Vodafone's Strategic Analysis: PESTLE, VRIO, and Market Analysis

This report provides a comprehensive analysis of Vodafone's business strategy within the UK telecommunications sector. It begins with an introduction to the sector and identifies key issues faced by Vodafone, such as market position and customer satisfaction. The report then delves into the macro environment using the PESTLE model, examining political, social, environmental, technological, legal, and economic factors impacting Vodafone. Ansoff's Matrix is utilized to analyze Vodafone's strategic positioning, particularly its focus on product development. The report further explores Vodafone's internal environment, strategic capabilities, and strengths and weaknesses, utilizing the VRIO model to assess resources. Finally, the report concludes with an analysis of the telecommunication sector and offers strategic direction interpretations, along with recommendations for Vodafone's future strategies.

BUSINESS STRATEGY
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Table of Contents
1. Introduction 3
2. Task 1: Impact and Influence of the macro environment 3
2.1 PESTLE model for analysis 3
2.2 ANSOFF’S Matrix for analysis 7
3. Task 2: Vodafone’s internal environment and capabilities 8
3.1 Strategic capability 8
3.2 VRIO model for determination of strategic capabilities 9
3.3 Strengths and weaknesses 10
4. Task 3: Telecommunication sector analysis 11
5. Task 4: Strategic direction interpretation 14
6. Conclusion 16
Recommendations 17
Reference list 18
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1. Introduction
The telecommunication sector is one of the fastest growing sectors in today’s world. It
tends to occur when there are activities of information exchange through the digital
medium. It is also termed as the lifeblood of society and helped in procuring the world to
under their network coverage in maximum limit. The sector has its roots over every
working sector that is pursuing their activities through the use of digital media. While
the telecommunication sector is equipped with positive aspects there are several factors
that are responsible for its deterioration.
Regarding this context, the following content is in relevance to the chosen organisation
of Vodafone within the province of United Kingdom. There are a few reasons for such
choice. Vodafone being a favourable telecommunication company is facing some of the
issues regarding the capturing of marketing positions along with customer satisfaction
issues. In viewpoint of Curwen and Whalley (2016), further Vodafone is having issues
regarding its data plans that are unacceptable for their customers in some regions.
Further, with the rising concern of competition, Vodafone is having a lower market
outcome in recent years. Hence Vodafone needs some strategic development on virtue
of which they can overcome the issues. Hence it is chosen as the content topic.
2. Task 1: Impact and Influence of the macro environment
2.1 PESTLE model for analysis
PESTLE Analysis Factors Impacts
Politics Through politics, UK is
having environment of
politics. In words of Kelly et
al. (2016), there are
provisions of tax reliefs
The regulations of
Government with context
of Vodafone factored
transparency through
seeking interest in the
protection of consumers.
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towards the investors thus
providing them relaxations.
There are also chances of
change in regulations and
policies that can affect
invest of visitors towards
the telecommunication
company.
The EU has an impact on
Vodafone. The rates of
terminations were lowered
to 14.32 euro cents within
a minute to 1.79 euro cents
per minute. Other factors
regarded the access to
networks through the use
of transmitter bases.
Social The United Kingdom is
effective for its cultural
aspects that feature
traditions and festivals.
The UK is also famous for
attraction of tourist from all
over the globe.
Through the social context,
the terms of disposable
income is subjected to rise
further 7% within further
years. In opinion of
Jakobsen (2016), such
aspects are correlative
towards the use of
communication through
wireless technology with
higher saturations. On
context of rise of
disposable income, the
adjoining demands of
population grew within a
rate, 12.4% on annual
basis.
Environment The united kingdom is
effective for its friendly
environment. As opined by
Eicker and Cilliers (2017),
The implications of
recycling while
manufacturing the products
is also termed as a major
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the collaborative approach
is effective to achieve the
goals along with the
objectives. There are much
stability in the food sector
and is affected by the
transforming conditions in
climate.
and challenge that deal
synthetic matters.
