Business Strategy of Vodafone UK: PESTLE, VRIO, and Growth Matrix

This report provides a detailed analysis of Vodafone UK's business strategy, focusing on the significance of the business environment for successful development. It employs the PESTLE model to assess macro-environmental factors such as political, economic, socio-cultural, technological, legal, and environmental influences, particularly in the context of Brexit and technological advancements. The Ansoff Growth Matrix is used to analyze Vodafone's strategic positioning, including product development, market penetration, and diversification. The report also explains strategic capability and applies the VRIO/VRIN model to determine Vodafone's strategic capabilities, evaluating resources and competencies to identify competitive advantages. The analysis covers tangible and intangible resources, core competencies, and sustainable practices, offering insights into how Vodafone can enhance its market share and customer base in the competitive UK telecom market. Desklib offers a variety of solved assignments and past papers to aid students in their studies.

BUSINESS STRATEGY
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Table of Contents
Introduction........................................................................................................................3
Task 1................................................................................................................................4
Task 2..............................................................................................................................10
Task 3..............................................................................................................................15
Task 4..............................................................................................................................17
Conclusion.......................................................................................................................21
Reference List..................................................................................................................22
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Introduction
Technological advancements are becoming a basic necessity for the growth and
development of business organizations. Technologies are modifying and improving so
that they are able to assist the business firms in improvising their services. Telecom
industry is one of the fastest developing sectors of United Kingdom that utilized the
most advanced and latest technology to serve their customers with excellent and
satisfactory services. This industry is expected to grow and reach to a value of around
45 billion Euros by the year 2017. Vodafone UK is one of the most popular telecom
operators of United Kingdom. They serve their customers with a number of services
including internet, messaging, calling and more. This assignment will provide details
about the significance of business environment in development of successful business
strategy. Porter’s Five Force analysis and VRIO model analysis will help the
management of the company in gaining vital information about their current position in
the business market. This information will serve in developing the most appropriate
strategy for Vodafone that will help them in increasing their business.
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Task 1
i. PESTLE model for environmental analysis
Vodafone in UK has contributed in shaping the wireless industry of the country.
Vodafone currently is on the verge of enhancing network and expanding the company
globally (Klauer, 2015). In Europe, the company is trying to reduce the cost of
production. Vodafone is also aiming to retain the customer base, as there is an increase
in the demands of the customers.
PESTLE model helps the company to assess the external business environment
influencing the business. The macro environmental factors are to be taken into
consideration to improve the position of the company.
Political  Post Brexit, both the customers and
the companies in UK has been largely
impacted leading to a political crisis
(Dhingra et al., 2016). Customers
have faced a negative impact in their
confidence and the purchasing factor
has declined among the customers
 The telecom industry has adapted the
digital strategy agenda proposed by
the UK government. The government
has taken many initiatives to improve
the standards of the telecom
communication industry through the
collaboration. In UK, Vodafone has
taken a shift from GSM cards to
wireless communications, increasing
the productivity of the company
contributing to the GDP of the country
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 The UK government has spend 25
million euro to develop 5G projects
has benefited the telecom industry
and created opportunities for
companies like Vodafone.
Economic  The economy of the country is largely
dependent on the profit of the
companies operating in the
demographics. Having high standards
of income will enhance the
opportunities for the company to
initiate more sales among the public.
However, this was not the scenario
with UK. Post recession, the
customers were less interested to buy
services as the cost of living was high
in UK. Inflation and recession of 2008
adversely affected the companies in
UK. Vodafone suffered a loss by
losing its potential employees and
customers.
 In the year 2017, the disposable
household income in UK in 27, 3000.
Stable income allows the consumers
to spend more on their requirements
of communication.
Socio-Cultural  With the emergence of globalization, it
has been observed that the
customers’ demands variety in the
products. To avoid the customers
from being bored of the services and
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decrease their purchasing interest,
Vodafone has created wireless
communication and latest features in
the mobile. Targeted customers have
been attracted with the strategy of
incorporating latest technology in the
products.
 Consumers belonging to different
cultures and behaviour influence the
pricing policy and service types.
