Vodafone's Strategic Analysis: PESTLE, VRIO, Porter's Five Forces

This report provides a comprehensive analysis of Vodafone's business strategy, examining both its external and internal environments. The report begins with a PESTLE analysis to assess the political, economic, social, technological, legal, and environmental factors affecting Vodafone. It then applies Ansoff's growth vector matrix to explore market penetration, product development, market development, and diversification strategies. The analysis continues with an examination of Vodafone's strategic capabilities using the VRIO model, identifying valuable, rare, and costly-to-imitate resources. Porter's five forces model is employed to evaluate the competitive landscape. Finally, Bowman's strategy clock is used to determine Vodafone's strategic direction, considering various options for competitive positioning. The report concludes with a summary of findings and recommendations for Vodafone's future strategic development.

Business Strategy

Table of Contents
INTRODUCTION...........................................................................................................................4
TASK 1............................................................................................................................................4
1.1 PESTLE model for environmental analysis.....................................................................4
1.2 Applying Ansoff's growth vector matrix for Vodafone...................................................6
TASK 2............................................................................................................................................8
2.1 strategic capabilities........................................................................................................8
2.2 Applying VRIO model for Vodafone...............................................................................8
2.3 Identifying Vodafone's Strength and weakness..............................................................10
TASK 3..........................................................................................................................................11
3.1 Applying Porter's five force model for Vodafone.........................................................11
TASK 4..........................................................................................................................................13
4.1 Applying Bowman's Strategy clock model for Vodafone.............................................13
CONCLUSION..............................................................................................................................16
REFERENCES..............................................................................................................................17

Illustration Index
Illustration 1: PESTLE Analysis......................................................................................................5
Illustration 2: Ansoff's growth vector matrix..................................................................................7
Illustration 3: Porter's five force model........................................................................................12
Illustration 4: Bowman's strategy clock.........................................................................................14

INTRODUCTION
Business strategy plays an important role in the every business environment. The report
focus on various macro as well as micro factors that affect the external and internal environment
of a business. It deal with Vodafone which is the second largest leading mobile company in
telecommunication sector and faces tough competition in market. The report present how macro
factor affect the external environment of a company by applying PESTLE model and Ansoff's
growth vector matrix model in order to analyze the company's strategic position. The report also
help to understand the meaning of strategic capabilities and by applying VRIO model, help to
determine the strategic capabilities which are possessed by Vodafone. It also help to identify the
company's strength as well as weakness. The report also present porter's five force of model
which help to identify the competitive advantages in market and in order to identify strategic
direction, the report describe Bowman's strategy clock model with different options available for
Vodafone.
TASK 1
1.1 PESTLE model for environmental analysis
Vodafone is consider the second largest telecommunication company in UK and has
more than 17 million subscriber. Being a global company in the world, there are some external
factors that need to consider in order to evaluate the success of a company. Using PESTLE
analysis, all the external factors can be evaluated which are mention below:

Political factors: It is the most affecting factor for Vodafone and the company's
environment is influenced by the political factors. It is independent on the political scenario in
UK. The government of United Kingdom make new regulations related to mobile phone
companies which highly affected the sales power of a company and as a result the company's
profitability are affected (Pestle analysis of Vodafone, 2018). On the other side, to build up an
infrastructure, it needs various network but it requires government's permission that takes lot of
time and as a result the income of a Vodafone is affected. The recent conflict in Europe have
highly affect the profitability of Vodafone and this proves that country's political instability
affect the business external environment.
Economic Factors:It is also the most important factor that affect the business financial
status. If the GDP of a country is good then it means that people has more income and it will
directly affect to adapting latest technologies. In this way, Vodafone's overall financial
profitability affected which leads a result to expand its existing business in the market. The
overall economic crisis of a country will directly create an adverse impact on telecommunication
sectors and even in sometimes, the global uncertainty force company to changes its strategies in
order to gain profit (Castellani and et.al., 2018). On the other side in UK, the recession decreases
the amount of money which leads to a result for customers not to spend according to their will
and it affect the overall profitability of Vodafone.
Illustration 1: PESTLE Analysis
Source: PESTLE Analysis, 2018