Vodafone subjects to use
the program of recycling
phones by collecting
handsets that are
disposable.
Technology The united kingdom is
subjective to be engaged
in developments through
technology within a
frequent scale. The
advancement in
technology is effective to
provide better profits.
Vodafone has subsequent
contracts with usage of
technology through the
procurement of GSM,
EDGE and GPRS. The
effect is majorly due to
technologies that are
emerging with Vodafone.
As mentioned by Curwen
and Whalley (2016), the
adaptations of 4th
generation network
through newer platforms
are also subjective to affect
the operations.
Legal The legal factors deals with
providing safety to the
incoming investors and
other visiting bodies. Better
enhancement of
productivity is achieved
through the provision of
The regulations that were
considered as bulk were
taken to set prior the
initiations in contrast to the
sales. Taking instance
such as the usage of
phones while engaged in
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better opportunities of
employment. According to
Yeboah-Asiamah et al.
(2016), there are
significant low crime rates
in the united kingdom.
driving activities are
subjected for reduction of
usability as well as
revenue.
Economic The nation of United
Kingdom has its GDP with
greater effectiveness that
can attract other overseas
populations for expanding
their business. There are
also the aspects of being
mixed economy that
affects the production style
and the production
outcome by the investing
companies.
Under the financial crisis
concerning the year 2007-
2008 along with crisis in
subsequent Euros, the
growth in GDP took
decrement even to
negative percentage.
As mentioned by Mizrahi
and Tevet (2014), there
were growths in the
southern parts of Asia from
3.2% towards 12.5% within
2003. Until the further
years, the GDP is factored
to rise to 75.4%. As
mentioned by Mizrahi and
Tevet (2014), the other
factors on economy were
subjective to high business
investment and dedications
towards greater amount of
resources.
Table 1: PESTLE analysis of Vodafone UK
(Source: created by author)
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2.2 ANSOFF’S Matrix for analysis
As per Ansoff’s matrix, the strategic position of Vodafone is the “development of the
new product”. As mentioned by Mizrahi and Tevet (2014), the marketing aspects of
Vodafone mainly aim to retain their leadership in the United Kingdom
telecommunication market. The strategy of Vodafone is led by products; the company is
with the concern of developing new products along with better services. Such
developments are with alignment of utilising the advancements through the usage of
latest technologies. According to Payne and Frow (2014), the strategies are mainly with
subjections of meeting the demands of customers by implementing new services in their
module. The improvements of older products are also added in the list.
Within the context of United Kingdom, the market of mobile telecommunication has
taken approach to the maturity within a very short period of time, especially concerning
the younger age. In order to maintain the position, the telecommunication market of
Vodafone is looking up to add value added services to their plans. As opined by
Raddats et al. (2016), further the company is also planning to implement new attractive
services with value additions that can be provided in the form a package to the
customer in order to meet their growing demand.
Apart from the production and implementation of new products, Vodafone also
implements to undertake some new measures. The new objectives in addition to
product development were obtaining new customers and to develop the brand with new
implementations. In words of Sabillon et al. (2016), the introduction of new technologies
along with services like subscriptive texts and WAP services are the main focus. In
order to achieve the concerned products, Vodafone tends to introduce new ranges of
mobile accessories and enhance their services. In opinion of Špaček and Vacík (2016),
they are focussing to update the new services in accordance to the market needs. The
company also focuses to implement feedback plans in order to gain the knowledge of
user experiences of the new designed products.
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The new products were in the form of DPS, the potential system with differentiation. The
system was subjective to provide encryption within both ends. According to Yeboah-
Asiamah et al. (2016), it is duly designed by the telecommunication company in order to
put the insights of new as well as old customers at the priority of developing product.
The system was planned to prove its effectiveness while ensuring the integrations of
voice records. It was related to procedures of complete business in order to comply with
customer’s voice. As mentioned by Curwen and Whalley (2016), it was subjective to be
integrated through the ways of developing subscription of both the dialler and the
receiver.
