Strategic Analysis of Vodafone PLC in the UK Telecommunications Sector

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BUSINESS STRATEGY
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Table of Contents
Introduction...................................................................................................................... 2
Task 1: The external environment....................................................................................3
P1, M1, D1....................................................................................................................... 3
Task 2: The internal environment and organisation capabilities......................................8
P2, M2, D1....................................................................................................................... 8
Task 3: Analysing the telecommunication sector...........................................................13
P3, M3............................................................................................................................13
Task 4: Understanding and interpreting strategic decision............................................18
P4, M4............................................................................................................................18
Conclusion..................................................................................................................... 22
References.....................................................................................................................23
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Introduction
In UK, the telecommunication is found to be the fastest growing sector, providing the
people the feasibility to use mobile communication or other sources at any place as per
their ease. The infrastructure of telecommunication sector caters to underpin the
economic and social activities featuring the preference of people towards shaping the
form of connectivity among them. The present study effectively highlights about
conduction of internal and external environmental analysis through which the growth of
the respective sector as well as organisation like Vodafone operating within it. Along
with this, it has also been deciphered about analysing the capabilities of the company
and identification of its strengths and weaknesses has also been done. Models and
theories are also considered in support of the study.
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Task 1: The external environment
P1, M1, D1
i. “PESTLE model for environmental analysis”
Macro environmental analysis is the strategic tool that is effective for analysing the
external factors that are affecting Vodafone PLC. Analysing the factors can effectively
help the concerned company to synchronise their activities as per the market trends of
telecommunication sector. Under laid is the vivid description of the factors significantly
affecting Vodafone PLC.
PESTLE Model
Factors Specifications
Political UK is a politically stable country, thus this provides a huge
platform for different business tycoons to expand their business on
vast basis.
The political stability of UK has helped Vodafone PLC to
determine its long-term profit. The concerned company operates
itself in wireless communication, exposes itself to the political
environment of the country. It is necessary for the respective
organisation to undergo through political risks in order to succeed
in dynamic wireless communication industry. However, it is
necessary for Vodafone PLC to understand certain factors before
its total indulgence in telecommunication market. Risk of military
invasion, intellectual property protection, taxations, pricing
regulation and level of corruption caters to determine the
investment factors of an organisation (Peng, 2017).
On contradiction, if the chosen organisation is not cautious about
the above-mentioned factors, this can affect their strategic
decision-making process. Ignorance towards considering the
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pricing regulations can affect the pricing techniques of
telecommunication services provided to customers (Akter et al.,
2016).
Economic UK has a strong and mixed economy. The inflation rates, interest
rates, economic cycle, savings rate and foreign exchange rates
caters to determine the aggregate demand and investments made
accordingly can also help the company to analyse about the
competitive norms. This can help Vodafone PLC to compete with
other organisations belonging to telecommunication industry.
However, lack in adoption of appropriate strategy can hamper the
competitive edge of the company in the market. Lack of skilled
labours can also affect the productivity and business cycle
(Vodafone.co.uk, 2019).
Social Demographics, class structure, attitudes of people and leisure
interests help Vodafone PLC to evaluate the culture of people of
UK. This can help the company to make strategic decisions for
development of their services and hence, this can also help to
deliver advanced services to the people.
Lack of proper conduction of evidence-based research on the
demographic and social factors can make the company lack
behind in terms of services delivery.
Technological UK is a technology embracing country; this can be considered as
an opportunity for an organisation to develop their services
through technological embracement. “Vodafone Leads in M2M
Connected Cars with Scope Technologies”, in this technology,
Vodafone has decided to introduce a new mobile application for
connected cars and partnered with Scope Technologies. They
provide Drivexone services that can help customers to install OBD
(on-board device).
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By embracing this technology, Vodafone also encountered
challenges like increasing competition, shrinking margins in air
time sales (Vodafone.com, 2019).
Environmental Weather, climate change, pollution, maintenance of sustainability
and waste management plays a significant role in standardising
the environmental norms. Vodafone establishes its sustainable
business through empowering women and promoting gender
equality, engaging people of all communities (Vodafone.com,
2019).
