Vodafone PLC Business Strategy: A Comprehensive Analysis

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Business Strategy
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Table of Contents
Introduction...................................................................................................................... 3
Task 1- The external environment...................................................................................4
Task 2- The internal environment and organisation capabilities......................................8
Task 3- Analysing the telecommunications sector.........................................................12
Task 4- Understanding and interpreting strategic direction............................................19
Conclusion..................................................................................................................... 22
Reference List................................................................................................................ 23
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Introduction
A strategy is a plan that is made to attain the aim of the business for the long-term
benefits. The strategic management incorporates the formation and implementation of
the initiatives made by the company’s management department to achieve a particular
goal (Ansoff et al., 2018). This management is made by considering the resources of
the organisation and the evaluation of the external and internal environment of the firm.
The strategic management includes specific objectives, policies as well as plans to be
able to attain the goal and the implementation of the plan with the resources available.
There are various kinds of strategy such as business, corporate, and functional
(Jannesson et al., 2016). In the corporate level, the whole organisation is considered.
On the other hand, in business strategy the product lines, division of the firm, and such
activities are considered. In the functional level, the departments of the firm are taken
into consideration for developing strategy.
The study that will be provided below will have discussion on the macro environment of
the chosen firm. The internal environment of the organisation will be explained that has
enabled the company to have competitive advantage. Ansoff’s matrix, Porter’ forces and
balance scorecard methods will be provided to develop strategies for the firm. A
management plan will be presented with the help of Bowman and Porter’s strategies.
Vodafone PLC is a telecommunication company that has been founded in 1991. The
founders of this firm have been Gerry Whent and Ernest Harrison. The headquartered
of this organisation is in London, England. It serves different regions of the world. At
present, Nick Tread is the CEO and Gerard Kleisterlee is the chairperson. The annual
revenue that this firm generated is 43.666 billion as per the reports of 2019
(vodafone.com, 2019). It has around ninety-nine thousand employees (vodafone.com,
2019). The subsidiary of this firm is Vodafone Global Enterprise.
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Task 1- The external environment
Provide a critical analysis of the macro environment and how it determines your
chosen organisation’s strategic management decisions using;
i. PESTLE model for environmental analysis
Macro environmental
factors
Factors identified Analysis of the factors
on Vodafone
Political The political situation of
the United Kingdom is
unstable. The Brexit has
affected the companies of
the country by reducing the
number of employees
(Bloom and Mizen, 2017).
The organisations of the
country have been
regulated by the
regulations of EU but after
the withdrawal of UK from
EU would create a chaos
atmosphere for the
companies as they would
need to change the
policies as per the current
scenario (Ford, 2016).
The reduction in the
number of employees
would adversely affect the
functioning of Vodafone
company. In a telecom firm
like Vodafone, there is
need of a large size of
employees to interact with
the high population of the
country. There can be
difficulty in solving the
queries of the customers
thus; Brexit would affect
the firm negatively.
Vodafone might need to
change the policies and
regulations after the brexit
to adjust with the new
scenario of the country.
This would need efforts on
the part of management as
well as thee would be
difficulty in following new
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rules.
Economic The GDP of UK has been
increased by 0.3% from
February 2019 to June
2019
(tradingeconomics.com,
2019).
The unemployment rate of
the country has seen
reduction by 0.15 in three
months that is from March
2019 to June, 2019
(tradingeconomics.com,
2019).
The increase in the growth
rate of UK’s economy can
determine the increase in
the sakes of the products
of the firm as there would
be increase in the
purchasing capacity of the
people. Thus, this factor
acts positively for the
organisation.
The reduction in the
unemployment rate would
increase the prospect of
the buyers in buying the
products provided by
Vodafone. This would at
positively for the firm.
Social The people of the country
are dependent on the
telecom services to contact
with each other (Goddard
and Gillespie, 2017).
The social factor would
create a positive impact on
the company, as the
services provided by the
firm are essential to make
interaction with people
even from off regions.
Thus, there would be
increase in the sales of the
products.
Technological The telecom companies of
the UK has incorporated
the use of IT services to
Vodafone should enhance
the customers’ experience
by boosting the facilities
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enhance the experience of
the customers such as by
providing internet facilities
in the wireless products
(Osseiran et al., 2016).
provided by the firm with
the help of technology.
This would assist positively
by augmenting the profit.
Environmental The people of the country
have become conscious
about the affects of the
firms on the environmental
aspects of the country.
They are preferring the
companies who have
controlled the carbon
footprints of the
organisation (Long and
Young, 2016).
Vodafone should control
the management of waste
produced by the company.
It can also use renewable
energy for the same
purpose. In this way, the
environmental factor will
have the positive influence
on the firm, as renewable
energy is cost efficient.
Legal The “National Minimum
Wage Act 1998” provides
adequate wages and other
benefits such as protection
from unfair dismissal and
provision of supplementary
expenses made by the
company to the workers
(legislation.gov.uk, 2019).
As per the “Data Protection
Act 2018”, the
organisations of the
country should protect the
data of employees
(legislation.gov.uk, 2019).
The Wage Act of the
country would affect
Vodafone negatively, as
there will be increment in
the cost towards the labour
force. In order to manage
this, the firm should
increase the quality of
products to boost the
sales.