Social Factors: this factors impact directly to its environment. In UK, people adopt
different life style and there is a need to have a mobile phone. People are now prefer I- phones
and it is consider the best seller in the UK's market. On the other side, mobile phones are mostly
used by youngsters and the people who are aging are less preferred to use the phones which
impact the sales power of Vodafone. That is why the company must show flexibility in their
policies to accept the sudden change in local culture. In the context of Vodafone, it accept all the
changes as per the local factor where the company is being operated (Maniora, 2018).
Technological Factors: Vodafone is known for its innovation and its mission is to follow
all the technological changes and implement those into their business area. It also offer tailored
price plans to their customers to increase its customer base. The company easily cope up with
new technology in order to face tough competition and it also help to increase more number of
customers through this. Even the product which are offered by Vodafone are related to advance
technologies and in near future it also launches its forthcoming devices in order to increase its
customers base.
Legal Factors: the company has many rivals and it is suffered from many legal issues
such as copying and another pirated issues. UK blamed many times related to legal issues related
to the infrastructure and as a result Vodafone pay penalties. Beside it, the company did not pay to
its employees which means that the company did not follow employment law (Bengtsson and
Stein, 2018). It is necessary to follow all the rules and regulations of government such as
discrimination law, employment law in order to maintain its good customer base and sustain
brand image in market.
Environmental Factors: as the rise of globalization, people become more concern related
to environment. The customers always expect from their brand to become responsible related to
environment as well as society too. The company must follow sustainability law in order to
reduce the environment issues. Recently, Vodafone organize a recycling program in order to help
environment and recycle the material which are used in the handset. The company should follow
all the rules and regulations related to environment so that it will help to enhance the base of
their customers (Cagnin, 2018).
1.2 Applying Ansoff's growth vector matrix for Vodafone
Ansoff's growth vector matrix is used to determine the best strategy for sales and this
strategy help to identify what is best for a company in order to achieve the success. In the context

of Vodafone, Ansoff's growth vector matrix is also apply in order to know its best product and
plans for their existing customers by using four options which are mention below:
Market Penetration: it is the first quadrant of Ansoff's which Vodafone can be used in
order to sell its products or services to existing customer in current market. It is one of the most
simple growth strategy that help to find new ways to increase Vodafone's customer's loyalty in
order to grow its user's values (Ansoff's growth vector matrix for Vodafone, 2018). Using this
strategy, Vodafone can improve its process of serving which make also make easier for its
customers and help to extend the business for long term.
For example: enhancing customer care and providing online services to their customers will also
help to create good customer relationship for a longer time.
Product development: it is the second quadrant of Ansoff's growth vector matrix which
can be used by Vodafone. Under this strategy, Vodafone can develop new product or services
and sell those into existing market or customers. For example: by introducing 4G services and its
smart connection can help to enhance its customer base. Another new service such as introducing
Illustration 2: Ansoff's growth vector matrix
Source: Ansoff's growth vector matrix, 2018

modern and easy method of payment or introducing new Vodafone TV will also attract wide
number of customers and as a result it will also maximizes its profitability.
Market development: it is the third growth strategy of Ansoff's where Vodafone can
attract new customers with their existing products only. New customers may be from new
country or new geographic region (Olson and et.al., 2018). There are number of market
development strategies which Vodafone should be implement such as introducing Vodafone web
box, Vodafone Money transfer app, new opera mini. These strategies will help to enhance its
customer base in new region. Apart from this, Vodafone also offer mobile voice, SMS and
internet service in low and affordable price as compared to their rivals in India or Africa which
help to create good customer base.
Diversification: it is consider one of the highest risk strategy because this is selling new
products or services into new market. Vodafone can also use this strategy in order to identify its
market chain and easily adapt new geographic market and product. For example: Vodafone can
provide new service such as Machine to Machine facility, Tracking care, billing for 3rd party etc
these new service can help to gain more competitive advantage in completely new market.
Under this strategy, a good market consultant is require in order to take a business in completely
new market for its better growth and development (Peng, 2017).
TASK 2
2.1 strategic capabilities
Strategic capabilities means the ability of a business for their successful employ in order
to increase its value. It also look after about all the plans that a business uses in order to achieve
all the targets and defined goals. Strategic capabilities also focus on a firm's assets, resources
and market position that help to fulfill all the needs of a company. Employees of a company also
care about organization's strategic capability because it help to identify the stability of business
and the need to cost cutting as per the demand of their customers (VRIO Model, 2018). To
measure the strategic capabilities there are variety of methods available in order to identify
organization's reality.
2.2 Applying VRIO model for Vodafone
VRIO model is helpful to that help to to evaluate company's resources as well as
competitive advantages. VRIO model help to analyses the company's internal environment and
as per the model, resources must be valuable, rare, imitability and organization. In the context of

