Strategic Analysis of Vodafone UK in the Telecommunications Industry

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Business strategy: telecommunication sector (UK)
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Table of Contents
Introduction......................................................................................................................................3
Task 1 – The external environment.................................................................................................4
Task 2 – The internal environment and organization capabilities...................................................7
Task 3 –Analysing the telecommunications sector.......................................................................11
Task 4 – Understanding and interpreting strategic direction.........................................................14
Conclusion.....................................................................................................................................16
Reference.......................................................................................................................................17
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Introduction
Business strategy is the broad concept this shows what business strategy follow by the
organization to his success to his telecommunication sector. Vodafone Telecommunication
Company has a diversity of liberalization over the years. Vodafone Telecommunication
Company as a part of a group of Vodafone i.e. world largest second company of mobile phone
company. By the year 2018, Vodafone UK has a 17.2 million subscriber across the worldwide
area. Vodafone Company is the third largest company in the telecommunication canter. It is
offering the best internet services provided to the people. Vodafone company provided the first
3G call to the on Vodafone UK network. In this assignment the assessor needs to identify the
pestle analysis, an off’s growth vector matrix, critically evaluate organization international
environment and capability. Strength and weaknesses of the organizational internal environment.
By using porter five forces model and interpreting the strategic direction of the
telecommunication sector(Wheelen, 2017).
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Task 1 – The external environment
Macro environment- the macro environment affects every business. By the study of macro
environment, organization wants to reduce the effect of negative impact. So macro environment
impact the overall effect of economy of business. Some factor such as downfall in the economy
or bankruptcy of potential industries. Due to economic issues consumers are not wanted to buy
the product they sell will not proper way and suffers more. In addition to the inflation rate
increase and unemployment rates is affecting business day by day.
Some specific macro environment influence competitive environment, the rate of changes in
interest and change of behavior of the organization. Also sometimes the organization facing
government regulation. The big external and non-controllable issues affect the decision making
of the top level department(Chen, 2014).
The macro environment is a situation that applies to the company whole structure in comparison
to a particular sector and region. Macro environment impacts the gross domestic product and
monetary policy of department and fiscal policy. The macro environment which is the help to the
company in an impact of the performance to the business.
In a UK company following pestle, analysis are as follows-
Political analysis- In a political analysis of the UK Company promotes cartelization. The
meaning of Cartelisation is the company engagement of independent firms which they are to
produce a similar and identical product.
Infrastructure- Vodafone has to increase the infrastructure facility to be provided in the network
often taking of the acceptance to the government and other statutory bodies. So the Vodafone
should create the image of brand and goodwill to entering the Mexican market(Wheelen, 2017).
Communication- in us Mexican market there is an own communication structure so the
Vodafone must follow his policy and rules. The Mexican market is the very good opportunity to
the Vodafone Company in spite of company must follow his communication act so the company
can access his market freely and provide very good service of networking to the customers. If the
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Vodafone want to enter the Mexican market but they must provide good and quality service to
the Mexican market because the Mexican market and their government want high services.
Economic factor-
Recession- last year recession time play a wide impact of the market so the consumers not
buying the product and they kept savings it has a big impact on the Vodafone company and they
have to change their policy in relation to the recession and focusing to attracting to purchase a
mobile phone in the market. In recession time the UK Company have a war with the prices so
they have to down their call charges and SMS charges(Chang, 2016).
New licensing cost- the present Mexican market introduced the concept of 3G technique so the
new company TELMAX using this technology as a whole to capture the telecommunication
market. So this creates a competitive environment between a local, small company and the
Vodafone Company. It is always true that new advanced technology requires heavy expenditure
on the purchase of new technology.
Inflation rate- in the Mexican market the current inflation rate is 3.60% so it has a bigger impact
on the buying behavior of the customer. So the Vodafone decrease the product price to the
customer(Amit, 2012).
Social factor- the success in the market of the Mexican of Vodafone is education because there
are 90 percent people who are educated in technology and take a good decision and company
also play a better development to them.
Technological market-
A new innovation- in our market well established and well-functioning market so every
company wants to enter our market. So the Vodafone Company covert new upgraded product to
his existing product to the company. They are using new branded technology to cover the
market.
GPS- they are using GPS in networking services.
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Legal factor- it is a legal factor when a study of Vodafone in the market. In the Vodafone
sometimes customer purchases a product by the taking installment. So they delay in payment to
the company(Khalili, 2013).
People always try to reset the tax structure to govt. Because they want to give less tax.