Vodafone has targeted the teenagers
as its customer segment. Since they
do not have earning source, they
cannot afford high prices in products.
Vodafone to retain he customer
segment should adapt pocket friendly
products.
Technological  With technological advancement,
competition has increased among the
companies. Rival companies of
Vodafone are using advanced tool to
capture their position in the market.
 Vodafone as one of the leading
telecommunication company, it is
largely dependent on the
technological advancement.
 Telecommunication companies are in
itself gift of technology. Vodafone has
adapted technological advancement
by introducing wireless
communication and latest features.
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Legal  UK government has incorporated
many laws for companies operating
in the demographics of UK to protect
the environment. The companies
have to abide by the laws in order to
maintain the position in UK.
Vodafone followed UK
Communication Act 2003 in the
market of UK. Certain employment
regulations are implemented to
defend the rights of the employees.
The Employee Act 2010 has helped
the employees from any kind of
discrimination or issues in the
company
Environment  Vodafone has invested in many CSR
programs to reduce having an
adverse impact on society and
company overall.
 Customers are now aware of the
increasing pollution and degradation
of environment. Telecom
organization must adapt eco friendly
measures to operate in UK and
attract customers towards their
company
Figure 1: PESTLE analysis of UK
(Source: Created by learner)
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ii. Ansoff’s growth vector matrix to analyse the organisation’s strategic
positioning
Product Development: According to this quadrant of the matrix, innovation and
technological advancement is implemented in the products to retain existing customers
and attract new customers. Launching new products in the markets will help the
business to expand. Vodafone has adapted this strategy of the matrix by shifting its
focus from GSM to wireless communication. As the company already has an existence
in the market, the company faces less risk and increases the purchasing factor of the
customers. Vodafone has been able to meet the customers’ demands largely.
Market Development: This stage of the matrix indicates launching existing products in
new markets by having different customer segments (Darroch, 2014).
Market Penetration: This stage includes the introduction of the existing products in the
existing markets which increases the market share (GURCAYLILAR-YENIDOGAN et
al., 2018). The market share can increase by selling the products to new customers or
established customers keeping in line with the market segmentation. Vodafone can use
this quadrant to sell the products in the existing markets with its existing products to
increase the market share. This strategy is less risk associated and cost effective,
thereby giving profit to the Company. Vodafone can approach to the users who are not
regular users increasing the brand loyalty.
Diversification: According to this quadrant, the companies focus in launching new
products in new markets having high risk factors associated to it. Diversification can
take place if the business sees new opportunities and funds available for implementing
the opportunity in the business.
Vodafone can use Product development matrix and Market penetration to enhance
the market share and retain the customer base along with attracting new customers in
the UK market. Product development has been able to meet the demands of the
customers largely as their demands of having variety and innovation have been fulfilled.
Vodafone applied latest features in the mobile by developing new apps to benefit the
customers and increase the customer-buying factor. Market penetration will help the
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company to be cost effective and reduces the chances of facing risk in the market and
deal with the increased competition.
:
Figure 2: Ansoff’s Growth Matrix in Vodafone
(Source: Created by learner)
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MarketPenetrationProductDeveopmentDiversificationMarketDevelopment

Task 2
i. Explain what strategic capability means
Strategic capability is a term used in order to refer to a business organization that
successfully employs competitive strategies that helps the firm to sustain in the
competitive environment and assist to increase its value over time (Vesalainen and
Hakala, 2014). Strategic capabilities deal with the different strategies that are used by a
business organization. However, this strategy focuses on the organization’s market
position, resources and other significant assets that help in understanding how well the
organization can make use of certain strategies for their growth and development.
Efficient strategic formulations are essential in order to utilize all the vital resources in
the most appropriate manner. The effective use of resources will allow the company to
earn increased revenue and enhance their market share. Strategic capability is
considered as one of the major component that helps the company to remain financially
viable and grow in its operating market despite the presence of intense competition.
The management of Vodafone has implemented a number of strategies and policies
that assist their organization in utilizing the available resources in the mist appropriate
manner. The business organization makes use of their in-store supports and has
recruited well skilled and qualified sales staffs for their organization so that they are able
to deliver their customers with efficient services. The company provides training to their
staffs so that they are able to use their strengths in order to increase the productivity
and business of their company. Thus, it is evident that the strategic capabilities plays
significant role in enhancing the customer base and business of the organization.
