Vodafone: Business Strategy Report - Macro and Internal Analysis

This report presents a comprehensive analysis of Vodafone's business strategy. It begins with an introduction to business strategy and its importance, followed by an examination of Vodafone's macro-environment using the PESTEL analysis, considering political, economic, social, technological, legal, and environmental factors and how they impact the company. The report then delves into Vodafone's internal environment, assessing its strategic capabilities through the VRIO model, identifying valuable, rare, inimitable, and organization-specific resources. Furthermore, it analyzes the telecommunications sector's competitiveness and explores Vodafone's strategic direction using the Ansoff Matrix to understand its market penetration, product development, market development, and diversification strategies. The report concludes with a summary of key findings and recommendations for Vodafone, drawing upon the various analytical frameworks to provide a holistic view of the company's strategic position and future prospects.

BUSINESS
STRATEGY

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................2
Analyse the impact and influence of macro environment on the organisation. ...................2
TASK 2............................................................................................................................................5
Analysing the organisation internal environment and its capabilities....................................5
TASK 3............................................................................................................................................7
Analysing the competitiveness of telecommunication sector...............................................7
TASK 4............................................................................................................................................9
Understanding and interpreting the strategic direction..........................................................9
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................12

INTRODUCTION
Business strategy is defined as the combination of various decisions which guides and
helps the management in achieving the planned goals of the company. This is used to make plan
and activities related to operations of every organisation working in the market. It is also know
as the main plan which is used by the organisation to gain the competitive advantage. The
formulation of these type of strategies is generally done to enhance the performance of any
organisation. Business strategies are basically of three types which are differentiation,
competitive strategy and cost leadership. The goals can either be for the long period of time or
for short period of time depending upon the need of the organisation(Aithal, 2016). This project
will be based on one of the biggest company in the telecommunication sector which is Vodafone.
The company is currently operating in approx 27 countries around the globe. The project report
will help in know the internal and external factors which can affect the working of Vodafone.
This can be done with the help of PESTEL analysis, porters five force model, etc. As with the
help of these theories and practices the planning for the future can be easily by Vodafone.
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TASK 1
Analyse the impact and influence of macro environment on the organisation.
PESTEL Analysis:It is a measurement tool which is design for the scanning of external
environment where a business perform its operations. Before making a strategy company can
done pestle analysis so they can identify present situation of a country(Aithal, Shailashree and
Kumar, 2016). After analysing the internal and external factor the organisation was able to plan
the strategies in the best possible manner. The PESTEL analysis Vodafone is mentioned below-
Illustration 1: Pestel analysis
Source: PESTEL Analysis, 2018.
Political factor- it state that how a government is involve in the economy of a country. It
include tax policy, foreign trade policy, law etc. which influence business operation to a
significant extent. However, Vodafone face a case in 2010 at India regrading the purchase of
hutch that had overall issue for the payment of tax which negatively impact on their productivity.
Hence, due to political stability of UK government, Vodafone was able to tackle this negative
influence by managing the tax amount that enable them to gain their proficiency .
Economic factor- It include bank rate, interest, raw-material cost and all factors that
impact the economic of a country and its performance. GDP is a way to find whether to invest in
that country or not(Akter and et. al., 2016). So GDP is important factor it states that the more
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GDP is develop there are more chances to grow and to expand more units in that country because
it increase the income of people. However, due to Brexit, EU forced the telecom sector firms to
cut lucrative roaming charges which negatively influenced Vodafone profitability. Therefore,
Vodafone tacked this negative influence by increasing its roaming charges which boost the
efficiency of company.
Social factor- It include age, career, growth etc. in these company focus is on
understanding choice, preference, trends etc. which are mostly prefer by the local population.
However, changing work pattern i.e. 'going green concept' which become popular among UK
customer which directly challenged their attainment of profit. . Thus, Vodafone took this
challenge as an opportunity to grow so they start campaign like stronger together campaign and
stronger every hour campaign. Digital India and Make in India are two transformational
initiatives said by Vittorio Colao. So it state that he is monitoring regularly social factors of
Indian market and want to find more opportunities in Indian market.
Technological factor- with technological word companies make a platform by which
communication is available all over the globe with minimum price. New inventions and
innovative technologies challenge Vodafone among competitors which negativity influence its
business operation. However, Vodafone tackle this negative impact by introducing GPS
navigation system which helps them to gain competitive advantage and capture customer
attention toward the products.
