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Unit 3 - Business Strategy - Pearson BTEC Level 5 - HND Diploma Business Regent College Higher Education

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Introduction

Business strategy is something which needs to be taken care by every single organization from time to so that to maintain sustainability for a longer period of time (Ackermann and Audretsch, 2013). On the other hand, this type of strategy is much enclosed with various sort of factors like planning, arranging resources, analyzing of both the market and of rivals as well, talent of employees so that to assign them tasks and so on so that desired goals can be attained right on time. A present report in which Vodafone a multinational company has been taken in order to better understand about business concepts which was founded in the year of 1991. Along with this, the impact of both external and internal environments has also been considered under the report so that business can be run in a successful and effective manner. Apart from this, measuring has been done of the telecommunication sector, strategic directions under which Bowman's strategy clock model included which will help the organization in making effective decisions so that better results can be gained in an appropriate time of manner. The assignment will in the last give better understanding of techniques and strategies that have been adopted by companies so that to gain competitive advantages.

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Task 1

P1. Evaluation of impact and influence of macro environment on Vodafone business strategies

Business strategies are enclosed with various sort of directions and scopes within an organisation that may aid it is attaining all goals and objectives in a much more effective and efficient manner. Along with this, it is required for them to keep on fulfilling the needs and wants of consumers so as to achieve aims and objectives. The external environment should be kept in mind so that to attention can be grabbed right on time so that it won't affect on organization's performance (Alsoboa and Aldehayyat, 2013).

The business environment combines of various factors which create a great impact on the production and profitability of an organisation. it includes micro and macro factors that affect business operations through internally and externally. Elements like technology, rules and regulations, economic conditions etc. comes in the external environment. Managers of a company need to analyse the impact of these attributes through which they can gain achievements of business in a required manner. In context with Vodafone role of these factors in business can be analysed by:-

1) PESTLE model for environmental analysis

PESTLE stands for Political, Environmental, Social, Technological, Legal and Economical which helps in determining whether these factors create positive affect or negative on business. Managers of Vodafone used this model as a strategic tool for moving business from the national to the international level. Through this model, they can make effective plans for globalisation as well as execute them in a proper manner also (Bentley, Omer and Sharp, 2013) (Cadle, Paul and Turner, 2010). A brief discussion of PESTLE Analysis for this technical company is given below as below:

Political factors- This factor reflects the current condition of a country related to its politics. It creates much impact when a firm wants to launch its business in other countries. Therefore, before making a globalisation plan, management needs to analyse the political system of government which varies according to territorial regions. The main reason behind the difference in political laws of every country is cultural power. These dissimilarities create many hurdles in running a business organisation in the international market. Thus, it assists employers of firms in analysing the political rules of such regions where they want to open outlets (Curwen, 2011). It will help the management of enterprises to remove barriers to the globalisation of a business. With assistance to Vodafone which is a telecommunication organisation, the Government of UK has passed various amendments for such types of companies like the Roaming Regulation of European Union with the common purpose is to decreasing the cost of calls and internet data usage by approximately 70% for enhancement of customer satisfaction.

Economical factors- This factor reflects the economic condition of a country which creates a direct impact on the profitability of an association either in a positive or negative way. Along with this, profitability or financial conditions of business affect the economy also. It includes changes in taxation rates, trading policies, fluctuations, exchange rates, inflation, deflation and more. Therefore, if the economic condition of a country is good then it will enhance the business of the organisation too. If it is low, then the firm faces many problems in operating the business in a proper way. In the telecommunication sector like Vodafone Group Plc, a high inflation rate increases the purchasing power of people which consequently helps in enhancing the growth of business.

Social factors- Due to modernisation, lifestyles and preferences of people are changing on a regular basis. Therefore, before manufacturing any new product or services, employers of a firm are required to identify the demands of customers first. This will help in delivering effective services as well as high-quality of products in an efficient manner. With this assistance, the management of Vodafone conducts various activities in order to judge what consumers actually need to avail services of telecommunication. Along with this, they determine social culture, status, level of education, purchasing power and more. This will help in providing more innovative products and services to customers in a profitable way as well as in getting their retention.

