Vodafone Group PLC Business Strategy: A Comprehensive Analysis

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Business Strategy
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TABLE OF CONTENTS
Introduction......................................................................................................................................3
Lo1...................................................................................................................................................3
P1 Applying appropriate frameworks analyze the impact and influence of the macro
environment on a given organization and its strategies...............................................................3
M1. Critically analyze the macro environment to determine and inform strategic management
decisions......................................................................................................................................5
D1 Critique and interpret information and data applying environmental and competitive
analysis to produce a set of valid strategic directions, objectives and tactical actions................5
Lo2...................................................................................................................................................6
P2 Analyze the internal environment and capabilities of a given organization using appropriate
frameworks..................................................................................................................................6
M2 Critically evaluate the internal environment to assess strengths and weaknesses of an
organization’s internal capabilities, structure and skill set..........................................................8
Lo3...................................................................................................................................................9
P3 Applying Porter’s Five Forces model evaluate the competitive forces of a given market
sector for an organization............................................................................................................9
M3 Devise appropriate strategies to improve competitive edge and market position based on
the outcomes..............................................................................................................................10
Lo4.................................................................................................................................................11
P4 Applying a range of theories, concepts and models, interpret and devise strategic planning
for a given organization.............................................................................................................11
M4 Produce a strategic management plan that has tangible and tactical strategic priorities and
objectives...................................................................................................................................13
Conclusion.....................................................................................................................................13
References......................................................................................................................................15
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Introduction
In order to survive in a competitive business environment, taking effective strategic decisions is
very important (Scholes, 2015). Moreover, efficient business strategies play a vital role in the
success of the business by attaining business objectives.
The present assignment is concerned with the strategic decisions and policies of a leading
telecommunication company of the United Kingdom, Vodafone Group PLC. The company is
headquartered in London and was founded in 1971 (Vodafone, 2019). The report outlines the
development of the business strategy of Vodafone. Also, various tasks have been covered in the
report such as macro environmental analysis, strategic planning of the firm, etc.
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Lo1
P1 Applying appropriate frameworks analyze the impact and influence of the macro environment
on a given organization and its strategies
The major external factors which affect the business performance effect in decision making
either in a positive or negative impact, these conditions are defined as a macro environment.The
external factor such as inflation, economic growth, social conditions, government policies,
climates changes and many more (Leonidou, et al. 2015). The company like Vodafone conducts
such analysis tool in the market to defeat the competition in the market. There are many analysis
tools to asses these macro environmental factors among them PESTLE analysis is one of the
most popular tools in the macro environment. PESTLE stands for (Political, Economic, Socio-
cultural, Technological, Legal and Environment) Different factors which affect the overall
performance of the company are discussed below-
POLITICAL FACTOR- Such factors which are influenced by Government it includes-
government policy, foreign trade policy, tax policy, labor law, environmental law, trade
restrictions and so on. Vodafone keep track on the all the political impact what are the policies
which will affect the business? What rule should need to obey? Excessive use of mobiles will
affect the health, therefore, the government of the UK introduces various policies and law to
control them.
ECONOMIC FACTOR- The factor related to purchasing power and spending patterns. It
covers economic growth, inflation rate, import duty, currency exchange rate, recession period,
etc. The economy of the organization depends on the economy of the country and we can say the
UK is a highly developing country. Now day's mobile is a necessity so Vodafone is going great
in the market.
SOCIO-CULTURAL FACTOR-Such factor involves the population growth, age distribution,
health consciousness or more. It is closely related to the consumer they buy products according
to the background, demographic location, lifestyle, immediate needs, and trends. In the UK the
standard of living of the people is high and they are very conscious about their health excessive
use of mobile they avoid it impact the Vodafone market in an unfavorable way.
TECHNOLOGY FACTOR-Technology which use to run the business more effectively like
new machines lounged to create new products and new business opportunities the country like
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the UK using advanced technology. Vodafone has lounged new technology in the market like 4G
platforms.
LEGAL FACTOR-Factor includes the legal right or consumer laws, health, and safety purpose,
Vodafone keeps track of legal right or laws of the country (UK) to trade successfully.
ENVIRONMENT FACTOR - The natural resources affected by the marketing activities of the
organization. The company like Vodafone adopts many strategies like recycling used mobile
phones.
By using PESTLE analysis we can know the strength and weakness of the organisation and can
work on it.
To know the strategic position in the market, ANSOFF MATRIX has been implemented.
There 4 types strategy is in an off matrix and they are most crucial and play an important part in
the company. The four strategies is 1.Market development 2.Diversification 3.Market
Penetration 4.Product development.
