Business Strategy Analysis: Vodafone's Competitive Landscape

This report provides a comprehensive analysis of Vodafone's business strategy. It begins by describing the impact of macro-environmental factors using PESTLE analysis, considering political, economic, social, technological, legal, and environmental influences on Vodafone's operations in different countries. The report then analyzes Vodafone's internal environment and capabilities using the VRIO model to assess valuable, rare, inimitable, and organized resources. Furthermore, it applies Porter's Five Forces model to evaluate the competitive forces within the telecommunications market. Finally, the report interprets and devises strategic planning for Vodafone, including the application of Ansoff's growth vector matrix to determine strategic direction, such as market penetration and market development strategies, to enhance its business and financial position.

Business Strategy

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Describing the impact and influence of macro environment factor for Vodafone................1
TASK 2............................................................................................................................................5
P2 Analyse the internal environment and capabilities of Vodafone...........................................5
TASK 3............................................................................................................................................7
P3 Applying Porter’s Five Forces model evaluate the competitive forces of a given market
sector...........................................................................................................................................7
TASK 4..........................................................................................................................................10
P4 Applying a range of theories, concepts and models, interpret and devise strategic planning
for Vodafone.............................................................................................................................10
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................14

INTRODUCTION
To survive in this competitive era, there is a need to develop best business strategy for
every organization. Thus, a business strategy is a company's working plan that helps to achieve
company's vision, prioritizing objectives and optimizing the financial performance of the troupe
with company's business model. In the same way, the present study’s main aim is to develop the
best strategy for the company's success. The chosen firm for this report is Vodafone which is one
the largest British multinational telecommunication company which operate in more than 47
countries of the world. Therefore, the report will describe the impact of macro environment
which creates impact upon the company's external environment by using models and also
analysis its internal environment and capabilities by using VRIO and SWOT analysis. In order to
determine competitive force, the report will use Porter five force model and using Porter Generic
strategies, study determine the strategic direction and produce a strategic management plan as
well.
TASK 1
P1 Describing the impact and influence of macro environment factor for Vodafone
As Vodafone deals in different countries, therefore, it also affects from some macro
environment as well which can be describe by using PESTLE analysis, which is as mentioned
below:
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Political factor: This factor is very much influential for the progress of a quoted firm
such that it has to develop the infrastructure in order to be operational in a particular state.
Therefore, if there is political instability in the country then it affect the Vodafone in negative
way. Such that having a political instability become a war prone area and even the establishment
of some good infrastructure for the network also becomes a dull task as well (Pestle Analysis of
Vodafone, 2017). For example, a recent conflicts in Europe have greatly affected the company in
negative direction. As a result, the government also increases sudden tax rate that also affect the
profitability of a firm as well.
Economic Factor: This factor is consider the most important dimension for a firm such
that the more the states will develop the higher are the chances of a company to expand and open
their new units. It has been analyzed that as the UK have good GDP of the country which means
that the people has more income and companies are more prone to adopting the latest
technology. Therefore, the overall economic crisis affect the profit or financial position of the
firm such that in past years there is an inflation rate in the country then the rates of company's
offering services are increases and people are not ready to spend their money, as a result, there is
fall in financial position of the company (Ansoff and et.al., 2019).
Social factor: the social factor is purely based on the local beliefs and the culture of the
people where the company is operating. Therefore, for the success of the company, it is quite
essential for the firm to show the flexibility in their policies that pertaining to the local culture.
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Illustration 1: PESTLE analysis

As Vodafone is a European company but it also chances their preferences and policies as well as
per the local factors of the company where it is operated. For instance, the changing work pattern
which are becoming very popular that also make to work from home that increasingly relying in
the communication technologies. Therefore, company should offer their services after analyzing
the needs of their customers that helps to sustain its brand image in market.
