Vodafone's Strategic Positioning in the UK Telecommunications Market

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Business Strategy 1
Business Strategy

Table of Contents
Introduction................................................................................................................. 4
Background information of Vodafone..........................................................................5
Task 1......................................................................................................................... 6
Critical analysis of external environment and how it determines Vodafone strategic
decision making....................................................................................................... 6
Ansoff Growth Vector Matrix of Vodafone................................................................8
Task 2....................................................................................................................... 12
Critical evaluation of internal environment as well as its capabilities.....................12
Task 3....................................................................................................................... 16
Analyzing Telecommunication sector.....................................................................16
Task 4....................................................................................................................... 20
Develop strategic management plan that shows clear direction and options
available to Vodafone and the strategic direction should be applied on the basis of
concept and models...............................................................................................20
Conclusion................................................................................................................ 26

Introduction
The aim of the report is to investigate on the macro environment of the
telecommunication organization of UK. For this report, Vodafone Telecommunication
Company is selected. The report also examines Ansoff growth vector matrix to
determine the strategic positioning of Vodafone. It also evaluates organization
capabilities by using VRIO model. Porter’s five forces is also applied to evaluate
competitive forces of a given market sector for Vodafone.
Telecommunication sector is one of the most growing sectors across the world. It
can be defined as the sector that is helpful in making the communication possible on
a global scale. It can be with the help of phone, or internet. There are different
companies such as Vodafone, Airtel, Idea, O2, Virgin and etc. that comes under the
telecommunication sector. These companies help people to allow communicate with
each other through phone, wireless cod, internet and etc. Moreover, the
telecommunication sector earns more revenue than other companies all over the
world. In terms of the UK telecommunication sector, it has been depicted that in the
year 2018 it has earned revenue of 2.69 billion. There is increase in the growth in
regards to telecommunication sector, UK. It can be seen given below graph. It has
also been examined that more than half i.e. 53% of 16-75 years old people of UK
use smart phones at the time of walking (Statistics, 2018). In addition, in terms of
younger people 75% proportion is there.

Background information of Vodafone
Vodafone is the multinational telecommunication company founded in the year 1991.
It’s headquarter is situated in London, UK. It is one of the most reputed companies
all over the world. It operates its services across the world. It operates in 25
countries and it has a partnership in approx 47 countries (Vodafone, 2018). It is also
listed on the London Stock Exchange. Its key people include such as Gerard
Kleisterilee Chairman and Nick Read the CEO. Its products include fixed-line
telephone, mobile phone broadband, digital television, internet television, and IPTV.
In the year 2018, its revenue is €46.571 billion. It employs 111,556 employees in the
year 2018.

Task 1
Critical analysis of external environment and how it determines Vodafone
strategic decision making
PESTLE analysis
Pestle analysis is the tool that helps in analyzing the actual environment of country
that is faced by Vodafone while operating its business in the UK. It is described as
below:
Political
Political factor is essential that can impact Vodafone in UK market or any other
market. Political factors include such as taxation rate, political stability or instability,
anti-trust laws and etc. There is political stability in UK, which is quite helpful for the
Vodafone in terms of creating more business opportunity in the UK. In terms of
Vodafone, it is affected by the government regulations of UK. It is due to limitations
of frequency as well as spectrum usage in telecom sector. This government
regulation factor affect most of the players thus network with largest number of
subscribers suffer lower delivery service. Another factor is in terms of network
access facilities like base transmitter stations as well as other masts. The company
is also affected by anti-trust laws in regard to wireless communication.
Economic
Economic factor also impact Vodafone, UK. As it is the large business so it has to
face certain economic factors in terms of large resource dedication to infrastructure
upgrade. 4G implementation is an essential capital project (Williams and Figueiredo,