Legal factors- rule and regulation by which a company can run their business in that
particular country in a legal and ethical way(Al-Bostanji, 2015). It include health and safety,
consumer rights, employees working standard etc. so smooth operation for business should be
done. It also help company so there confidential information should not be leaked. Data
information and anti-trust law are two ways which are focused by Vodafone in its early stage. It
was observed that important data of the customers were getting leaked to other parties, so
keeping this mind anti trust law was implemented. It becomes necessary for Vodafone to handle
the issue by making better plans regarding this law.
Environmental factors- surrounding environment of a company by which its ecological
environment has to suffer from problems. It include climate change like release of wireless
waves from devices etc. addiction of suffering and many more. Vodafone run a campaign with
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government in which they are providing technological friendly environment to farmers. It
provide more benefit by came under CSR activity.
Ansoff Matrix: it was invented by Ansoff in the year 1965. because of it easy understand
and simple use it help companies to create more strategic option in market. It has two major parts
one is market and other is product with four different strategies.
 Market Penetration- to explore the market by apply of maximum efforts of marketing to
promote company existing products. When a market start to become saturated company
focus to break their limits so that they can dominant market according to their resources.
Vodafone change its technology as trends change like from 3g to 4g and then 5G. Like
Vodafone defend their market by introduce new 5G technology in market and then they
grew more by launch it in different cities(Barba and et. al., 2016).
 Product development- when probably company already capture the market with their
existing products and now they introduce new products so untapped area is hit by them.
Vodafone introduces new product development strategies as per the demand of particular
market. This means different strategies are made for different areas and market. This
because the needs and demand of the customers may vary from area to area. The Prices
of Vodafone data packs also varies from area to area. Price is decided after analysing the
need and paying capacity of its potential customers.
 Market development- When companies launch their existing products into a new area. It
is beneficial for those companies who want to explore new area with a minimum risk.
Vodafone have opportunity to cover Asia market that can help them to increase their
geographical dimension with the help of develop new strategy for marketing their
products.
 Diversification- Entry in a new market by new products. It is total different new
responsibility and authority which have to face by company because it is the separate
industry from their present industry. Like Vodafone also can enter in media industry or
television industry. There are high chance of risk because company is totally unfamiliar
with this environment with less or no prior experience with them.
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TASK 2
Analysing the organisation internal environment and its capabilities.
Strategic capabilities- It is a set of various skills, resources and capacities which directly
help the company in achieving the long term competitive advantage. The skills and knowledge of
the employees of any organisation will be helpful in the formulation of the strategy. Employee's
working in Vodafone can do this by suggesting innovative ideas for the improvement of work.
As this will directly help in the achievement of individual and organisational goals. It is very
much necessary for Vodafone to manage its internal environment in the coordinated manner. If it
is not done than there will miscommunication and misunderstanding in the organisation. And the
plans for the future may not be made(Bohari, Hin, and Fuad, 2017). The internal and external
environment of any organisation is inter- related and inter- connected with one another. So if the
internal environment is not properly managed than the working of the external environment may
also get affected. So Vodafone needs to make the internal plans in the sequential and coordinated
manner. Vodafone can make use of VRIO model for analysing the strategic capabilities. By
using this model the competencies can be known in the best possible manner and the use of
organisation's resource can be done in the optimum and efficient manner. The VRIO model for
Vodafone is discussed below-
 Valuable- It is the value which can be extracted by using the capabilities of the
organisation. In the return of these money is generated from the customers. If the
resources used in the organisation in not adding value to the company than Vodafone
might suffer loss. This will also not help in gaining the competitive advantage in the
market. So for maintaining this Vodafone can focus on encouraging and motivating its
employee's in the best possible manner(Chu, KrishnaKumar and Khosla, 2014). Doing
this will help Vodafone in increasing the skills and talent of the employee's working in
the organisation and the organisational goals will also be able to achieved in the desirable
manner. The employees of Vodafone are very much valuable to the management because
they will help them in achieving goals and target in the best possible manner.
 Rare- This is defined as the unique qualities of the organisation which the other
company's is lacking. The activities done by Vodafone to attract its customers is very
much different from its competitors. The marketing department of Vodafone is able to
give unique plans to the company for attracting more and more customers. By doing this
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the management is able to create awareness in the mind of the customers. Using this
strategy will also help in the growth, probability and sale. Another unique quality of
Vodafone is its financial resources. It is seen that the company has a good amount of
funds. Due to this quality the company is able to attract more and more customers as the
company is able to use attractive methods in increasing the sale of the company. This is
rare resource of Vodafone as other organisations cannot copy this resource.