Some of the basic components of strategic capabilities are
 Effective cost management
 Foundations
 Sustainability
 Organizational knowledge
 Strategic analysis and development
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The strategic competencies of Vodafone depend on a number of factors such as
resources, core competences and dynamic capabilities of the organization (Thoenig and
Paradeise, 2016). The competency of the organization is completely dependent on the
ways the management makes use of their work force and the internal resources for the
betterment of their business activities.
ii. Apply the ‘VRIO/VRIN’ model to determine the strategic capabilities possessed
by your chosen organisation
VRIO model is an initialism that is used for the four-question framework to gain
knowledge about the resources and capabilities of the company in order to determine its
competitive potentials (Min et al., 2016). This model was developed by Jay B. Barney in
order to evaluate about the resources such as financial resources, material resources,
human resources and non-material resources of the firm. The four dimension of the
model are- Value, rareness, imitability, and organization. The VRIO model can be used
in order to understand the strategic capabilities possessed by the Vodafone
organization. The various resources as well as capabilities of the organization have
been discussed with the help of VRIO framework.
Resources Competencies
Threshold capabilities Entrance resources
Tangible
 The supply chain
network of the
company: absolute
fibre core network
Intangible
 Data base
information
Entrance competencies
 Tactics that are
used in order to
ensure sustainable
practices
 Efficiently managing
the supply chain of
the firm
 Qualified and skill
workforce
Capabilities helpful for Tangible Core competences
 Use of recycling
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competitive analysis Exclusive resources
 Provide products
and services as per
the market demand
and current trends
 Financial resource
 Reprocessing the
devices
Intangible Resources
 Sustainable
practices of the firm
 trained and
Effective sales
force
methods so that
sustainable
practices of the
company are
maintained.
 Managing the
supply chain in an
effortless manner
 Trained sales force
that utilizes latest
advancements to
serve their
customers with
satisfactory
products and
services.
Table 1: Strategic Capabilities and Competitive Advantage
(Source: Created by the learner)
Birger Wernerfelt developed the resource based view (RBV) model in the year 1984
(Gupta et al., 2018). According to this model the competitive advantages of a company
is dependent on their ability to utilize the intangible as well as tangible resources in an
efficient manner. The VRIO framework was developed on the principles of the RVB
model. In order to understand the value of intangible and tangible resources a number
of firms make use of this model. The VRIO model has been used in order to illustrate
about the competitive advantages of the tangible and intangible resources of Vodafone
organization.
Competitive
Implications
Valuable Rarity Imitablility Organization
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Network
infrastructure
Yes No No Yes
Diversified
Revenue base
Yes Yes No Yes
Leading market
position
Yes Yes Yes Yes
Table 2: VRIO framework for Vodafone
(Source: Created by the learner)
Vodafone has a very strong network infrastructure that helps in improving the efficiency
of its operations. As the company deals in mobile network, it is important to possess a
strong network infrastructure. This infrastructure plays a significant role in assisting the
company to provide their customers with high quality services. This important resource
is not rare in the telecommunication industry of UK, there for it is not so costly, and the
competitors can easily imitate it. Many of the leading telecommunication operators have
similar technologies that are used by Vodafone. Vodafone is well organized and
equipped to exploit the competitive potential of their network infrastructure by providing
their staffs with a safe working environment along with attractive performance based
incentives. This resource is one of the significant strength of Vodafone and helps the
firm in gaining competitive edge. Vodafone acquired valuable stakes in various
companies and partner networks. This strategy allowed the company to expand
strategically across many nations.
Vodafone’s’ partner networks arrangements are available in around 38 countries and it
has equity in 25 countries (Vodafone.al, 2018). Vodafone is one of the lading mobile
telecommunication of the world; they are available in Europe, Asia Pacific, Africa,
Middle East, and the US. Vodafone possess strong market share and the company is
improving its services to increase the brand image that will be helpful for the company
to enter new market potentials.