2014). There are other economic factors such as inflation rate, per capita income
that impact the operations of Vodafone. In The UK, inflation rate is increased that
impacts on the Vodafone as they had to face high expense in establishing different
products and services. It has been derived that in UK Vodafone merged national grid
with O2 in order to minimizes its expenses in regard to infrastructure. Due to
negative influence of economic factors like quality of infrastructure in wireless
communication industry it faced poor access in building areas.
Social
This factor affects the telecommunication sector positively. High lifestyle of UK
people is very favorable for the Vodafone. This would be helpful to increase its
presence across the UK people. Change in trends is the positive sign for
telecommunication companies like Vodafone, UK. Moreover, the trends of social
media have shifted communication to chat, instant messages, as well as internet
telephony, and minimizing dependence on the calls that are based on the network.
Technological
UK people are always up to date with new technologies. High technology also
impacts on the UK telecommunication industry, to a great extent. UK is focusing on
different technologies and this helps in increasing the economy of the country. It
includes global technology websites that is beneficial for Vodafone as it can adopt
this technology and attract the customers of UK for adopting their services.
Moreover, For example, the use of new Android phones like i-phone, android, etc.
has affected the old phone usability. Due to this, the manufacturer has to adopt new

technology phone. Vodafone, UK adopted 4G would affect the operations in future
(Albini, 2013).
Environmental
The implications of recycling at the time of manufacture of product are the major
challenge for the companies that deal with synthetic materials. The used phone
recycling program is adopted by Vodafone where the disposable handsets are
collected (Albini, 2013). The telecommunication sector is also affected by change in
weather. It also affected by air and water pollution.
Legal
Legal factor includes laws, regulations, and policies that has to be followed by the
company while doing business in particular country like UK. There are various laws
such as equal wage rate, non-discrimination law in terms of culture, gender so this
has to be followed by Vodafone. This impacts positively if it follows in an appropriate
manner.
Ansoff Growth Vector Matrix of Vodafone
Ansoff growth matrix is the strategy that helps the companies to have future growth
in current as well as in future. It helps the companies to attain growth in the market
wherever it expands its business. It comprises of four elements such as market
penetration, market development, product development, and diversification. It is
described as below:
Market development
Market development refers to expand its product in a new market with their products
that are already existed. In terms of Vodafone, it has developed its network

expansion in other countries like India, USA, and China by taking into consideration
its existing products like headsets, headphones, chargers, memory cards (Namaki,
2012). It also provides different innovative offers like discounts on recharges and
purchase of Sim.
Product development
Product development is the second element where new products are introduced in
the existing market. In terms of Vodafone, UK it has introduced with new Post-paid
as well as pre-paid plans in the market where it is already exist. It has also
introduced long-distance voice, audio network services in terms of high-scalable
platform.
Market Penetration
Market penetration takes place when there is marketing of existing products in a way
that may be able to increase a firm’s market share. It is the risk strategy that is not so
risky thus the companies have to increase its marketing efforts. In terms of
Vodafone, it has planned to grow its technology in UK (Mathews and Bianchi, 2010).
It also offers to the people of UK various packs like internet pack, calling pack, as
well as STD pack.
Diversification
Diversification is another element of Ansoff matrix strategy. In this element, the
company launches new product in the new market. Here, both product and market is
new. In terms of Vodafone, it slowly changes to new areas like IT solutions as well
as mobile payments that are increasing growth of the business. It operates in almost
30 countries.