Technological Factor: It has been evaluated that the quoted firm is famous for its
innovation and the company has the mission to always follow the contemporary trends in their
technological and communication sphere (Liu and et.al., 2019). But now the company has many
rivals but Vodafone is go one step ahead with regard to technology. Further, it has been
technology driven company that mostly focus on the latest trends of new or advance techniques
that helps to maximizes the profitability. But on the other side, it has been critically evaluated
that the increasing competition from the rival firm also affect the strategy of Vodafone that is
why sometime, the firm keep introducing innovative products and services to the market.
Legal Factor: It is another important factor that affect the business such that Vodafone
has to be very much alert about the legal issues such as copy and other pirated issues, even many
of the states also blamed Vodafone for the legal issues pertaining to the sphere of infrastructure,
as a result, it has to pay penalties as well. Not only this, many times, the quoted firm also
accused of not paying good to their employees as compared to its competitors. Therefore, the
company should abide all the legal laws such as Employment law, Health and safety sale, data
Protection act etc. in order to maintain a positive image in market which further help to gain rust
of the customers.
Environmental Factor: As globalization increases, people are more and more ethics
oriented, in the same way, consumer are always expecting from their favorite brand to be more
socially responsible (Pestle Analysis of Vodafone, 2017). Moreover, they also want that the brand
also plays an important role for the betterment of society. In the same way, Vodafone is also
dynamic in nature and in order to maintain the market and to expand the network, the cited firm
should always be consider all the facts and also follow sustainability act as well. So that it will
help a business to attract wide range of customers towards it.
In order to determine the company's strategic direction, it is essential to use Ansoff
growth vector matrix which is as mentioned below:
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Market Penetration: It happens when the existing products are marketed in the same
way in order to increase the market share of a firm. This strategy is considered as an minimal
risk strategy and this is mostly used in order to raise the current market share of a firm. In the
same way, Vodafone is also uses this strategy in order to maintain the existing features in its
current market in order to make sure that the firm is growing as the sue to growth in the size of a
market (Gurcaylilar-Yenidogan and Aksoy, 2018). Further, in this stage, the company should
provide best value proposition that is further better than their rivals. In this way, it helps to grow
their business in existing market in order to raise the profit as well.
Market Development: This strategy is used when the firm try to expand into new market
with their existing products such that it is suitable for the firms who have the capabilities and the
resources to enter into new market in order to pursuit of growth. It has been analyzed that this
strategy is quite risky as compared to market penetration because it requires good market
research and finance to establish its brand image in market. Basically this strategy is used by
telecommunication sector such as Vodafone in order to tapped into new market with their current
products and services.
Product Development: This strategy is used in order to launch new product in their
existing market (Dawes, 2018). This strategy is successful when the firm already established
their unit but now they want to raise their profit and attract wide range of customers towards
them by introducing new products. Therefore, this strategy is mostly used by retail sector
because they always try to innovate new products and launches new products after analyzing the
needs of their customers. It has been critically evaluated that this strategy is riskier than two
because in this stage, there may be chances of transfer of customers from the existing products to
new ones for Vodafone.
Diversification: One of the riskiest strategy because it is used when firm is launches new
products in new market. This is high risk strategy and only justifies when there is a chances of
high return for the firms.
For example, it is successful for Vodafone when it venturing into mobile telephony and
retail segments where the firm has to launch new products and targeted at the new customer
segments. It has been also evaluated that the company should use use diversification only when
the firm has enough cash and other resources that helps them to be successful in the market
(Chereau and Meschi, 2018).
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From the above, Vodafone uses market development strategy in order to state its strategic
positioning because it helps a firm to enter in African markets where these market are yet to be
tapped and can also gain high advantage from their existing expertise in order to enter into a
market. As a result, it also helps a firm to raise its financial position and sustain its brand image
in market too.
TASK 2
P2 Analyse the internal environment and capabilities of Vodafone
To determine the internal capabilities, VRIO model is used because it helps to evaluating
the resources so that the competitive advantages or weaknesses are easily understood. Therefore,
VRIO model for Vodafone is mentioned below:
Valuable:
 The financial resources of the company are highly valuable such that it help in investing
into external opportunities. Further it's employees are also valuable resources as these are
highly differentiated.