Technological factors- Innovation in technology always creates a positive impact on the business of all firms especially for telecommunication companies (D'Aveni, Dagnino and Smith, 2010). It helps in providing more new features to customers as well as getting their interest in a wider manner. Therefore, Vodafone has adopted the latest technology in operations and production. This has supported management to create various new applications in the networking system.  Through this, Vodafone has gained high satisfaction from customers and their retention with services in an effective manner. Innovation has supported technical firms to operate their business operations on an international level easily as well as marketing products with full efficiencies. With this assistance, Vodafone has had success in operating as well as managing its business in more than 50 countries.

Legal factors- Rules and regulations of a country are always changed at regular intervals which creates a huge impact on the sales performance of a company. These legislations include the Employment Act, trade laws, taxation policy and more. All these factors are set some specific rules for firms by the government of a country. It assists Vodafone in implementing all types of legislation at business which helps in operating the company in a legal and successful manner.

Environment factors- Every marketplace has its own norms and rules which need to be known by managers of a company to enhance the profit level of business. Therefore, Vodafone Company analyses the situation of the marketplace first. It has operated its business in an eco-friendly way(Dobbs, 2014).

2) Ansoff's growth vector matrix

It is another type of model used to determine the impact of macro factors on the business of a company. This type of marketing theory helps in identifying the need for changes for future growth. It includes four types of strategies market penetration, diversification, market and product development. These factors provide a framework for devising the strategies for future development of business. This structure is used by managers, marketers and executives of a company for the achievement of business objectives.

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Task 2

P2 Internal environment and organisation capabilities

The internal environment incorporates certain factors that are important for a company in order to run their business in an effective manner. In includes certain elements like management, employees, corporate culture and many more. This helps the organization in performing their task in a better way. Therefore, it is essential that all the factors must be looked at by the manager because these can affect the business internally or externally (Sumer and Bayraktar, 2012). Apart from this, it assists the company in accomplishing the work in a systematic manner. Organizational behaviour can be said as the capabilities by which a company can manage their resources for example: a sufficient amount of staff members, attaining maximum benefits as compared to rival firms etc., henceforth, it is important that an enterprise goes through the situation and focus on organizational capabilities so that they can fulfil the demands according to the customer's needs and wants.

1) Strategic capability

Strategic capability is said to be an ability that is used for applying competitive strategies through which a company can sustain in the market for a longer period of time along with this it improves firms' value and shares at the market area. Thus, it is essential that superiors manage and implement all the strategic capabilities in such a manner that it is operated in a proper way. This includes elements like resources, skills, knowledge, and core competencies by which organizations can attain competitive advantage for longer periods. If a company hires eligible candidates then they can give their best efforts in their jobs so that the firm can attain their set targets and goals under a specific time frame. Therefore, it can be said that through competencies, the company can gain a superior position and it will enable them to perform their task in a different way. Thus, it is important that organizational capabilities are good so that a firm can achieve its aims and objectives in a given time period (Zalengera and et.al., 2014). Apart from this, it will assist companies in fulfilling the demands and needs of customers according to the choices and preferences of the consumers.

2) ‘VRIO/VRIN' model

VRIO is a kind of framework that is used for business analysis so that strategic schemes for an organization can be made. Thus, Vodafone is using this concept so as to understand and gain competitive advantages. Therefore, the VRIO tool is optimized to analyze all the internal factors so that all the capabilities and resources of a company. The existing strategies that is being used by Vodafone are assisting them in expanding their business in an effective manner along with this by providing better services they are sustaining customer loyalty (Scholes, 2015). With new and interesting schemes companies are enabling themselves to attract a large number of people towards their organization. For this, they have optimized new tools and technologies other than this Vodafone is conducting surveys so that they can identify the targeted customers from where they can gain maximum benefits. Whereas VRIO is used for as an effective tool so that the company can identify the resources that can provide them with competitive benefits. Therefore, it is utilized by most of the company so that all the elements can be analyzed in order to fulfil the criteria of an organization. This model was profound by Jay B. Barney and the model is discussed below in order to understand it in a better manner:           

Valuable- In this, designers and engineers are given much importance as they are the ones who assist the company by providing and implementing innovative ideas. This helps the organization eliminate all the threats and incorporates the resources that can add value in their products. Therefore, it assists the company in providing excellent services and as a result, it will enhance the brand image and increase the market value and shares as well. Thus, the resources that cannot add any value to the product are avoided and this leads to a competitive disadvantage (Tavitiyaman, Qu and Zhang, 2011).