3. Task 2: Vodafone’s internal environment and capabilities
3.1 Strategic capability
Strategic capabilities of a business entity refers to the abilities and the compatibilities of
the telecom service providing companies such as Vodafone and other relevant
companies in the market. As per Bendell (2017), the strategic capability pertains the
company and thus allows it to increase or rather enforce its values in due time. It does
not pay attention to the business strategies implemented by the company, but it lays
focus on the assets, obtained resources and the persistent market position of the
chosen company, that is Vodafone. Martin and Tian (2016) states, the strategic
capability of the company cannot be measured or analysed by any method. Moreover,
the strategic capability is necessary for third-party investments in the company. It can
be analysed and evaluated by the strategic value analysis of the company. The data
that is obtained from final reports, surveys conducted and the present market scenario
or position of the company in the UK market is used for analysing the strategic value.
3.2 VRIO model for determination of strategic capabilities
With respect to the telecommunication market of Vodafone in context of VRIO model,
the primary resource available to the company is technology. Being a listed company, it
is equipped with the capability to raise capital by procuring sales with affecting its own
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securities. As opined by Eicker and Cilliers (2017), such a step is effective to secure the
company with easy access towards the funds if there any requirements. On further
context, the company is able to borrow capital within a favourable rate. The company is
furthermore attested by the investment of the firm through the accreditation of longer
terms. It is also favourable for the higher grades with ratings in shorter terms. In opinion
of Jakobsen (2016), on further concern, Vodafone has cash and its equivalence that are
considered to be higher than annual GBP. With the disposal of stakes at a rate of 45%,
the telecommunication company was subjected to procure increment. The increment
was more the amount than GBP and followed repaying of debts within GBP with 9.8bn.
The aspects were followed by repurchasing of shares which were considered larger
than the GBP of 1bn within the same time. In words of Kelly et al. (2016), on further
context, the Vodafone company group was successful in achieving the profits with the
following years that raised the GBP with 7bn under higher losses of impairments. Such
activities are demonstrative towards presence of strong resources consulting finance of
Vodafone. Such resources are useful towards the procurement of advantages with
opportunities. The advantages can be of investments within R&D or to improve the
services towards the concerned customers along with the investments within the better
networks. As mentioned by Mizrahi and Tevet (2014), the rarity of resources is a
negligible aspect with the approach to Vodafone being the largest and multinational
competitive with the presence of substantial capital. The firm is equipped with the
advantages over competition through the aspect of operators of network on a national
basis. According to Payne and Frow (2014), such factor ensures that the resources are
valuable along within a certain limitation producing the advantages of competition
through small scale competitors.
Figure 1: VRIO model
(Source: created by Author)
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3.3 Strengths and weaknesses
Strength
There are various aspects related to Vodafone that are in relevance to available
strengths of the company. Vodafone has total majority of dominance over the cellular
market along with wider presence of geographical aspects. According to Payne and
Frow (2014), the expansion of company has its footprints over 80 countries. The
company has also acquisitions pertaining to 5.6% stake from Airtel while having the
percentage raised to 67 in case of Essar. Within the United Kingdom, Vodafone is
having collaboration with major mobile networks like Airtel or Docomo, which are the
reason for high output and their high productivity. As opined by Raddats et al. (2016),
on further context, Vodafone has stronger infrastructures of network and is considered
to be one of the global network providers with immense supply of connectivity. Apart
from the United Kingdom, Vodafone has its roots spreads over the middle Asian
provinces. In words of Sabillon et al. (2016), through such positive aspects, Vodafone
has procured the market dominance by the procurement of attractive offers and non
disruptive connectivity.
Weakness
There are various weaknesses available for the telecommunication market of Vodafone.