 Further, for the company's its patent are also valuable resources because these allow the
firm to sell their products without competitive interference. This also help to generate
high revenue (VRIO analysis of Vodafone, 2018).
 The research and development and cost structure are not valuable resources.
Rare:
 The financial resources of the company are found to be rare and even the employees are
also found rare resources.
 As patent are not easily available and not possess by the rivals, therefore it is also rare
resources as per VRIO analysis.
 Even the distribution network for the company is also a rare resource as it require a lot
of investment and time to come up with better network for Vodafone (Hsueh and Gomez-
Solorzano, 2019).
Imitable:
 The financial resources of Vodafone are costly to imitate, as new entrant world require
similar profit for a longer period of time to accumulate the amount of a financial
resources.
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 The employees of the firm are not costly to imitate because other firm also train their
employees in order to improve their skills.
 The patent of the company is difficult to imitate because it is not legally allowed to
imitate a patent products (Scholes, 2015).
Organized:
 It has been analyses that the financial resources are organized in order to capture the
value such that these resources are used to in invest in right place and also making use of
different opportunities.
 On the other side, the patent of the company are not well organized which means that the
firm is not uses these patent to their full potential.
Resources Value Rare Imitation Organized Competitive
advantages
Brand
awareness
Yes Yes No Yes, Vodafone
also utilize its
leading brand
position
Sustainable
Competitive
advantages
Marketing
Expertise
Yes No Pricing
strategies are
matched with
rivals,
Yes Temporary
competitive
advantages
Intellectual
property
Yes Yes Risk of
imitation is
low
Firm has not
utilized the
full extent of
its patent
Providing
strong
competitive
advantages,
Financial
Resources
Yes Yes Yes Yes Sustainable
competitive
advantages
Strength:
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 Vodafone is one of the most popular cellular service providers at global level and it has
more than 10000 employees across the world.
 The company also provides the landline, mobile telephony and digital TV services at
reasonable rates.
 Currently the company is presents more than 150 countries and has high customer base of
around 470 millions (SWOT Analysis of Vodafone. 2018).
 It also has highly efficient website that make sure that it provide easy online payment,
recharges and service activation facilities. Further, the company also provide movie,
music through various Vodafone applications.
 Company also have high brand visibility and strong brand recall as well, and also have
good network infrastructure (Thompson, Strickland and Gamble, 2015).
 The company is also known for its innovation and it has been successfully track records
of developing new products.
Weaknesses:
 As the company has high global market presence but still the company also comes under
constant vigilance from the global authorities.
 Apart from this the company keep fight for the market share with the competitors because
of the price wars.
 It has been analyzed that it has limited success outside the core business because it has
faced challenges in moving to other products segments with the present culture.
 The company is not able to tackle the challenges that is presented by the new entrant in
the segments and as a result it lost the small market share as well (Pisano, 2015).
 Another weakness of Vodafone is such that it is not very good at product demand
forecasting and it also missed opportunities as compared to their rivals.
TASK 3
P3 Applying Porter’s Five Forces model evaluate the competitive forces of a given market sector
To determine the competitive advantages of a market, Porter five force model is used
which is as mentioned below:
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Threat of new entrant (Low): it has been analyzed that new entrant in the wireless
communication brings innovation and this put the pressure on Vodafone group through lower
pricing strategy, by reducing the cost. But Vodafone faces low threat of new entrant because it
requires lot of investment to establish its unit in the market, therefore on the other side, the
quoted firm manages all the challenges such that by introducing new and innovative new
products and services it keeps attracting new customers towards it (Zhong and Li, 2018). Apart
from this, if there is a strong threat of new entrant in a communication industry then the current
players of the firm are willing to earn lower profit in order to reduce the threat from new players.