Rare- In this, the resources that may be acquired by one or some other are included thus, those resources that are valuable and rare as well are involved. This provides temporary benefits to the organization. As tough competition can be seen in the sector of telecommunications it is important that Vodafone provides proper training to their employees so that they can improve their existing skills and knowledge. In context with Vodafone, there is a need to manage the risk in a better manner and for this, they must hire eligible and experienced professionals who can give their best to take the company in the forward direction.

Imitability- Under this, the resources that are required for manufacturing any products is copied or imitated through other companies whose productivity is minimal. Although it becomes sometimes difficult to use rare capabilities and resources if it is applied in a proper manner then they can give competitive advantages to the organization at the marketplace.

Organisation- It is considered as the last step for VRIO analysis and it helps in identifying the uniqueness, imitability and the value of product. If all the steps that are mentioned above are passed by the resources then in this case company can manage their work in a systematic manner. This will enable them to operate their activities properly. It includes some of the elements like compensation policies, management control and structure of the firm etc., through this company can make proper decisions in an effective manner (Williams and Figueiredo, 2011).

3) Organisation's strengths and weaknesses

Every company has its strengths and weaknesses this assist the company in making proper policies that can be used for their future proceedings. Therefore, it is important that the firm has the capability of changing the negative aspects into positive ones so that they can gain competitive advancement. Thus, some of the strengths and weaknesses of Vodafone are mentioned below:

Strengths

  • Vodafone is considered one of the leading companies and Sit has a strong market share around the globe. They provide better services and it is winning the loyalty of people in large numbers (Williams and Figueiredo, 2014).
  • As the company is operating its business on a large scale thus, they have more than 1000, 00 number of staff members who are helping them in providing better services to its customers.

Weaknesses

  • Due to the change in price strategies they rival companies are giving them a tough fight.
  • Although the services which Vodafone is providing is good they fail to give facilities to remote areas.

Task 3

P3 Porter's Five Forces model

Porter's five forces model plays a vital role in every single organisation. It is being analysed that the company can resolve all the complex issues or problems by formulating a proper and effective plan. Along with this, it is a must for firms to adopt the best sort of tools so as to measure the reputation of both of their own and of other companies as well that are doing business in same sector. On the other hand, in order to make a proper plan it is a must for Vodafone to examine the perspectives of consumers and make determinations so as to sustain at marketplace for a longer period of time(Firnkorn and Müller, 2012). Vodafone needs to keep in mind Porter's five forces to maintain both productivity and profitability in an appropriate manner. Some of its factors are given beneath:

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Bargaining Power of Suppliers: It has been examined that under the telecommunication sector suppliers do stay strong but then also firms like Vodafone keep on maintaining its profit margins and give a good rivalry to other organisations like Virgin. As Vodafone has a great brand name all over the world, therefore, it generates huge revenue where its suppliers support it because the company has maintained its reputation over the years. Apart from this, they also keep on maintaining the cost of suppliers if they increase it so as to better serve consumers on a regular basis. The reduction process of cost which is being enhanced by suppliers may aid this firm in grabbing the attention of customers in large numbers at both domestic and at international levels as well.

Bargaining power of Buyers:  Telecommunication firms have less commodities of services to offer which directly raises the number of buyers from all over the world. But, in the modern era, there are business people who are introducing new networks all around the globe which is directly affecting the profitability and productivity both at the same time of firms who have already made its existence in the marketplace of United Kingdom. It is a must for Vodafone to keep on making alterations in the products and services that are being offered by them to customers and charge them with lower prices so as to maintain its reputation among users of its network. With the help of this, good rivalry can be given to other firms(Grover and Kohli, 2013). Adoption of effective pricing techniques can aid in giving full of satisfactory services to consumers high in numbers.

Threats of new entrants: It has been analysed that there are new companies under this sector enters which directly puts impact on profit margins of Vodafone and of other big firms. However, many barriers are there that can stop new enterprises from entering this sector. The government asks for the high rate of charges which need to be paid by these organizations to enter this market. Similarly, the cost of establishing network infrastructure are high and frequent changes in technology bring more challenges and difficulties to new companies to enter and compete with existing rivals. However, Vodafone can able to compete with its rivals in more effective and efficient manner by improving the efficiency of its services which cannot be provided by their competitors.

