LSC UoS: Vodafone's Business Environment - External & Micro Analysis

This essay provides a comprehensive analysis of Vodafone's business environment, examining both macro and micro environmental factors that influence the company's operations. It begins with an introduction to the dynamic nature of the contemporary business environment and the increasing importance of strategic planning and stakeholder communication. The analysis includes a PESTLE analysis, evaluating the political, economic, social, technological, legal, and environmental factors affecting Vodafone. A SWOT analysis identifies the company's internal strengths and weaknesses, as well as external opportunities and threats. Furthermore, Porter's Five Forces model is applied to assess the competitive intensity within the telecommunications industry. The essay emphasizes the importance of auditing the internal and external business environment to understand market dynamics, explore opportunities, mitigate threats, and assess business feasibility. The conclusion summarizes the key findings and their implications for Vodafone's strategic decision-making. This document is available on Desklib, a platform offering a variety of study tools and resources for students.

CONTEMPORARY
BUSINESS
ENVIRONMENT

Table of Contents
INTRODUCTION...........................................................................................................................4
MAIN BODY...................................................................................................................................4
Macro and micro environment and its need to audit about Vodafone........................................4
PESTLE Analysis of Vodafone..................................................................................................6
SWOT Analysis of Vodafone.....................................................................................................8
Porter's Five Force Model of Vodafone......................................................................................9
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Contemporary business environment is dynamic in nature and competition is increasing
at a very rapid rate. The fact is that the changes takes place very frequently and they came with
the new concept which need to be control in order to cope up with the changes. For this
companies need to develop logical and relevant business strategies and also utilise management
accounting tools in order to support planning and decision-making (Boone and et. al., 2019).
Communication with the stakeholders and the general public is no longer a matter of luxury but
competitive necessity. The business environment is dynamic and competitive because of trade
liberalisation where there is no strict criteria in order to enter or exit the business world and also
has the potential to compete to grow and stay there.
There are many factors which are present in the external business environment which put
impact on the operational activities of the business and its different situations. This factor put
great impact on the daily business activities in order to survive for the longer period of time to
company and its operations (Barr and et. al., 2018). In order to carry forward study about the
impact and various aspects of the contemporary business environment Vodafone is selected who
deals in the mobile manufacturing in UK. Vodafone is a communication provider and established
in UK and also become the world's second largest mobile phone company in the world.
Company was founded in 1991 and headquarter in London, UK. Vodafone launches its new
mobile phone in 2010 and put lowest prices of it in the whole world. Because of its geographical
diversification company also has a very huge employee base which is the combination of best
talent and helps them in performing their responsibilities.
MAIN BODY
Macro and micro environment and its need to audit about Vodafone
Every business operates and runs its activities in the business environment and become a
part of it as not any business or entity can function without any competition as there are many
factors that are closely surrounded by the business environment. This environment is classified
into two main categories which is micro and macro environment (Namada, 2018). Both of them,
influences the working conditions of business and how they relate with each other and also
affects its functioning of the business organisation and its operations in the economy. As the
micro environment put direct impact on the business functions and the macro environment is the

general business environment which influences the business group at a very large scale.
Therefore, it is important for the company to determine and analyse about the business
environment in order to understand the impact of its forces on the business.
The factors of internal environment of Vodafone firstly influences the customers of it and
then come up on the suppliers from which the company purchase its raw materials in order to
produce finished products which helps in providing relevant and valuable services to customers.
After the suppliers, then it come on the finance as it include large amount of cost and capital in
order to carry out its business activities by taking loans in order to operate their business
activities (Dartey-Baah and Ampofo, 2016). Finance is the most important resource in order to
carry out the further business functions for achieving the growth and success which is depends
on the capital and budget as not a single activity work without the funds and finances. In addition
to this, the next component for the business organisation is the marketing activities which helps
the organisation in order to promote and advertise its offerings and products in order to acquire
more and more market segment. This element is termed as the middleman factor which is used in
order to flourish the business services in order to connect the entity and the customers. The
marketers helps the company in order to reach out more and more people and spread its activities
in order to available its products and services to each and every customer. Moreover, the last but
not least Vodafone also gets affected by the customer perspective as what other people think
about the company matters for them as it directly impacts their reputation in the market.
By considering the external environment of Vodafone it put both positive and negative
impact form the perspective of other factors which influences the whole industry (Amankwah-
Amoah, Osabutey and Egbetokun, 2018). The impact of these factors are varies according to the
business organisation which depends on the conditions of business and the methods which they
use in order to organise their business activities. The external factors impacts the whole business
operations and also the economy which influences the operations and various impacts on an
organisation.
Need for Audit of Internal and External business Environment
In order to conduct audit, strategic management process is used which is an approach as it
helps in taking the major business decisions of the company for the future direction and strategy.
This approach is useful in order to identify the internal and external strengths and weaknesses
which helps in establishing the long term objectives and selecting the relevant strategies in order