Bargaining power of suppliers (high): Vodafone have high bargaining power of
suppliers because all the companies buy their raw material from suppliers and it has been
analyzed that powerful suppliers in a technology sector use their bargaining power in order to
extract higher price from a firm. While on the other side, the company build efficiently supply
chain with multiple suppliers in order to tackle the bargaining power of suppliers.
Bargaining power of buyers (high): Vodafone has high customer base such that buyers
want to buy the best products from their favorite brand at low rates. That is why the company
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Illustration 2: Porter five force model
(Source: Porter five force model, 2017)

keep innovate new products in order to raise its customer base and it also provide discount on the
offering services that helps to raise it financial position as well. Further, it has been analyzed that
if he buyers have strong bargaining power then it usually tend to drive price down which helps to
earn a sustainable profit as well.
Threat of substitute products (high): Foe Vodafone, threat of substitute products is
high because when a new product or service meet the similar customer need in different way
then the profitability of the company is suffers (Leonidou and et.al., 2015). Even, the threat of a
substitute products or services are high if it offers a value proposition which is completely
different from the present offering, but in the case of Vodafone it can be tackle by being service
oriented rather than just product and also analyzing the needs of their customers and then
produces the same.
Rivalry among existing players (high): The company faces though competition from
the rivals such that as the competition is intense then it becomes quite difficult for the existing
players to earn sustainable profits. Therefore, the company is operating in very competitive
industry it can easily tackle the intense rivalry by building a sustainable differentiation and even
by collaborating with the competitors also helps to increase the market share rather than to just
competing for some small market.
Stakeholder Analysis: It is the process of assessing a system and make some potential
changes because they are related to some relevant and interested parties. Further this also used to
assess how the interest of those stakeholder is addressed for an action (Barney, 2015). Basically
in every organization there are four types of stakeholder which are as mentioned below:
 Primary stakeholder: These are the most important stakeholder of a company such that
they also affected the most either by a positively or negatively by a firm's action. Such as
Board of directors, shareholders and investors.
 Secondary stakeholder: they are the intermediaries such that these stakeholders are
indirectly affected by an organization. Such as suppliers
 Tertiary stakeholder: these stakeholder are who, will be impacted the least such as
government.
 Key stakeholder: these are the major stakeholder of the company who are directly or
indirectly affected from an organization action such as customers and employees.
Highly satisfied Satisfied
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 Board of directors
 Shareholders
 Investors
 Customers
 Employees
Monitor Informed
 Suppliers  Government
Board of directors: For Vodafone, it is quite necessary for the firm to keep highly
satisfied to the primary stakeholder because they it helps to creates positive environment of the
company. Such that it is the responsibility of the BOD to protect the shareholder's assets and
make sure that they receive the return on their investment (Riasi, 2015).
Employees: It has been analyses that there is a need to keep satisfied the key stakeholder
of the company because they are the person who plays an important role. For instance, customers
are those who help to generate high revenue for a firm and on the other side, employees are those
who help to make the action successful in a company. Therefore, there is a need to keep satisfied
the stakeholder in order to run business successful.
Government: if a new action is taken by the company, then it is quite necessary for the
firm to keep informed about all the decisions. Further, it is also necessary for the firm to keep
comply with all the laws and regulation in order to run a business successfully (Huggins and
Izushi, 2015).
TASK 4
P4 Applying a range of theories, concepts and models, interpret and devise strategic planning for
Vodafone
Vodafone also uses Porter generic strategy in order to determine the strategic direction
for a company. It has been analyzed that this strategy is helpful to determine the relative position
in an industry and to raise the profitability as well that further assist to gain sustainable
competitive advantages as well. These model involves some strategies which are as mention
below:
Cost leadership: It is a traditional method that helps to achieve the firm’s objectives in
order to produce the large scale that also help the business to exploit economies of scale.
Therefore, Vodafone may uses this strategy to become the low cost producer of the industry. It
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