Environmental factor- in Vodafone company organization has a vision to succeed in the
organization sometimes they use zero vision environment in the company.
2. Ansoff's growth vector matrix to analyze the organization's strategic positioning
According to the Ansoff's growth vector matrix is the option provided to the risk option to the
company. A doing well leader need to run his organization for the long term it is necessary to
change his business tactics they cannot stay with the same mindset. They need to get to find new
circumstances and ways to increase profit and reach new customers.
It is published in the year of 1957 by h. Igor Ansoff article named "strategy for diversification".
It is a segment of the market that is leader think to growth company to the market(Hoejmose,
2013).
The corporate Ansoff's growth in corporate us market shows the following table-
Development of the market Diversification
Target different more market at home or
abroad in the telecommunication sector by the
study of pestle analysis.
Use different online mode or selling product
through an agent
Use the segment of the market in a different
group of peopleknow the positioning of a
product
It is risky company want to achieve economies
of scale to sell their product to different
customers.
If the business is expanding one business
should not suffer because of another business
Market discrimination
Develop a new market strategy to attract
customer to choose the product of Vodafone
Product development
A company selling the product of an objective
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company.
Increase the product faithfulness of the
product.
Increase the sales objectives
of profit maximization.
Expand the product with greater efficiency
In the service industry give better service to the
customers.
Task 2 – The internal environment and organization capabilities.
Vodafone is the biggest Tele networking company which have a head office of the Newbury
England. It recognizes the largest telecommunication company in the UK. Presently the
company has equity shares in twenty-five countries worldwide and the partnership network
along with the forty-one country in the year 2011. It comes after China telecommunication. The
biggest reason for the success of this organization is a proper strategic capability and proper
significant environment internally and externally.
An organization internal environment includes the element of the organization i.e. present
employees in the management and corporate environment of the business. Especially
engagement of various managers or the leader directs the employee of the organization.
In organization changes in leadership and philosophy are under the supervision of the manager.
The internal environment includes the vision and mission statement.
Organization capability-
Now a day the company survives is the biggest problem in the world. A company should think of
the innovative idea towards the success and implement strategy from time to time. The company
should use his resources to the major part of the innovation(Ghezzi, 2013).
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1. Applying the ‘VRIO/VRIN' model to analyze the strategic capabilities possessed by your
chosen organization.
In order to develop and get growth in the market, the company requires the proper strategies for
the company. A company uses many tools an organization to determine the internal and the
external factors which are influencing them. Among the various tools, one of them is VRIO
analysis, this tool is given by the Barney, J.B (1991). In this author had identified the four
attributes that the Vodafone Company can implement in the business in order to gain a
competitive advantage. This modal should be implemented by the company as this provides the
strategic recommendation to the Vodafone group to help out in maintaining a good position in
the market. This helps the company to identify the internal and external factor within the
company. According to the VRIO analysis, he in the company the resources should be valuable,
rare, imperfectly imitable and nonsubstitutable. Previously this model was known by the name
VRIN but after some changes and correction, it was improved by the VRION model. This model
is implemented and questions the company in four ways as: -
 Valuable: - The first question of the framework is asking whether the resources are
adding value by enabling the firm to defend against the treat and exploit the
opportunities. And in return, if the answer is yes then the available resources are
valuable. Resources are only considered valuable if they are helping in the increasing of
the customer value. And it can be only achieved by bringing some changes in the
company as reducing the cost of the product or changing old strategy. In a company, it
requires a continuous review of the values of resources which help the company cope up
with the internal and the external changes.
 Rare: - By the name only it is defined that the resources that are limited to the few
companies are considered in the category of the rare resources and they only give the
temporary advantage to the company. While on the other hand if the same resources are
having with many companies then the growth of the company is partial as identical
resources lead to the same plan and strategy which will overlap their success. So it is
very important that the company should have valuable resources and not the common
resources. The company having valuable resources help him to grow in the
organization(Grover, 2013).
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 Costly to Imitate: - In this, some resources are of the firm is imitated by the other firm
which leads to the copy of the original product. This lead to the loss in both company.
Imitation can occur in the two ways which are by directly imitating and the other is
providing the comparable product. According to the barney, there are three reasons why
resources are hard to imitate:-
 Social complexity
 Historical condition
 Casual ambiguity
 Organizational to capture value after realizing the Value, rarity and imitate of the
company resources and capabilities. The firm must organize company management
policies and system so that the organize leads towards success and do growth in the term
of the company. Vodafone must organize the management system and process. By the
help of this thing, a company can stand at a good position in the market.
ii) Strengths and weaknesses of the organization.