 Intimate- The competitors of Vodafone may not be able to copy the resources and
products of the company(Chen and Kodono, 2014). As the company has good financial
resources. The competitors of the organisation may not be able to generate the same
amount of fund which Vodafone has. But the technology which the company is using for
the conduction of its business can easily be copied by its competitors present in the
market. So the organisation must focus on making such strategies which is hard to copy.
As by doing this the sale of the organisation will automatically get increased. And the
customers will also be satisfied as they will get attractive products and offers. There are
some strategies of Vodafone which are intimate and organisation continuously focuses on
making improvements in those strategies.
 Organisation- The company must try to use the resources with the full potential.
Vodafone is already having a good image in the market so the management can make the
best use of this opportunity. If the company is able to use this than a good number of
customers can be attracted and the probability can be increased in the effective and
efficient manner. The competitive advantage can be achieved.
Some of resources of Vodafone are rare
The strength and weakness of Vodafone is mentioned below-
STRENGTH
 High market coverage- The organisation is the biggest brand in the telecommunication
sector. The company is operating in more than 27 countries around the globe. Due to this
customers have faith in the organisation. This can be the biggest strength for Vodafone.
 Marketing- Vodafone uses innovative methods to attract its customers. Its marketing
strategy make different from its competitors. For example Vodafone Zoozoo was the
best plan introduced by the organisation in the market to attract its customers.
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 Revenue generation- Vodafone is able to generate good amount of profit as compared to
its competitors. Its revenue is growing rapidly and the rank and brand image is also
growing.
 Subscriber Base- The subscriber base of Vodafone very large. This position is achieved
by the organisation by using various new and innovative strategies.
WEAKNESS
 Subscriber base- Major changes in the subscriber base have seen witnessed by the
company. The rate of the subscriber base is decreasing rapidly. This can be one of the
severe weakness for the company.
 Market share- The market share of the company is continuously decreasing. The major
reason behind is high competition available in the market. The customers of Vodafone is
shifting from one company to another because of the change in the preferences and price.
 Leader- Vodafone generally follows the trend of the market and does not introduces new
plans on its own. Because of this the company is facing loss as this type of market
involves high risk and uncertainty(Eaton and Kilby, 2015).
TASK 3
Analysing the competitiveness of telecommunication sector.
The level of competition is very high in the telecommunication industry this because
there are many other company's operating in the same market. So if Vodafone wants to survive
in the market for longer period of time than the company must try to change its plans and
strategies. Doing this the customers of Vodafone will be satisfied and the company can easily
earn high profits. Porters five force model can also be used by Vodafone to know the plans and
strategies of the competitors. So that the company is able to make better plans for the future.
Porters five force model- This can be used to evaluate the degree of competition
available in the market. The competition level is directly depended on the these five internal
factors of Vodafone. There is high degree of risk and uncertainty available in the
telecommunication industry because of the rapid change in the preferences of the customers. So
if this model is used in the proper manner than it will directly help Vodafone in increasing the
sale and probability. The points for the Porters five force model is discussed below-
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Threat of new entrants- This type of industry is one of the fastest growing industry in
the world. This is because rapid changes took place in the market according to the demand of the
customers. There is less threat of the new entrants in telecommunication industry. The major
reason behind this is organisation has to face many barriers and obstacles before entering into the
market. High licensing fee is charged by the organisations for operating the business. The
installation and other formalities requires a high amount of money. As this type of industry
requires to adapt changes so it is not a easy task for the new entrants to deal with such difficult
situations. But Vodafone can easily do this by managing good efficiency level in its services.
There are also some plans and strategies which can be used by the company to handle the
problem of threat from the new entrants. These can be the price of the services can be decreased
and the speed of data can be increased(Klettner, Clarkeand Boersma, 2014).
Threat of Substitutes- The degree of threat of substitute is very high for the company
because there are many substitutes present in the market. The major substitutes for mobile
services of Vodafone is video conferencing, google talk, email, etc. If the customers of Vodafone
shifts from one company to another than it will be a problematic situation for the organisation.
So to overcome this problem Vodafone can make some major changes in their plans and
strategies. These can include- innovative ideas can be used, the plans can be made after properly
analysing the demand.
