Business Strategy: Vodafone UK's Macro and Internal Analysis Report

This report provides a comprehensive business strategy analysis of Vodafone UK. It begins with an introduction to the telecommunications sector, highlighting its competitive landscape and importance. The report then delves into the impact of the macro environment on Vodafone, examining political, economic, social, technological, legal, and environmental factors. It utilizes Ansoff's Matrix to evaluate market penetration, market development, product development, and diversification strategies. The internal environment is assessed using the VRIO framework to analyze valuable, rare, costly to imitate, and organizationally exploited resources and capabilities. Furthermore, the report analyzes the telecommunications sector, offering insights into Vodafone's strategic direction and concludes with a summary of key findings and recommendations.

BUSINESS STRATEGY

Table of Contents
INTRODUCTION ..........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Impact and Influence of Macro Environment on Vodafone..................................................1
TASK 2............................................................................................................................................4
P2 The internal environment and organisation capabilities........................................................4
TASK 3............................................................................................................................................8
P3 Analysing the telecommunications sector.............................................................................8
TASK 4..........................................................................................................................................10
P4 Understanding and interpreting strategic direction..............................................................10
CONCLUSION .............................................................................................................................12
REFERENCES .............................................................................................................................13

INTRODUCTION
In modern scenario, telecommunication is one of the fastest growing sector within the
world. This kind of sector has created high level of competition within the market and thus has
become great challenge for all kind of companies in order to maintain the current position along
with increasing the market share in both national and international market (Business Strategy.
2015.). As per the survey, there are more then 53% who are attached with this kind of sector as
equal to 22 million people. This kind of company has contributed about 3.8 billion Euros.
Company chosen for this report is Vodafone UK, which is multi-national company dealing in
telecommunication sector since 1982. There are various things which will be discussed in this
report like impact on the influence of macro environment for UK. Along with this, internal
factors which will be analysed for determining the strength and weaknesses in better and
effective manner.
TASK 1
P1 Impact and Influence of Macro Environment on Vodafone
Vodafone is one of the largest telecom company and it has expanded its business in
Europe, India and many other areas. This company has its greatest market value of around one
hundred billion pounds. This company has operating its business in more then countries and thus
has been expanding more. As this is the global company, there are various kind of external
factors which are being considered for evaluating the success of the company and those are
described below:
Political Factors: There is high influence of the political factors for the company like Vodafone
UK as this company has been developing its infrastructure in order to operate in certain areas.
There are various political factors and scenarios within the state and thus company has been
totally dependent of this kind of factors for operating its process (Ackermann and Audretsch,
2013). However, there are various factors which has made direct impact on the company like
peace of state and political instability. Country which has political instability has high chances of
having war and due to that having effective structure and maintaining it becomes difficult task.
Example can be taken up of recent conflicts which has direct affect on company as whole.
Economical Factors: This kind of factor can be stated as one of the essential element for the
company like Vodafone. Company will have the higher chances of expanding if there will be
more states which will be developed and thus new units can be opened in newly developed
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zones. Effective GDP of the country means that more is the income of the people and thus they
will be more prone to the adopting the latest technology within telecommunication sector. By
this, profit ratios of the company will increase and thus company will have opportunity to expand
its area of expansion. Along with this, overall crisis in economical factors of the world has been
mainly facing by Vodafone in the recent times. The main reason of modification in strategies is
the global uncertainty.
Social Factors: This kind of impact are mainly based upon the local beliefs and the culture of the
people in which operations are being conducted by the company. This factor can be stated as
dynamic in nature and thus for the success, flexibility should be adopted by company within the
policies relating to culture of local people (Annabi and McGann, 2013). Vodafone company is
basically an European company but with time it ha changed its preferences along with policies
which are being related to the social factors in which operations of the company is being
conducted.
Technological Factors: Vodafone is a popular company who is known for its innovation. The
mission of the company is following the trends within the technological factor along with the
sphere of communication. There are many competitors of this company within marketplace.
Therefore, it has become highly essential for the company to be ahead of the technological
factors. Goods and services which are being produced by the company is highly related to the
technology and so for Vodafone it is highly essential to bring out the innovation and along with
this purifying the policies and thus evaluating the devices who will be launched in future time
along with the device features. Vodafone can be stated as technology driven company who has
been putting its focus on latest trend of technology and thus following it.
Legal Factors: Vodafone company has many competitors within the marketplace. This company
is being highly alert regarding the legal issues like copying and other patent issues. There are
many blames which are being put on the Vodafone regarding the legal issues relating to the
infrastructure's spheres (Auzair, 2011). From this aspect, there are many of the penalties which
needs to be faced. Besides this, this company has been accused for not increasing the pay scale
of the employees as compared to the its competitors. There are many of the employees who are
working in the company and they do not work for the long period of time and thus join the other
company which mainly increase the chances of leaking up of the innovate ideas. In addition,
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Vodafone should follow the legal issues for increasing the amount of customers and thus
maintain the positive image within the marketplace so that loyalty of customers can be gained.
Environmental Factors: In modern scenario, people has been adopting the ethical factors due to
the rise of globalisation within the economy. It is always expected from the customer that the
company they follow should be socially responsible (Azar, 2011). It is always been expected
from the brand to play crucial role for the betterment of the society. Working condition of the
company should be effective in nature in order to attract the individuals for being the part of
Vodafone family.
There are various kind of strategies within Ansoff's Matrix for selecting a Product-Market
Growth Strategy:
(Source: Ansoff's Matrix, 2017) Market Penetration: This kind of strategy is being adopted by Vodafone as this is least
risky since it is leverages various resources for the company and abilities. Within the
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Illustration 1: Ansoff Matrix