Determination of strategic decision making through macro environment of
Vodafone
On the basis of above discussion, of macro-environment such as PESTLE analysis
and Ansoff matrix there is determination of strategic positioning and decision-making
of the organization. It is essential for the companies like Vodafone to analyze their
external as well as internal environment. This would be helpful in making appropriate
decisions for the welfare of the company. In terms of Ansoff matrix by analyzing four
elements Vodafone can take decision whether it is good or bad of expanding its
business in another country or not. Or it can expand its business with same products
in the new market. With the help of Ansoff matrix, it can also take a required position
in the market (Kokodey, 2013). In terms of Vodafone it should take into consideration
differentiation factor as it would help in compete with the competitors. On the other
hand, Vodafone is also affected by PESTLE analysis. These factors are a challenge
or opportunity for Vodafone. Therefore, it is quite difficult to take decisions in terms of
strategic implementation. Hence, these factors helps the company to overcome the
issues as it can become alert and follow all the rules and regulations according to
these factors. In order to compete in this business environment Vodafone manager
has to take appropriate decisions. Moreover, for Vodafone technology factor is
favourable as it would be helpful in gaining market share. By adopting new
technologies would also help in increasing strategic position in the market. Political
factor is favorable for the company. At last, it can be said that these macro
environmental factors are helpful for Vodafone in order to compete with their
competitors in the UK market. As by identifying the political as well as social factors it

can implement different tactics so that it may not be affected by these macro
environment factors.
Task 2
Critical evaluation of internal environment as well as its capabilities
VRIO model analysis for Vodafone
VRIO model helps the organization to uncover and protect the capabilities and
resources that provide the companies competitive advantage for the long-term. It
consists of four elements such as value, rarity, imitability, and organization. In terms
of Vodafone, VRIO analysis is also adopted to attain a competitive advantage in the
country. It is described as below:
Value
The resource is valuable in terms of Vodafone which include such as financial
resources, human resources, marketing expertise, as well as operations
management. It has been determined that company has very strong financial
resources with the increase in profit by hundreds of million pounds per year (Ribeiro
et al., 2014). It enables to expand in research and development and this helps in
attaining large market share.
Rare
Rare refers to the element where the company has to ensure that whether the
resources can be controlled or not. In terms of Vodafone, it has to know that the
valuable resources to the company are rare or costly to achieve. If the resources of
Vodafone are not rare then other competitors can easily enter into their market and

compete with it (Maiyusril, 2018). Therefore, it is essential to have rare resources
that may not be present among other competitors.
Costly to imitate
In terms of this element, it has been derived that most of the companies are facing a
threat as there is an increase in the disruption or innovation. In terms of Vodafone,
data is provided to attract the pre-paid customers thus, there is difficulty in imitating
as a core differentiation. In Vodafone, the products imitation can be conducted with
the help of two ways such as products duplication of company and competitors who
introduce substitute products.
Organization
In this element, it is essential to know whether in the company there is an organized
management system, structure, process or not. In terms of Vodafone, the
management is organized in an appropriate manner that competes in the market in
an appropriate manner.
VRIO Analysis
Resources/Capabilities Valuable Rare Costly to
Imitate
Organized
Properly
Competitive
Implications
Economic
Implications
Technology Yes Yes Yes Yes Sustained
advantage
Above Normal
Pricing strategy Yes Yes Yes Yes Sustained
advantage
Above Normal
Distribution channel Yes No Yes Yes Competitive
Parity
Above Normal

Human resources Yes No Yes Yes Competitive
Parity
Above Normal
Infrastructure Yes No Yes Yes Competitive
Parity
Above Normal
Financial Yes No … Yes Competitive
Parity
Normal
Above VRIO framework demonstrates that the financial condition of Vodafone is very
strong and company having skilled human resources. Effective and skillful workforce
helps the company to gain the competitive advantage in the UK market as compared
to the other competitors. Meanwhile, strong distribution channel of the company is
valuable and anybody can’t imitate easily. As a result, company providing good
services to their customers at effective Prices.
Internal Environment
Strength
This is the internal environment that is helpful in knowing the internal strength of the
particular organization. In terms of Vodafone it has various strengths due to which it
is one of the most reputed companies all across the world in the telecommunication
sector, UK. Its strength includes such as high successful market, high level of
satisfaction of customers, successful track record of integrating complimentary firms
with the help of mergers and acquisitions. Moreover, it also includes good
performance in the new markets wherever it expands its business (Abubakar and