to pursue the business operations (Rosenbach, 2018). Moreover, the external audit helps in
providing information about the threats and opportunities of the business environment which
could impact the strategies decisions in order define the various issues such as new product
development, entry or exit in the market, mergers and acquisitions and resource allocation. There
are various factors which works for the need for Vodafone to audit its internal and external
environment which are mentioned as under: Understand the market: The internal and external both the factors are important for the
company in order to understand the market and its operational activities (Cegliński,
2016). For this, it is important for the Vodafone in order to know the market in which it
operates and because of the continuous changes takes place in the market and also
analyse the dynamic nature for the company in order to keep the knowledge updated.
Vodafone can work effectively and can perform its activities effectively and efficiently
when they clearly know the market trends and changes which take place in the
environment. Explore various opportunities and mitigating threats: When analyse and determine the
various factors of market now it is important for the company to know about the various
opportunities which is suitable for the company (Ahmed, 2016). Moreover, it also
important for the company to mitigate the impacts of threats which are exist in the
external environment. For this, Vodafone provide its services in many other countries in
order to raise the need for the company which help in the audit in its internal and external
environment.
 Assess feasibility of business: This element explains the need and importance of an
organisation to audit the internal and external environment in order to conduct its
operations (Amankwah-Amoah and Wang, 2019). For this, Vodafone need to check its
feasibility in its operations and economies. For example, if Vodafone is planning to start
its operations in rural areas in order to spread awareness among people as they do not
know about the access of mobile phones and its usage. This idea will work as an
opportunity for Vodafone in order to serve its segment but it can also put negative impact
on it.

PESTLE Analysis of Vodafone
This framework is used in order to analyse the external factors and elements which
influences the company and provide information about the those elements which influences it.
This analysis include six components which is enables by the organisation in order to gain
overall image of the market conditions about the economy (Smith, El-Anis and Farrands, 2017).
This framework is used by the Vodafone and various factors are mentioned as under: Political: This factor states the intervention of the government on the economy and
include the policies of the government, political stability and also oversees the whole
economy, laws and regulations which is made by the government for effective and
smooth functioning of the business (Schaltegger and Burritt, 2017)(. These factors put
great impact on the working style and operations running on the organisation. Currently,
political stability and state peace impacts Vodafone directly. Moreover, the conflicts
arose in the Europe put great influence on the working conditions of company and
operations as a whole. Economical: This factor put direct impact on the working conditions and methods which
are adopted by the organisation in order to earn profitability. It include economic growth,
interest rates, exchange, inflation and buying power of people and other related factors.
These elements will influence the demand and supply of the economy. By considering the
various ways it is determined that the people spend their money without analysing that
what is their purchasing power and how they manage it in their lives (VODAFONE
PESTLE AND SWOT ANALYSIS, 2019). The global risk in the world put great impact on
Vodafone and the main reason behind the profits and productivity is the Brexit. Social: This factor is divided on the various factors which is classified on the basis of
demographic, behaviour, lifestyle, attitude of people and many more. Some of the social
factor which put great impact on the company by considering the age, growth of the
population, preferences of public which is in their mind. The various components of
social factor put direct impact on the business and its economy. This factor is dynamic in
terms of Vodafone in order to make plans and policies of the culture in put great impact
on the operations of the company (VODAFONE PESTLE AND SWOT ANALYSIS, 2019).
Vodafone is a UK based company and it make changes in the policies and procedure by
considering the social factors in which they operate.

 Technological: This factor refers to the new technologies which are adopted by the
market as the fast changes are takes place in the environment. These factors impact the
various ways in which company promote its products for the general public. These
elements influences on the marketing and the management methods which can be
differentiate on the basis of producing, distributing goods with the new methods in order
to target the market. The strength of Vodafone is that they provide innovative products
and services (VODAFONE PESTLE AND SWOT ANALYSIS, 2019). Hence, it is
important for the organisation to analyse the factors and keep updated about the
knowledge. Legal: These factors put emphasis on the health and safety, consumer rights, laws and
safety of products and many more. There are many specific laws and regulations in the
economy which are present in order to keep the quality high and ensure the safety of
product. If these laws and regulations are not followed by the organisation, they can face
huge amount of penalties and various charges from government. For this, it is important
for the company to keep update about the laws and regulations which can impact the
economy (VODAFONE PESTLE AND SWOT ANALYSIS, 2019). Vodafone need to show
great importance for their marketers in order to know about the legal laws and also make
policies accordingly. Therefore, legal factors have affected Vodafone in a negative
manner and pay penalties because of this.
 Environmental: This factor describe the many environmental elements as it impacts the
company because of the fast reduction in the raw materials available in order to exploit
the natural resources by the organisation. For this, companies need to regulate their
business functions by considering the various ethical practices in an organisation. The
demand of customers and preferences are changes very rapidly as they are in the favour
of environment which are made by the sustainable resources and considering the ethical
meaning. In the context of Vodafone, its aim is to provide valuable services and serve
betterment for the society. As Vodafone is more responsible in the social terms in order
to perform its CSR and pay back in small amount what they take from the world.
SWOT Analysis of Vodafone
It is a framework or technique which is used in order to analyse the internal factors and
also evaluate the competitive position in the market in order to develop strategic planning. Here