There are present aspects regarding development and research in lower levels. In
opinion of Špaček and Vacík (2016), the researchers are not adequate and are
subjective to provide fewer outcomes through quantitative or qualitative analysis. There
is also presence of ROA that is the return of assets value in negative scale for the
Vodafone Company. Such factors are responsible of lower under performances within
the present key competitors. On further context, Vodafone fails to provide network
coverage within the rural segments. According to Yeboah-Asiamah et al. (2016), there
is no availability of Vodafone assets in rural segments that affects its productivity. Being
in second position within the industry of telecommunications, the company was able to
establish in the form o premium brand after Hutch. On such context, the company faced
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aspects of market in competition. As stated by Lee (2016), it was very difficult for the
company to implement charges at the rates considered premium for the customers.
4. Task 3: Telecommunication sector analysis
a) Bargaining power of buyers: A telecommunication company in the UK can make
a strategic decision based on the several kinds of buyers and the characters of
the different kind of buyers. The telecom users in the UK are given the utmost
priority and as a result, the customers enjoy the bargaining power in the market.
Due to the presence of a strong and competitive range of customers in the
market, the telecom service providers in the country are facing a high rate of
competition among themselves. As opined by Frederiksen (2014), due to the
high bargaining power of buyers in the UK market, telecom companies such as
Vodafone also face price wars among themselves. This, in turn, forces the
telecom service providing companies including Vodafone to lower the prices of
the service and primarily focus on the business of customer pulling.
The Bargaining power of buyers is relatively high also due to the extensive range
of users and the potential revenue it provides to the telecom companies. As
Greiman (2015) states that the competition in the market only results to the
benefit of the buyers and thus bringing the bargaining power to high. Telecom
companies such as Vodafone can lower the bargaining power of the buyers and
increase their profit margin by implementing the fifth generation mobile network
service and charge appropriately as per the service.
Figure 2: PORTER’S five forces model
(Source: created by author)
b) Bargaining power of suppliers: The bargaining power of suppliers for the telecom
industry is relatively moderate due to the presence of a large number of
suppliers. As per Kańciak (2016), suppliers refer to the companies which deal
with the primary service provider to the telecom service providing companies in
the UK. These companies help the primary telecom companies such as
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Vodafone in setting up mobile network infrastructure throughout the country. As
opined by Frederiksen (2014), these companies also assist the telecom
companies by providing required manpower and technical infrastructure
whenever required.
However, the bargaining power of the suppliers being moderate adds a benefit to
the telecom companies in the UK. Vodafone too faces much lower disadvantage
due to the presence of a large number of suppliers. According to McNaughton
(2018), the bargaining power of the suppliers can be even lower if Vodafone and
other telecom companies start investing and creating their own range of supply
branches. Extra costs incurred due to the suppliers shall also gradually decrease
and bring in more profit for the company.
c) Threats of new entrants: The threats of new entrants are low among the telecom
service providing companies in the UK. Vodafone has a relatively low risk of the
new entrants into the prevailing mobile network. The prime reasons for the low
threat of new entrants are due to the high cost of establishment in the country.
According to Omenugha (2015), a huge capital is required in order to set up a
telecom network service providing company in the UK, and so it is not possible
for many to go for the step. Further, the current status of the already present
companies is also at the peak level of sale. Due to which a new company shall
have to delve into customer destruction of the rival companies in the market. The
loyalty of the present customers has also decreased the threat level for the new
entrants in the market. According to Yeboah-Asiamah et al. (2016), in order to
maintain the same and similar genre of marketing and also prevailing in the
market, Vodafone and other relevant companies must focus on better service to
the customers and maintain the loyalty they already possess for the company.
d) Threats of substitutes: The threats of substitutes refer to the existing similar
products or similar services in the same market. The threat of substitute is very
high in the UK market for Vodafone and even other relevant network service
providing companies. The threats of substitutes are relatively very high due to the
presence of many relevant companies who also are on the same platform. As
opined by Sutherland (2014), the rise in these threats gives rise to utter
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