In South Africa, Vodacom’s Mum & Baby platform provides free
health checkups at the pregnancy stage.1.2 million people have
successfully registered themselves for healthcare information.
The energy efficiency of the operations of Vodafone can help in
reducing emissions and technologies like Internet of Things (IoT)
helps the customers to protect the environment (Vodafone.com,
2019).
Legal It is necessary to underpin the legal frameworks of the country in
which the respective organisation is operating itself. Underpinning
legal factors like implementation of data protection act 1998,
employment act and equal pay act can help the company to
enhance their internal procedures.
However, lack in maintaining the legal framework can affect the
customer satisfaction and harm to intellectual properties.
Table 1: PESTLE Model of Vodafone PLC
(Source: Created by Author)
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ii. “Ansoff’s growth vector matrix to analyse the organisation’s strategic
positioning”
Figure 1: Ansoff’s Matrix
(Source: Gurcaylilar-Yenidogan and Aksoy, 2018)
Ansoff matrix is coined as strategic market planning that can assist organisations like
Vodafone PLC to explore their opportunities in order to stimulate revenue generation of
the company. Under laid are the factors encompassed in the matrix:
Market penetration
Market penetration caters to help organisations like Vodafone PLC to analyse their
pricing strategies as compared to their competitors. This can help the organisation to
come over through the competition and be effective towards services delivery towards
the customers. This particular quadrant also emphasises on providing the customers
with feasibility to seek for services through easiest ways (Gurcaylilar-Yenidogan and
Aksoy, 2018). This can be done through online platforms. From the aspect of targeting,
it is necessary for Vodafone to target different sections of society and also underpin the
requirements of the customers. The market penetration quadrant focuses on market
share growth, improvising customer value and enhancement of customer loyalty.
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However, in failure of meeting the criteria, Vodafone can face drastic downfall in the
market, thus, affecting their competitive edge in the telecommunication industry.
Market development
Conduction of evidence-based marketing research is the factor of sheer significance for
analysing ways for market development. Through market penetration strategy,
Vodafone PLC is able to put forth its initiatives for market development. This can done
through providing convenience to customers through online channels, selling products
and services at low cost and developing existing products to sell it in new emerging
market with cost-effectiveness (Verhoeven and Johnson, 2017). However, Vodafone
PLC is able to gain competitive edge through its innovative products and stronghold in
European market. Vodafone has able to maintain is extensive presence in the European
market and has facilitated 87% of 4G services and data tariffs on 4G networks.
Product development
Vodafone PLC has vast range of innovative products that includes Vodacom, M-Pesa,
Vodafone Speechmark, Vodafone Portrait and Vodafone one; all these products have
helped Vodafone PLC to gain competitive advantage in the telecommunication market.
This helps the customers to gain wide access to the products and services of Vodafone.
However, in order to develop the existing products, Vodafone is required to make
certain financial investment which might hinder the development of the products on
further basis.
Diversification
In terms of diversification, there must be upstream and downstream with suppliers and
integration with the intermediaries. This can help organisations like Vodafone PLC to
segregate its marketing branches and also assist the company to develop strategic plan
for expanding their business of wider platform (Murdock, 2017). For instance, expansion
of Vodafone operates itself in Central Europe, Asia-Pacific, Sub-Saharan Africa and
Southern Africa and Europe. Furthermore, Vodafone has also diversified its business
from a mobile company to emerging into playing a significant role in telecommunication
industry.
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Task 2: The internal environment and organisation capabilities
P2, M2, D1
i. “Applying the VRIO model to analyse the strategic capabilities possessed by
your chosen organisation”
Figure 2: VRIO Model
(Source: Chatzoglou et al., 2018)
VRIO is the abbreviation of Value, Rarity, Imitability and Organisation, it can be
considered as strategic analytical tool that is helpful for an organisation to analyse the
necessity of protecting its resources and capabilities and thus, acquire long-term
competitive advantage. Strategic plan process and strategic decision making process is
used for shaping the fate of an organisation.