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iii. Identify the organisation’s strengths and weaknesses
Strengths: Vodafone has a very popular rand value in UK due to the quality of their
services, thus, they are able to attract potential customers. The management of the
company advertises about their services in the most creative and attractive manner.
They use number of platforms such as social media, television, newspaper and more to
promote their services. Marketing helps in creating awareness about the services and
contributes towards the brand image of the organization. Vodafone has a strong
distribution network system that assists the firm to reach out to its target consumers.
Another significant strength of the company is that it has a very strong global presence
that contributes towards increase its business.
Weaknesses: Dropping consumer subscription is one of the concerns of Vodafone; due
to fall in mobile users in UK, the sale of the company fell by 3.2% (Withers, 2018). The
services of the company are high price due to which they are losing many customers
that to brands that provide dissimilar services at a lower price range. The company is
also facing the issue of high employee turnover due to which the productivity of the firm
is reduced. The organization is investing heavily in providing efficient training to their
employees those results in lowering the profit revenue.
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Task 3
The strategic position of Vodafone in the UK market can be analyzed with the help of
Porters Five Force model. The analysis will provide the management with information
that can help them in developing strategic plans for their organization (E. Dobbs, 2014).
The factors of the model concerning Vodafone have been discussed below:
a. Bargaining power of buyers – High
As the technological advancements are developing and modifying, the competition in
the telecom business of UK is increasing at a rapid rate. Most of the leading telecom
operators provide their customers with similar kind of services and the price range are
also more or less same (Sutherland, 2014). Due to increasing competition, the
consumers gain an opportunity of exploring the market before investing in a particular
provider. The organizations that offer customers with quality services, discounts or other
benefits are able to grab the attention of the consumers. Thus, the bargaining powers of
the buyers of Vodafone are comparatively higher than other industry.
b. Bargaining power of suppliers – Low
Due to advancement in the technological sector, it is easier for Vodafone to interact with
suppliers from across the globe in order to achieve quality materials and resources for
their business organization. Due to this, the bargaining power of the suppliers is
comparatively low. Apart from technology as there are a number of suppliers available
in UK that are ready to supply resources at a lesser price, the competition among the
local suppliers is increasing. This reduces their bargaining power over global
organization such as Vodafone.
c. Threats of new entrants – Low
Vodafone is one of the most popular international telecom brands that have a huge
customer base. The telecom industry of UK is facing rapid developments and moat of
the well-established firm such Vodafone, British Telecom, EE and more are focused at
improving their services and performance in a techno-friendly manner. It can be stated
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that the threat of new entrant in telecom industry is low, because in order to sustain and
develop in the telecom sector of UK the new entrant will require huge capital
investment. The entrant will have to invest heavily on marketing and promotional activity
in order to enhance its brand image. As Vodafone is already, a popular name it will be
very difficult for new entrant to give competition to such a strong firm with high customer
base.
d. Threats of substitutes – Low
The service provided by Vodafone is of the most superior quality. They serve their
consumers with the latest and high-speed internet facility. All the technological
developments taking place in the telecom industry in incorporated by Vodafone
organization in order to improve their performance. The consumers have the option of
switching to any other telecom provider; however, the substitute of the products
provided by the telecom industry is relatively low. It is evident that the
telecommunication industry is becoming a vital part of every individual; hence,
Vodafone does not face any threat of substitute.
e. Rivalry within the market
The rivalry in the telecommunication industry of UK is increasing Vodafone faces severe
competition from O2, British Telecom, EE and more. As UK is, technologically much
updated and the stable economy of the country provides its citizens with the opportunity
to spend more on their requirements. The consumers are always looking for faster
network providers, thus, all the companies are engaged in improving their services for
their consumers and hence, rivalry in the market is enhancing.
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Task 4
Using Bowman’s strategy clock model, analyse the strategic direction and
options available for your chosen organisation.
Bowman’s strategy clock model is considered as a more evaluated version of Porter
generic strategies (Haselwanter et al., 2016). Many leading firms use these strategies in
order to analyze about their current market positions in the competitive market. This
model illustrates about 8 basic strategies using four main quadrants that are classified
using axes of apparent benefits and prices.
