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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