market growth, maintaining the market share will highly result in growth and will give
platform of opportunities to reach its limits (Bharadwaj and et. al., 2013). But this
strategy is being limited and company need to adopted another one for growing. Market Development: This kind of strategy is being adopted for additional segment
within the market. As Vodafone is expanding its business so development of new market
for the products and services can be an effective strategy for the company. Developing
market strategy is typically has more risk than the market penetration strategy. Product Development: This is most appropriate for the company like Vodafone if the
strength are highly related to the certain clients instead of specific product itself. In this
kind of scenario, this can provide advantage to the strength by developing new product
for the current existing clients (Bucolo and Matthews, 2011).
 Diversification: This can be stated as more risky among the growth strategies as it needs
both of the product and market development and thus it may be outside the competencies
for the company. However, this can kind of factor may be a reasonable choice fort the
chances of rate of return.
TASK 2
P2 The internal environment and organisation capabilities
As business compete with one another for the clients, revenue and market share and thus
for that they implement various kind of employee tactic as pre the deliberate strategies. It is the
duty of business leader to shape the strategies along with putting them into the action.
(1) Strategic capability alludes to a business' capacity to effectively utilize focused techniques
that enable it to survive and increment its incentive after some time. While key capacity takes
into account the techniques a business utilizes, it centres around the association's benefits, assets
and market position, anticipating how well it will have the capacity to utilize procedures later on.
There is no single strategy or general metric for estimating or taking note of key ability (Grover
and Kohli, 2013).
Assessing the strategic abilities which can be stated as complex process due to the number of
various elements which needs to be addressed. Process of classifying the strategies of business
can be stated as known as strategic value analysis. This mainly depends on the data of annual
reports, public surveys and along with market trends for analysing which kind of business has the
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skills and abilities which others lack in . As business of Vodafone is changing and the are
acquiring additional resources which must perform new kind of strategies value analysis.
There are various kind of factors which has the potential to contribute within the business
abilities (Jocovic and et. al., 2014). Various assets like cash, property along with various patents
mainly gives their contribution to the abilities of business for making and implementing
strategies. There are various other factors of the strategic ability including the HR and the
structure of the company as skills of employee and process of company mainly gives their
contribution to the business competitiveness.
(2) “VRIO” Model: This can be stated as effective tool which is being utilised for analysing and
determining various kind of internal resources of company along with its abilities for identifying
that it can be the source of attaining and sustaining the competitive advantage.
Valuable: The very first query of this kind of framework is that if the resources which adds the
value by allowing the company to exploit the opportunities or defend against the danger. If the
answer is in yes, then the resource is considered as valuable. Resources are highly valuable if the
help is being provided by the company for increasing the perceived value of customer. This is
being executed by the improving the differentiation and reducing the product price (Kalyani and
Sahoo, 2011). Condition can not be met by the resources which in turn can lead to the
competitive disadvantage. It is highly essential for evaluating the value of resources as this will
constantly change the internal and external which can make it less valuable.
Rare: Acquiring up of the resources by one of more then one company which are being
considered as rare. There are various rare and valuable resources which can grant ephemeral
competitive advantage. Besides this, there is a scenario when there are many of the companies
who have the similar kind of resources or utilises in similar kind of way which leads to
competitive gestation. This is due to the utilisation of various identical resources for applying the
similar tactics and thus no company can attain superior performance.
There are various kind of resources which should not be neglected by the company even though
the competitive advantage is not in the desires position. Process and operation of the company
will be hindered if the resources and abilities will be lost as they are highly essential for staying
up in the market (Klettner, Clarke and Boersma, 2014).
Costly to Imitate: High cost is being involved while imitating a resource and if other company
does not have which can be imitated, buy or substitute at a reasonable price. Imitation can be
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occurred in two various ways and that are by directly imitating the resource or providing the
comparable product\service. Company which has valuable, rare and costly to imitate the
resources can attain the sustainability within the competitive advantage. Vodafone has
determined various reason for the resources which are hard to copy:
 Due to the some of historical reasons, there are various resources which are being
developed for a long period of time. These resources are found difficult to imitate.
 It can not be determined by the company regarding any kind of resources which are
being caused for the competitive advantage.
 There are various kind of resources and abilities which are being based on the culture of
company or it can be interrelated relationships.
Organised to Capture Value: There are number of resources which do not provide any kind of
benefit to the company if they are not being captured for the value within them. It is highly
essential for the company to organise its management system, processes, policies, organisational
structure along with the culture so that it can be enabled to be fully realise the potential of its
value, rare and costly to imitate the abilities and resources (Köseoglu and et. al., 2013). This will
be allow company to attain sustainability within the competitive advantage.
