improved with
the help of effective innovation and advanced technology.
Rare
This factor considers the effectiveness of optimising resources to attain the set goals of the
organisation. The human and capital resources of Vodafone are effectively utilised to gain a
competitive advantage in the market. There are various professionals and experts appointed in
Vodafone that focuses on development for excellent availability of network at cheap rates so that
organisation can lead in the market (Klauer, 2015).
Costly to Imitate
The costly to imitate resources help the organisation in sustaining competitive advantage. The
limitation refers to the duplication of resources that are generally done by competitors to increase
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