Vodafone's VRIO model is used to identify factors affecting internally and this are mention
below:
Valuable: It is the first part of VRIO framework which deals with whether the company
has values that help to exploit opportunities as well as threats and Vodafone has then the
resources are consider the most valuable item among all. In the context of Vodafone, it uses
human capital management who help to hire a skilled employees so that they help to produce
innovative products and services and this is possible with having skilled and managed staff. For
high brand company such as Vodafone, the resources are HR, managers and its employees
(Leonidou, Kyrgidou and Palihawadana, 2017). These resources are most valuable if they help
an organization to achieve all the targets and increases its customer value and this can be done
only when it adapt differentiation pricing strategy. It is necessary to continue review all the
resources because if there is minor changes in its internal condition then it make them useless
which leads to affect company's profitability.
Rare: under this strategy, resources that are used by only one or two companies that are
consider rare are consider to have great competition while on the other side, when the companies
have same resources and that are used in similar way that leads facing less competition in the
market. This is so because all the firms use the same resources to implement almost similar
strategies which leads that no competition in a market and no superior performance. In the
context of Vodafone, it uses best pricing strategy which no other company follows and it makes
it different and rare from others and Vodafone also uses data based management system for
employees which no other company used and that is why it is considered the rare among all
others (Belton, 2017).
Costly to imitate: the resources which are followed are quite costly and Vodafone uses
very expensive resources in order to make it superior among other companies. This strategy is
occur in two ways, by duplicating and by substituting. Vodafone has valuable, rare and costly to
followed and that is the only reason to achieve competitive advantages. There are many reasons
that resources are hard to followed some of them are due to its historical conditions or its social
complexity etc. but in the context of Vodafone, to implement new technologies into the work
area, it is quite difficult to follow and to implement those it needed skilled HR staff who knew
how to implement those into the work area (Scholes, 2015). Even to their existing employees

company has to conduct training sessions so that staff able to operate those new technologies and
can maintain their brand value in a market.
Organization: it is the most important strategy that help to identify company mission as
well vision which help to capture the organizations values. Vodafone has organize its
management system, its policies or process, or its cultural values that describe organizations
potential values. It an organization possess valuable, rare or costly to imitate resources then only
it can achieve competitive advantages. Vodafone is organized to capture values form its own
capabilities. The HR department and IT department of a company has a well skills to collect and
organized the data while HR team hire the employees and train them to improve the performance
level of existing employees. It shows that, Vodafone is basically organized to sustain all the
values by analyzing all the internal factors so that it help to sustain in its position and can achieve
all the targets for a business.
2.3 Identifying Vodafone's Strength and weakness
Strength Weaknesses
 Vodafone is consider one of the second
largest leading telecommunication
sector.
 It has brand image in whole world and
ranked 395th among top brand.
 Vodafone has world wide distribution
and network channel as compared to
others.
 Company has strong financial status
and generates billion of dollar every
year (Leonidou and et.al., 2015).
 Vodafone has strong marketing as
compared to its rivals. It always uses
different promotional methods which
help to attract wide number of
customers. For example, Vodafone's
pug and zoozoo become so popular that
 The subscriber of Vodafone is
dropping year by year and it is consider
one of the biggest problem in the global
market. As a result, it needs to
implement new strategies in order to
enhance its customer base.
 Due to loss in its subscriber base, the
brand value of a company also affected
and as a result Vodafone has to suffer
related to its financial status.
 The company has strong market share
but in USA, it losing all its market
share because of low performance in
that particular market.
 Vodafone perform poor in Europe due
to wars and its rivals pricing strategies.
As per the annual report, it has been

enhance its brand image in market.
 Vodafone is able to get some premium
from their customers while other
operators did not maintain those margin
which Vodafone already sustain at
initial stage.
 Vodafone has strong subscriber base
which reach up to 340 millions of
people where no other company reach.
 It provide its best product and service
such as landline, TV services etc which
makes it different from other.
 Vodafone has strong brand visibility
which shows that its customer base is
high as compared to others.
 Used all the new technologies into their
working environment in order to
increases its customers base. Have
efficient websites that help their user
for online payment, recharges and extra
facility.
 The company offers its services or
products in more than 150 countries
with wide range of customers.
analyses that more than 40 percent
revenue comes from other countries but
not in the UK or USA.
 Being a global brand, the company did
not follow many rules and regulations
which are made by the government due
to which its brand value is affected
(Martinez-Simarro, Devece and Llopis-
Albert, 2015).
TASK 3
3.1 Applying Porter's five force model for Vodafone
Porter five force model is helpful to identify the competitive advantages in market. These
five force model directly impact on the its strategic competition. It consist of five basic level
such as rivalry with existing competitors, threats of new entrant, threats of its substitution,

bargaining power of buyers and bargaining power of suppliers these help to know the
competition of Vodafone faces in market. These models are mention below:
Rivalry with existing competitors: Vodafone face extremely high competition form its
rivals because it offers low call rates as compared to others. On the other side the company also
introduce new innovative products and services to their customers which forces other telecom
companies make fear to loss in its market share and decreases its customers base. Vodafone uses
various different strategies such as by building differentiation pricing strategy and with
cooperation to its rivals it helps to increase market size (Amran and et.al.,2016). Vodafone does
not only compete with small companies in order to enhance its base but it mostly target its same
level companies in order to raise its market base as well as customers base.
Threats of new entrant: Vodafone has low threat of substitution because it is service
oriented company rather than product one which is the biggest advantage for it. Vodafone attract
new customers by their innovative products and services and it also offer low range of plans as
compared to others which help to gain large amount of people and as a result it easily tackle the
threat of new entrant (Higgins, Omer and Phillips, 2015). The threat of new entrant is low in a
Illustration 3: Porter's five force model
Source: Porter's five force model, 2018