Industry rivalry- This is concerned the level of competition with other organisations
available in the same industry. The industry rivalry is very high for Vodafone because the price
of the call rate is very low. The other organisations are also focusing on satisfying the customers
by providing them innovative services. And this is resulting in the negative impact on the
working of Vodafone. As the customers are preferring some other brand. To control the problem
of industry rivalry Vodafone can try to retain its consumers and can also decrease the price of its
products.
Bargaining power of the buyer- Due to high competition the bargaining power of the
buyer is very high. In this type of industry the customers or buyers have options for bargaining
the price. This is leading to decrease in the price of the product. Vodafone has a good
opportunity to earn high profit by bargaining in a appropriate manner with the buyer. Vodafone
can also make use of some of the following strategy to grow its business- company can provide
products and services at discount rates, appropriate customer base can be built by Vodafone.
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Bargaining power of supplier- Vodafone is currently operating on high margins so the
company has good bargaining power of supplier. Company has managed to capture a good
portion from the market. So it will not be a difficult task for Vodafone to handle the increment in
the price from the suppliers. Company can reduce the price of its services and products. This will
directly lead to increase in the profit(Mathooko and Ogutu, 2015). Vodafone can make use of the
following strategy for managing the bargaining power of its supplier- plans can be made
according to the market in which company is currently operating, network connectivity can be
increased.
TASK 4
Understanding and interpreting the strategic direction
Strategic management is defined as the process of strategy formulation for achieving the
desired goals and objectives by the organisation. If the strategies are implemented in the proper
manner than the profitability of Vodafone can be easily increased. If Vodafone wants to achieve
its long and short term goals than the company can go for strategic management planning. As it
will help Vodafone in communicating the organisational goals to its employee's. So that they can
help in the growth of the company. By using this sustainability can also be achieved by the
organisation in the market. The management of Vodafone can make use of Bowman strategy
clock model to make better plans.
Bowman strategic clock- With the help of this model best plan can be chosen by
Vodafone to gain a good competitive advantage in the market. As the management will be able
to make plans after analysing the present and past situation of the market. The major motive
behind using this model will be to know the various options for placing the right product at the
right place. This means proper positioning of the product can be done. The bowman strategic
model is mentioned below-
 Hybrid strategies- According to this strategy the product can have low price with
different features. This means the customers can be encouraged to buy the product or
service by reducing the price. And also by creating value of the products of Vodafone in
the mind of the customers. This strategy will benefit Vodafone in attracting new
customers for buying its product at low prices as compared to the competitor. The
product and services of Vodafone will be pocket friendly for the customers because
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services will be decided keeping in mind the needs and want of the potential
customers(Slavik and Bednár, 2014).
 Differentiation- This strategy will focus on making differentiated products from the
customers. Vodafone can introduce a new product which will help in adding value in the
growth of the organisation. This can be done by offering high quality products to the
potential customers at low price. As by using this the market value and image of the
company will be increased and the customers can be retained in the appropriate manner.
 Focused differentiation- This strategy will help Vodafone in dealing with the particular
set of customers. The set of customers is chosen on the basis of the demand available in
the market. Different plans will be made according to the paying capacity of the
customers. For example if the customers belong from high income group than Vodafone
can charge high price from them. As they can easily afford to pay high price. But this
strategy needs to be implemented after proper analysis of the market. This is because if it
is not done than the company might suffer huge loss.
 Low price- By using this strategy organisation can manufacture the products in large
quantities and can sell it on low prices. So due to this the manufacturing cost will be
saved and more customers can be attracted. By doing this the profit margin of the
company will be increased. As the low quality of the product will be offered to the
customers. This strategy involves high degree of risk and uncertainty because the needs
and preferences of the customers are uncertain. It will also be a difficult task for
Vodafone to predict the future plans of the competitors(Takata, 2016).
CONCLUSION
From the above given report it has been stated that proper formulation of the business
strategy will help the organisation in achieving the desired task and objectives in the coordinated
manner. The management of the organisation can predict the future situation with the help of
PESTEL analysis and by doing this competitive position can be attained easily. Porters five force
model will help the company in dealing with the competitive advantage. This can also be done
by knowing the strength and weakness of the organisation and also of its competitors. Bowman
strategic model will help in deciding the price of the product. By taking the needs and demands
of the customers into consideration. Proper strategic management plan will help the organisation
in achieving the goals and objective in the effective and efficient manner.
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