The strategic position of the Vodafone organization using the Bowman’s strategy clock
model has been discussed below:
Position 1: Low Price and Low Value Added
As per the model, this is the least competitive position for any company. In these
quadrants, the services and products are not distinguished or discriminated and have a
very low market value. This quadrant of the clock is often termed as bargain basement
strategy. Company in this situation can only service if they offer their customers
products at a very low price.
Position 2: Low Price
The companies that position their organizations in this quadrant are focused at
becoming the low cost leaders in the competitive market of their country. The
management of the firm sues a number of cost minimisation strategies in order to
ensure that they are successful. During this stage, the organization can earn high profit
revenue with the help of increased volume of output.
Position 3: Hybrid
In this quadrant product, differentiation is evident with certain low pricing strategy. This
organizations operating in this position try to convince their consumers that the products
provided by them has a benefit with rational process as well as satisfactory product
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differentiation. If the organization is able to serve their customers with the stated benefit
then the success rate of the organisation can be high.
Position 4: Differentiation
The organizations operating in this position provides their customers with a high level of
apparent benefits. The quality of the services and the brand image of the company play
a vital role during this stage of the model. Products that have superior quality and are
associated with strong brand loyalty helps in achieving comparative benefits. The
products are able to generate prices that are required for a good differentiation strategy.
Position 5: Focused Differentiation
In this quadrant, the companies are focused on positioning their services and products
at the highest price level. In this strategy, the consumers are attracted to purchase the
products because they receive extra beneficiaries along with the product. This strategy
is mostly used by luxurious brands because they target the premium market segment.
The customers of premium segments are abele to spend higher prices for premium
services. This is the most helpful strategy for increasing the profit revenue of the
organizations. However, it is evident that the competition level among the competitive
firms is increasing maintaining premium pricing for long term can be difficult.
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Figure3: Bowman’s strategy clock model
(Source: Radut, 2015)
Position 6: Risky High Margins
This is considered as the most risked strategy of the positioning model. Organizations
operating under this strategy are required to price their products at a higher rate devoid
of providing any apparent value or offers with their services. This strategy is completely
dependent on the purchasing behaviour of it customers, here the management of the
company takes a huge risk. If the company is able to sell its products to its loyal
customer and then only it is able to sustain and earn profit revenue. However, this
strategy is not used very often due to increasing competition. Customers are also
having the option of switching organization thus; any leading firm rarely uses this
strategy.
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Position 7: Monopoly Pricing
Business firms that operate in any monopoly market usually prefer using this strategy.
During this position style, the company or organization is not concerned about the
opinion or perception of their customers towards their products or services. The
customers of these markets do not have switching option and have to purchase from
the operating organization. In this quadrant, the organization prices their services or
products according to their choices.
Position 8: Loss of Market Share
This quadrant is considered as catastrophe in the competitive market. The business
firms position their services and products at a very standardized or reasonable rate with
reduced apparent value. If the consumer is of this market are able to receive any better
option then the operating firm is in loss.
Vodafone uses the hybrid quadrant and differentiation quadrant of this framework, in
order to sustain and increase its position in the UK market. Both the strategies used by
the company allow it to provide their customers with reasonable pricing and benefitted
services. This strategy is beneficial for attracting customers as the company provides
superior quality services. Vodafone provides value added service along with their
products so that it is able to satisfy the requirements of its customers.
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Conclusion
This assignment helps in gaining information about the external business factors that
influence the operations of Vodafone. The PESTLE analysis and Ansoff’s matrix
analysis helps in understanding the factors that influence the major decision making
process of the company. The strategic positioning of the company helps the
management in developing appropriate strategy for the company that will be beneficial
in increasing the business of the firm. The significance of strategic capabilities for
Vodafone have can be understood with the help of VRIO model. The Five Force
analysis allows the earner to gain vital information about the current position of the
Vodafone firm in the UK market. The Bowman’s strategy clock models helps in
understanding about the various strategies that are used by organization in order to
increase its business. Vodafone makes use of Differentiated and Hybrid strategy of the
model in order to sustain in the UK market. The different stages that are required to be
analyzed by the management of Vodafone in order to develop the most accurate
business strategy have been discussed in this report.
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