(3) Strength and weaknesses:
STRENGTHS: Massive Market Coverage: Vodafone is being ranked 395th among the worlds top 2000
brands by Forbes. This company is known for its network error and wide distribution.
This company has the second largest base settled in India. Sit mainly operates in more
then 30 countries. Revenue Generated: Billions of dollars are being generated by this company annually. In
2016 this company has generated 87.3 billion dollar and thus it has been ranked 104 in its
sales across the globe and number 84 within the market value. Marketing: Marketing of this company is highly effective in nature. Vodafone pug is
known across the globe to follow the users of this company everywhere. Along with this
Vodafone Zoo-zoo's was a brilliant and effective campaign which converted many user
get attracted (Murano and et. al., 2011). Premium Cost: Services are being differentiated by the Vodafone while its competitor are
penetrating the market. Due to its communication and marketing, there are various users
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who think that Vodafone is much more higher then its competitors. As result, Vodafone
is still able to get some of premium out of the customers while other telecom operators
which are struggling in order to maintain the positive margins.
WEAKNESSES:
 Dropping Subscriber Base: As per the graph below, subscriber base of the Vodafone is
mainly dropping out within the last 4 years. This can be stated as the main issue for
Vodafone who are looking at the global market scenario.
 Dropping Brand Valuation: This kind of factor can be stated one of the effective reason
for drop in subscriber rate of Vodafone. Both of brand valuation and subscriber base are
very strong for the beginning. But both of the factors have mainly suffered from this.
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 Losing market share in USA: USA is the country in which Vodafone could have
demanded premium to keep itself growing. However, it can be stated that this company
has been loosing its market to the Verizon wireless, AT&T both of them are performing
much more then UK.
TASK 3
P3 Analysing the telecommunications sector
Telecommunication sector can be created by Harvard Business School Professional
Michael Porter for analysing the appealing factor along with the profit ratios. Porter recognised
that there are various kind of companies who keep close on the competitors, but he encouraged
for looking beyond the actions of rivalry and examine what are the factors which can make
impact the environment of business. Below are described: Competitive Rivalry: This kind of factor mainly looks out for the number along with the
strength for the competitors of Vodafone UK. Along with this, it should be known by
the company that how many of the competitors they have within the marketplace who
are working better then them. Along with this, it should be determined that what kind of
products and services which are being provided by the competitor and how they are
better then the Vodafone one (Scholes, 2015). This kind of comparison along with
intense competition, customers can be attracted by the companies by the aggressive
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cutting up of price along with the high impact of the marketing campaigns. Along with
that, within the marketplace, Vodafone which is multi national brand has many of the
competitors, there are many of the suppliers and buyers which has the choice of
choosing another brand over this if they are not getting good deal from the current
market and company. Supplier Power: This kind of factor is being determined by the prices which are being
increased by the suppliers and that too in ease manner. Besides this, Vodafone needs to
determine that how many of the potential suppliers they have for their company along
with the uniqueness and appealing factor their products and services have. If there are
high number of choices for products and services , then it becomes highly easy for the
customers to have cheaper alternative (Oestreicher-Singer and Zalmanson, 2012). So
Vodafone needs to look out for this kind of factor and thus charge as per the
competition within the market. Buyer Power: In this kind of factor, Vodafone company needs to determine the ways
through which prices can be cut down by the buyers. Along with this, company needs
to determine that who are the buyers and how much big are the orders. Beside this, cost
will be analysed which is being utilised for switching up from another goods and
services to those of the competitors . When the company has to deal with only few kind
of customers then customers have more power. Since Vodafone has high number of
customers their power increases. Threat of Substitution: This can be stated as to the likelihood for the customers who are
looking out for the various kind of ways of doing what exactly the company has been
doing. This can be made much more clear by an example that if there is supply of
unique product service which mainly alter an essential process and thus people can
substitute this kind of process in manual manner or it can be done by outsourcing it.
Substitution which is being easy and cheap for making it much more weaken the
position on the company is in and thus can put the profit ratios in danger (Schaltegger
and Wagner, 2011).
 Threat of New Entry: When new company enter into the market, position of the
company can directly affected with that. If there is little money and effort involved to
enter within market and compete effectively,then there is little protection for the key
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technologies which is being possessed, then rivals can quickly enter your market and
weaken Vodafone's position. If there are strong and durable barriers for the entry, then
a favourable position can be preserved and thus better benefits can be availed.
TASK 4
P4 Understanding and interpreting strategic direction
Bowman's strategic Clock can be stated as model which mainly explores the various kind
of choices for the strategic positioning that is ways through which is being positioned for giving
out the most of the competitive position within the market. The main purpose of the Bowman's
Strategic clock is to evaluate that a business will have a variety of options for positioning a
product based on the two dimensions which are price and perceived value. Below described are
the strategy clock.
(Source: Bowman's Strategy Clock, 2017)
Low Price and Low Value Added (Position 1):
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Illustration 2: Bowman's Strategy Clock