1) Market development it's all about working existing market with a new product on different
platforms like online selling and to identify the opportunities and threats. 2) Diversification
means entering a new market with new products at is demands of the current position 3) Market
penetration we can say increasing sales of an existing product in the existing market to give
loyalty schemes and to give special offer 4) product development means entering new products
to an existing range. It's about offering a new product or an old one with new tactics in the
market. Vodafone adopts the new policy to run more successful in the market they launched new
products in the existing market. The company has introduced new products like car dongle, pet
location cameras, security cameras, and much more new product and able to expand its market in
the UK, US, and INDIA.
Both the strategy works for you in each way positive or negative and make the company get
more successful in the market.
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M1. Critically analyze the macro environment to determine and inform strategic management
decisions.
Microenvironment helps identify the possible opportunities and danger that will impact to your
company (Buckley, et al. 2016.). Analysis helps you understand the health of the organization
and create such kind strategy that will help you devise will succeed. The following are the points
to analyze time to time in the company is as follow-
1. Company mission, wide statements of its goal
2. Matching the resources with the external environment
3. Analyse the success strategy for further future objectives of the company
4. Analyse the competition, new technology, and new product in the market.
5. Create a company profile to determine the weakness and capabilities and strength for
accurate decision making.
6. Analyse about the new political policies and laws in the country (UK).
Apart from this, decision is taken by looking at the factors in the macro environment to develop
and achieve goals through management. The Company like Vodafone analyse every possible
factor to reach out the potential, ultimatum, opportunities to succeed in the market that's why
today it's running successfully in the UK as well as in the other country too like INDIA and US.
Decision plays a crucial role in the succession of the company to compete in the market. Before
every decision taking in Vodafone, the company closely monitor all the factors or macro
environment. While making a decision keeping all the macro environment perspective in mind
helps a lot in company performance or in achieving goal. The macro environment helps to
determine the factors will affect the company growth in the industry (Buckley and Ghauri,
2015).
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D1 Critique and interpret information and data applying environmental and competitive analysis
to produce a set of valid strategic directions, objectives and tactical actions.
All the factor and analysis is utilizing in the Vodafone Company for its growth and performance
(Chang, 2016) Applicable of PESTEL and ANSOFF MATRIX through which Vodafone
Company discover new direction or new ways to compete in the market in different tactic
actions. Vodafone requires discovering in a different country where the telecommunication
market is weak or not offered for success and grabs new techniques and opportunities. By
ANSOFF MATRIX and their strategy will give a new perspective to the product and market. It
provides an opportunity to produce a new product or repacking the existing product to the new or
same range. Offering new schemes and discount special offer etc. These strategies give
Vodafone company a new platform like 4G, spy cameras, dongle or many more products,
offering more telecommunication services in the market to become more successful. Strategic
planning is matching the strength in the company with available resources. The successful
strategy shows company growth if the strategy didn't work out will help in future planning or
making a decision. Before making a strategy company will analyse every possible factor which
gives a clear view of company strength and weakness and its performance through which it
develops a definite mission, goals, and objectives. Planning focuses widely on environmental
factors which involve competitors, government, suppliers, customer, technology, a social factor
which affects the business and its goals. You have to very focus before making a plan because if
the plan will not succeed will waste money time and any business venture. The first step to do
anything in business is the plan.
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Lo2
P2 Analyze the internal environment and capabilities of a given organization using appropriate
frameworks.
In order to effectively sustain in this complex business environment, identification of the
strengths and weaknesses of the organization is essential (Schaltegger, et al. 2016 Knowledge of
capabilities helps in the proper use of the strengths in achieving the organizational goals, and on
the other hand, identifying the weaknesses allows the business to overcome them. This SWOT
analysis is a framework or strategic tool that can be used by the chosen company to analyze and
identify the strengths, weaknesses, opportunities, and threats.
After conducting the SWOT analysis, it has been identified that the key strengths of Vodafone
are its massive market coverage, large customer base, and brand image. The company is well
known for its wide distribution and network cover. Further, it operates in various nations of the
world. Also, Vodafone uses excellent and unbeatable marketing practices and techniques to
promote the brand and attract more and more customers. The wide and loyal customer base
across the globe is a major advantage as well as considered as the strength of the cited
organization.
On the other hand, the main weaknesses that have been identified of the Vodafone are a low
investment in the area of research and development, and inefficient financial planning. In terms
of innovation, at present Vodafone is not able to compete with other leading companies of the
country operating in the telecommunication sector. This is the reason that the low investment in
this area can be considered as the major weakness of the company. Apart from this, the company
is inefficient in its financial planning, and it has been assessed by the company by evaluation of
the liquid asset ratio and current asset ratio.
Furthermore, the opportunities, as well as threats of the organization, includes the increased level
of spending of the customers in the products and services offered by this sector, new customers
from various online channels and emergence of modern technologies (Oldmans and Tomkins,
2018). As the focus and interests of the customers in continuously increasing towards such
products and services and that is why it is considered as the key opportunity to the company in
order to attract and retain more and more customers. The growing online sector is also a way for
the company to expand its business operations and targeting more audience. On the other side,
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there is a strong and intense competition in the market of UK for Vodafone, and that is the
biggest threat.