● Value
This factor focuses on understanding the value of the resources that are adopted by the
concerned organisation. As argued by Chatzoglou et al., (2018), the less value of the
resources, less probabilities of gaining high competitive advantage. Lack in
understanding the value of the resources can lead to exploitation of opportunities of the
company.
Vodafone PLC caters to adopt effective resources that can help the company to
perceive their value of the customers and facilitate customer satisfaction. Resources
can be gathered by reducing the price of the products. Due to the fluctuations of the
internal and external factors, resources might not gain properly. Hence, this can lead to
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lack in competitive advantage. It is necessary for Vodafone PLC to evaluate appropriate
strategic for gaining resources. It is necessary for the company to neutralise its
competition in the telecommunication industry.
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● Rarity
Resources that are less adopted or adopted by few companies can be considered as
rare. As stated by Rockwell (2019), rare and valuable resources provide an organisation
temporary competitive advantage and situation where other companies use similar
resources and equally participate in competition, arises. Due to application and
implementation of similar resources can hinder organisation to achieve superior
performance.
However, Vodafone has adopted marketing penetration, product development and
diversification strategies that can help the company to standardise its strategic
capabilities. With the help of high-skilled labour forces, the chosen organisation is able
to gain long-term competitive advantage.
● Imitability
Initiation of resources might not be possible in many cases. Imitation of resources can
be performed in two different ways including substituting or duplicating. Either of the
ways can help an organisation to achieve sustainable competitive advantage. Imitating
resources might be of high-cost for an organisation. According to Galpin (2018), there
are several reasons through which it becomes difficult to imitate resources. The reasons
are social complexity, historical conditions and causal ambiguity. This can hamper the
organisational culture as well as the actual resources that could lead to long-term
competitive advantage (Andersén and Samuelsson, 2016).
Vodafone PLC has a global footprint that allows the respective company to focus on
numerous opportunities that are available for the organisation on different platforms.
This can also help the organisation in terms of innovation. The diversified platform for
the company disables Vodafone for developing need of imitating the resources.
● Organisation
The resources acquired are required to be organised and make ample use for the
betterment of the organisational operations. It is necessary for every firm like Vodafone
PLC to organise their legal framework, organisational culture and legal policies and
procedures. The legal framework and technological advancements of UK helps
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Vodafone PLC to organise its procedures accordingly. This can be identified as
opportunities for the concerned organisation.
ii.”Strengths and Weaknesses of the organisation”
Based on the macro environmental analysis and the VRIO framework, certain strengths
and weaknesses of Vodafone PLC has been identified.
Micro analysis
Strengths Weaknesses
Massive market coverage
Vodafone is ranked as the 395th among
other 2000 telecommunication brands.
This respective organisation is the second
highest ranked telecom operator after
China Mobile. The diversified market is
also an opportunity for the respective
company (Vodafone.com, 2019).
Marketing
The company has a legendary way of
marketing. The Vodafone Pug is known
across the globe and the ZooZoos’
endearing and brilliant campaign has
helped the company to acquire more
customers.
Premium cost
As compared to other telecom operators,
Vodafone differentiates its services from
them an thus, the customers are proud to
claim that they are users of Vodafone.
Vodafone has huge subscriber base of
350 million people. According to the VRIO
Losing market in USA
Only considering the US market, it has
been found that due to strict competition
by AT&T, Verizon wireless, this has made
a downfall of Vodafone PLC in this
market. According to VRIO framework,
the company is required to adopt rare
resources in order to gain its position
back.
Poor performance in Europe
Due to economic instability and effects of
Brexit results in poor performance of
Vodafone PLC in European market. The
revenue generation of the company was
also very less as compared to other
countries (Vodafone.com, 2019).
Drop down of subscriber base
Vodafone PLC has also faced drop down
of their subscriber base from the past 4
years. This is considered to be major
issues for the company and thus, it is
necessary to adopt certain strategies and
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