two elements are considered and influences the organisation in order to understand the strong
point which helps in mitigating the impacts of threats (Prowle and Lucas, 2016). These elements
are discussed as under:
Strengths Weaknesses
 Operations and revenues are the biggest
strength of Vodafone. As company has
its operations around in 25 countries
which can bring huge amount of sales
and revenues for it.
 Moreover, the marketing techniques
which is used by the company is
excellent and can easily attract more
and more customers. As company is
using Pug and zoo-zoo's in their
advertisements which can become
centre of attraction for the customers
(VODAFONE PESTLE AND SWOT
ANALYSIS, 2019).
 As the subscribers are going down
which can become weakness for the
company and it is the major issue
which is currently facing by the
company. In order to overcome this,
Vodafone has to strengthen its plans,
policies and strategies in order to attract
more and more customers.
 Another weakness which is faced by
the company is because of the Brexit.
As the performance of Vodafone in
European Union is becoming poor
continuously because of the Brexit and
its negative impact on the company.
Opportunities Threats
 Best opportunity of the Vodafone is the
rural market as there company can
make sales of their mobile phones
because they offer lowest and
affordable prices.
 Another one is company can improve
its network coverage and use
diversification strategy in order to
launch its products and services in the
market.
 The basic threat which is faced by each
and every company is the competition
and it is same in the case of Vodafone.
As the competition in the market is
increasing on a continuous basis and
for this companies are making
innovative strategies in order to launch
its products (VODAFONE PESTLE
AND SWOT ANALYSIS, 2019).
 The biggest threat for the company is
the MNP, which is depends on their

customers as when the competitors of
Vodafone launch new product or better
services and this become threat for the
company (VODAFONE PESTLE AND
SWOT ANALYSIS, 2019).
Porter's Five Force Model of Vodafone
This model is used in order to analyse the five competitive forces which are included in
the both internal and external environment and also helps in provide shape to the company. This
model is used in order to utilise its applications in all the segments of the economy in order to
gain knowledge the competitive forces in the industry. This model has five components which
are discussed as under: Threat from New Entrants: This factor depicts the new entry and the competitors who
are coming in the market in order to show their abilities and skills and put influence on
the organisation (Vij and Bedi, 2016). This factor is influenced by the hurdles and the
restrictions which arise for the new entries. In the context of Vodafone, the threat factor
is high as the market is increasing rapidly and capital is available in the market which can
increase the threat and its implications of threat on Vodafone. Threat of Substitute: It is the another element which can impact the position of the
company as the number of substitutes are present in the market. Substitutes are those
goods and services which is used by the customers in order to fulfil their needs and
requirements and they have great impact on the business and its market share (Grant,
2016). In the context of Vodafone, it is not a threat as it is analysed that the company use
cost leadership strategy which makes it difficult in order to produce the substitute
products at low price. Bargaining Power of Suppliers: This factor depicts the powers of the suppliers in the
market and how easily they can drive up the cost of inputs. This factors depends on the
number of suppliers which are present in the market as the suppliers of the Vodafone
hold enough power for its inputs. The suppliers of the Vodafone has moderate power
because of its cost leadership strategy by which they can easily manage and earn profits.

 Bargaining Power of Buyers: This force describes the bargaining power of buyers and
the ability of the customers is described over the company. This power is concerned with
the price and products of the company and the capability of the buyer in order to take
prices according to them. This factor is influenced by the concentration power of
customers and how efficiently they can bargain with the seller.
 Threat from Rivalry: This factor describes the threats which occurs form the rival firm or
form the competitors which is present in the market and also depicts the power over the
company (De Vita and Case, 2016). As the larger the number of competitors the lesser
the power company holds in the market. As in the context of Vodafone, they have high
power over their competitors because of their cost leadership strategy and due to this
factor, the competitors of the company face hard time in order to compete with it.
CONCLUSION
From the above information it is concluded that contemporary business environment
describes the current business conditions which changes frequently as the changes takes place in
the social trends and behaviour of people and ultimately increases the overall competition in the
market. A thoroughly study is conducted in order to determine the importance of the internal and
external forces of the business functions and how they impact of an organisation. Apart form
this, it is also describe that the need of audit in the micro and macro business environment. Its
factors like increase in the competition, launch of new product and many more which put great
influence in order to explore the market conditions and also make plans accordingly. Moreover,
it also helps the organisations to get aware about the various threats and weaknesses in the
market.
For this, company also use the various factors which helps the company to conduct the
internal and external analysis in order determine various factors which affects them in their
business operations in order to earn more profit. In this context, PESTLE analysis is conducted
which helps the company to study about the various factors which can become beneficial for
company and SWOT analysis is conducted in order to know the strengths and weaknesses which
are concerned with the company in order to learn about the opportunities and threats which helps
in exploring the market in order to earn more profit. Another model is used which helps in
analysing both the internal and external factors which is Porter's five force model which is used
in order to analyse the new emerging business and existing competitors for the company.

Moreover, it also helps the company to know its market position by knowing its authority over
cost of the offerings.