Other than SWOT analysis, VRIO framework can also be used by Vodafone to evaluate its
internal environment and capabilities. The internal environment of the company reveals the
weakness and strength of the company in light what it has achieved or has not achieved. To
analyze the internal environment of the company different framework are available. VRIO is one
of them, and it plays a very vital role in the company .VRIO help us to find out the ways to
sustained competitive advantages. VRIO refers to valuable, rare, imitable, and organized.
Vodafone has valuable resources present, and these are considered as valuable as these resources
are able to enhance the customer value and enables attaining the opportunities as well as dealing
with threats. The employees or human resources are the valuable resources of the company that
helps in attaining the significant position in the market.
Rare are those resources which can be acquired by only a few or limited companies. These help
in gaining a competitive position in the market. The rare resources that are present within
Vodafone are its technological know-how and strong customer relations. It is not possible for
every company to maintain a strong and healthy relationship with customers. Apart from rare,
the resources that are present within Vodafone are inimitable. It has been assessed that the
resource that is present within Vodafone is inimitable as it is not possible for other organizations
to utilize them in a proper manner. Hence, the inimitable resources are technological and human
expertise. Moreover, the company has the availability of a skilled and talented workforce which
is its key strength and thus considered as an inimitable resource.
The next component of the VRIO framework is organized (Strategy, 2017). The chosen company
aims at organizing all resources in a proper manner to utilize them in such a way that it can
enhance the overall performance of the business organization in the market. The resources within
Vodafone are organized with the help of appropriate internal planning, and every department or
functional unit of the company focuses on the utilization of resources in a proper manner so that
various advantages can be attained.
Thus, it can be said that this framework or tool is very helpful in assessing the internal
environment and identification of strengths.
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M2 Critically evaluate the internal environment to assess strengths and weaknesses of an
organization’s internal capabilities, structure and skill set.
After the analysis of the internal environment of Vodafone, the key strengths and weaknesses are
identified (Razak, et al.2016). Further, one of the main strength of Vodafone is its wide and loyal
customer base and high brand name in the market of UK. Preference of customers towards the
products and services of the cited company is quite high, and this is the biggest reason that the
customers prefer to access such a service. Other major strengths of the company are optimum
utilization of resources including human, and technological. It is stated by Hart, et al. (2016) that
evaluation of strengths of the company is essential in order to understand them and utilizes in a
proper manner so as to deal with the challenges. Utilizing the strengths of the company is its
major ability, and this is the reason that the cited organization is able to sustain in the market and
also becoming a market leader. Further, it has been assessed that the structure of the organization
is highly developed and the skill set is also efficient. On the other side, there are some
weaknesses too of the company that creates an adverse impact on the performance of the
business. The major weakness of the organization is its inefficient financial planning (Wieland,
et al. 2017). It is said that when the financial resources are not adequate of any company and the
planning is not appropriate then it creates an impact on the future growth of the company and
sustaining in the market becomes difficult.
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Lo3
P3 Applying Porter’s Five Forces model evaluate the competitive forces of a given market sector
for an organization.
In order to know the external challenges and forces that is affecting the business performance of
the company (Evans, et al. 2017). Porter’s five force model is the most suitable tool that can be
used. This is the strategic tool and framework that is used to analyze the present competition and
other challenges.
The threat of new entrants (Low)
As there are various barriers to entry and requires a huge investment in the telecommunication
industry, the entrants are quite low (Soltanizadeh, et al. 2016). The cost of the setting up of
infrastructure is very high and also the technology is changing continuously and thus it becomes
quite difficult for the companies to enter this industry. Furthermore, the company can tackle the
threat of new entries by creating innovations in the products and services, spending money on
research and development, etc.
Bargaining power of suppliers (Moderate)
It has been identified that the bargaining power of the supplier is quite moderate as there are
various suppliers from which the companies operating in the telecommunication sector purchases
materials (Priem, et al. 2018). Numerous suppliers are present in the UK market such as other
firms that offer quality products to the company, and this is the key reason that the bargaining
power is moderate. Furthermore, in order to tackle the moderate bargaining power of the
suppliers, Vodafone can take several steps. These include building an efficient supply chain and
maintaining relations with dedicated supplier.
Bargaining power of buyers (High)
Buyers are very demanding, and they want the best products and services at very low prices
(Moseley III, 2017). The bargaining power of buyers is quite high as there is various service
providers exists within the market. The level of competition in the market of the country is quite
high, and the customers have high bargaining power. For instance, if the customers of Vodafone
are not satisfied with the services, then it is quite easy and convenient for the customers to switch
the brand. Therefore, in order to exist in the market, the business organization is required to
conduct its practices as per the needs of the target market.
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