The strength of the Vodafone is as follow:-
 Large market coverage: -Among the world, the Vodafone is ranked 395th rank among the
world's top 2000 brands and according to the Forbes. Vodafone is mainly known for its
wide network coverage in the world. In India, it is ranked as the second largest company
in the telecommunication sector. Presently Vodafone is providsing its network in the 25
countries(Peng, 2017).
 In term of revenue: - In term of revenue Vodafone generate a large amount of revenue as
revenue is directly proportional to the no of the customer using the company service.
Across the globe, Vodafone is ranked as the 104 in sales figure across the 2000 company.
 Marketing: -The marketing which is done by the Vodafone is just brilliant as it spends a
lot of amount in marketing its brand name. Vodafone uses the ZooZoos for doing the
branding and advertisement in the market for company promotion. The huge amount of
public got affected by this move of the Vodafone Company.
 Premium coast of a company:- Vodafone is one of the leading company in the world and
due to which premium cost of the company is too high. People who are presently user of
the Vodafone used to feel proud of being a member of the Vodafone(Schrander, 2012).
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 Support of subscribers: - Vodafone has a massive number of subscribers which are even
growing too fast as the service is quite good from the side of Vodafone. According to
information in 2016, Vodafone was having around 35 million people subscribers all over
the world.
The weakness of the Vodafone is as follow:-
 Lose in the market share: - Vodafone was the one of the leading company in the world
but due to a decrease in the service of the company, the public had stopped investing in
the company and the effect of it that the fall in the Vodafone share value.
 The decrement in the subscribers: - In the Vodafone Company, the subscriber rate is
quite good but due to the lack in the service the company is continuously decreasing the
subscriber rate. And due to which company is facing downfall in the profit rate and also
in the market value(Pisano, 2015).
 Drop in the market value: - The reason behind the drop in the market value is directly
affected by the subscriber's base, as subscribers only decided by the value of the
company. In the last 2-3 years, both the company value and subscribers rate has been
badly affected.
 The downfall in the users: - Due to the continuous increase in the new companies in the
telecommunication sector the competition is increasing day by day. Companies which are
emerging presently are giving to many offers to the customers and due to that offers and
good services at low prices, a huge amount of population is shifting from Vodafone
Company to other telecom company.
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 Service: - Due to a decrease in the quality of the service the no of the customer is
switching their network to the other company. And which is becoming the main reason
the company lost in the telecommunication sector.
Task 3 – Analysing the telecommunications sector.
Presently Vodafone is facing too much competition in the market and due to not proper strategy
and Plans Company is facing loss in the share and business. It is very important for the company
to take several plans and devise appropriate strategies for improvement. There are certain models
which can be used by the company to develop the company strategy. Porter’s five forces model
is defined below:-
This mainly consists of the five industrial forces to determine the intensity of the rising
competition in the industry. This model is created by M. Porter in 1979 to find out how the
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forces are affecting the company. It consists of how to plan the strategy for the company and
help in finding how powerful these forces in the company.
 Treat of new entrants: -It is very difficult for the company to enter in the market as it
requires a lot of financial and huge licensing fees for buying the spectrum and even the
many regulation law and regulatory issue. Therefore Vodafone can beat them, or behave
as the threat to the other new entrants by providing a high level of quality and efficiency
of service in the market.
 Buyers power: -In the market, the buyers have the power to increase or decrease the
price of the product as they have the bargaining power is so strong. The lower price of
the product will also result in the lower revenue and good quality will result in the high
revenue and as Vodafone is a big company which can provide a reasonable profit to the
company.
 Supplier’s power: -As high demand in the market company is operating with a great
margin as compared to its competitors. Presently Vodafone is the leader in the
telecommunication market. And due to which company can make a good profit at a low
price even(Woodard, 2103).
 Industrial rivalry:- Presently in the market, there are a lot of rivals of the Vodafone and
for making a good market they are providing low call rates and good services. As a result
in return, Vodafone will have to provide good service as other companies is providing.
The company can use these Porter’s five forces framework in the company by collecting the
detail of all five forces working and then analyze the result and write them down in the form
of the figure which company can use as the information form. And after this form the
strategy for the improvement of the drawback of the company.
Another tool which can be used by the Vodafone company to improve competitive edge, it
consists of the stakeholder's analysis in different ways. By doing this stakeholders will get
influenced by the company.
 Customer: - For the company to growth in the telecommunication sector, the growth
is directly proportioned to the customer linked to the company. Vodafone ensures that
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