The company would be
affected positively by the
regulations on data of the
workforce. There would be
enhancement in the image
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According to the “Health
and Safety at Work Act
1974”, the firms should
provide protection to the
workers from harmful
equipment, chemicals, and
provide safe working
environment (hse.gov.uk,
2019).
of the firm and the
labourers’ loyalty would be
devoted towards the
company.
The organisation would be
influenced positively by the
act of workers’ safety as
there would be positive
impact on the health
conditions of the workers.
This would increase the
productivity of the products
and series thus the
company would be
benefitted by this law.
Table 1: PESTLE Analysis of Vodafone
(Source: Created by the learner)
ii. Ansoff’s growth vector matrix to analyse the organisation’s strategic
positioning
The Ansoff’s matrix is a tool that can be used by the Vodafone to assess as well as in
making plan for the growth of the business. This is also called as market or product
expansion grid (Alon et al., 2016). Vodafone PLC has used this tool to develop plans as
per the market where the company serves or products that the company produces.
Among the four strategies, it has used the market penetration and product development.
Market penetration- As per this strategy, the company has focused in the existing
market and the existing products (Dawes, 2016). The existing market of the firm is the
native country and specifically in Newbury and London. This strategy has helped it in
enhancing the sales of the products, as these are some of the busiest regions. The
demand of the products is high due to the need of them for communication and sharing
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important information. Lately, its merging with Idea Cellular has increased the sales
thus, enabling it to gain a competitive advantage over other companies in the same
industry.
Product development- According to this strategy, the firm has focused in the existing
market and the development of new products (Gurcaylilar-Yenidogan and Aksoy, 2018).
It is introducing new products such as 5G internet to the existing market for the growth
of the sales. This would enhance the buyers; experience and this strategy would gain
the company a competitive advantage. It has introduced many products such as M-
Pesa, Vodafone Speechmark, Vodafone Portrait, and others to influence the buyers.
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Task 2- The internal environment and organisation capabilities
Critically evaluate the organisation’s internal environment and its capabilities.
The strategic ability of a business refers to its capability to connect its skills, resources,
and abilities to have competitive advantage and thereby make survival of the business.
This would help the company by increasing its value with time.
i. Applying the ‘VRIO/VRIN’ model to analyse the strategic capabilities possessed
by your chosen organisation
VRIO model to assess the strategic abilities of Vodafone
Resources Value Rareness Imitation risks Organisation
competency
Pricing
techniques
Yes.
The cost of the
products is less
(Wei, 2019).
No, because
of the same
tactics
adopted by
the rival
companies
Yes.
In
telecommunicatio
n industry, the
pricing strategy
are imitated
Yes, the
pricing
strategy would
gain the
company
competitive
advantage
Adopting of
Leadership
methods
Yes
The leadership
styles
incorporated in the
company are
transformational
as well as
transactional that
benefits its
considerably
(Sanda and
Yes
The
leadership
methods used
by the firm
cannot be
imitated in the
same way
No Yes
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Arthur, 2017)
Availability of
raw material
Yes No
Because of
the same
materials can
be available
to other
companies
through their
supply chain
management
Yes Yes
Adherence
to legal
regulations
Yes No Yes Yes
Awareness
of brand
Yes
This company is
expanded in many
different countries
Yes No Yes
Monetary
resources
Yes
As no company
can run without
financial
resources
No Yes Yes
Access to
capital
Yes No Yes No
Creation of
vision
Yes
The vision of the
firm is to increase
the
communication
between the
Yes No
Vision of a firm
cannot be imitated
Yes
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people through
the
telecommunicatio
n services and
products as well
as to enhance the
living standard of
the citizens
through innovative
products
(vodafone.com,
2019)
Flexibility of
supply chain
Yes Yes Yes Yes
Positioning
of brand
Yes No Yes, but it would
required more
budget by them
Yes, it has
developed the
positioning
based on the
behaviour of
the
customers,
thereby, with
the change in
the behaviour;
the company
would need to
change the
market
positioning as
well to avoid
loss (Simkin,
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2016).
Table 2: VRIO model to assess abilities of Vodafone
(Source: Created by the learner)
ii. Strengths and weaknesses of the organisation
Strengths
 The market coverage of the firm is
good due to its presence in many
regions (vodafone.com, 2017). This
has increased the annual revenue
of the firm as well as increased the
number of customers.
 The advertising tactics of the firm is
good enough to procure the profit.
 It provides training to the employees
on dealing with the customers
(vodafone.com, 2019). This has
enhanced the customers’
experience and enabled it to
increase the sales of the
merchandises and services.
 The customers’ satisfaction rate has
been increased due to the
development of fresh products. It
has also assisted it in augmenting
the income.
 The CRM incorporated in the firm
has enabled it to enhance the brand
equity with the enhancement in the
sales through cross-selling methods
Weaknesses
 The subscriber of the firm is
declining considerably due to rival
companies (Singh, 2017). This
would affect the sales as well as
annual profit of the business.
 In European market, the
performance of the company has
been weak due to failure in pricing
strategy. This has decreased the
sales of the products thus, the
revenue of the organisation.
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