Threats of Substitutes- There are various products in this world which played an important role and was being utilized by consumers in great numbers but every single thing has its age. Here, CDMA and landline can be stated as two major examples of lines that are mentioned above. But, broadband has taken its place(Johnson, 2016). Just like this, it is a must for Vodafone to keep on making alterations in products and services that they are offering at marketplace of the United Kingdom to customers. With the help of this, long-term profitability and its reputation can maintained in a much more effective and efficient manner.

Rivalry within the market- Companies like Virgin and some others are being stated as rivals that are rapidly looking into different aspects and are making strategies to give good rivalry to Vodafone. Therefore, it is a must for the research and development department of this company to keep on measuring the steps that are being taken by its rivals and formulate proper strategies so as to stay one step ahead of them. Continuation of this process may aid Vodafone in attaining a good reputation in the marketplace at both domestic and international levels. Apart from this, the telecommunication sector is stated as one of main sections of the United Kingdom which is helping in enhancing the economic growth of this country.

Henceforth, Porter's five forces should be kept in mind by Vodafone so that to sustain at marketplace of United Kingdom for a longer period of time (Kernbach, Eppler and Bresciani, 2015). With the help of this, firm will start dealing with all needs and wants of consumers. This scenario will also aid in giving good rivalry to competitors in proper and appropriate manner.

Task 4

P4 Bowman's strategy clock model

Bowman's Strategy Clock is one sort of model which is effective in nature and helps an organization to gain proper competitive advantages. With the help of this, it can be stated that a company can make a heavy profit by using this approach in an appropriate manner. David Faulkner and Cliff Bowman were the two intelligent human beings who introduced this model of marketing into the business world. It is considered an essential tool that may aid firms in analyzing the position that they have in the marketplace of the United Kingdom. Apart from this, it is very much needed for Vodafone to understand the business environment and to do an examination of its own position and of its rivals as well. Another name of this model is the marketing model which Vodafone needs to consider in an appropriate manner(Klettner, Clarke and Boersma, 2014). It has been analysed that there are some positions that consists under Bowman's Strategy Clock and these are mentioned beneath:

Position 1. Low price and low added value- According to Bowman Strategy Clock this stage is not at all close to the competitive phase. It has been found that firms do manufacture limited commodities and deal with consumers in small geographical areas and do not have much reputation so clients do get to know about products by looking at its logo. Along with this, this phase consists of low-profit margins where firms in high numbers do not like to compete with each other.

Position 2. Low cost- At this position most organisations build their products and services high in quantity which directly makes the firm much valuable in nature at the workplace along with this, in this context, Vodafone which is a telecommunication firm deals under this section where they provide services to consumers with less cost and do expect for less profit margins only. However, it has been examined that just because of low profit ratios Vodafone keeps on making changes accordingly so that it to sustain at marketplace of the United Kingdom for a longer period of time.
 Position 3. Hybrid- Under this stage it has been examined that firms that are willing to give good rivalry to their competitors come under this section. It keeps making different products and services and tries to compete with rivals to maintain its reputation in the marketplace of the United Kingdom. Product costs stay low which directly grabs the attention of consumers in huge numbers and they also try to apply new strategies so that to sustain for a longer period of time (Li, Zhou and Si, 2010).

Position 4. Differentiation- This phase is much enclosed with quality where the company manufactures products with proper utilization of raw materials and then asks for an average amount in exchange for them. Satisfaction gets improved which directly helps the organization in raising its reputation among rivals in the marketplace. Apart from this, profitability also gets raises which directly affects its goodwill in a positive way at both global and domestic levels.

Position 5. Focused Differentiation- Here, the cost of products starts taking rise as the quality of products was being improvised. This is not essential that goods have real value but value perception though consumers are enough to charge more premiums.

Position 6. Risky high margins- At this phase companies start charging high of products if they are being purchased by consumers. This stage is much enclosed with high risk as firms do not know about customers' perceptions as if they are going to purchase it or not. The profitability of an organization directly rises if the money which is being charged by the company has been accepted by users of products and services.

Position 7. Monopoly Pricing- This stage is pretty much enclosed with a monopoly system. It is being analysed that if a firm is making products and services that nobody else does then it is possible that the organization can charge to consumers as much as they want. Customers have to buy them as they do not see any sort of alternative of it in the marketplace. High profit margins can be expected under this phase(Pagani, 2013).

Position 8. Loss of market share- If an organization do not have a proper reputation among the marketplace then it is may be possible that its market share of it get decrease which will take the firm to a losing position. Low market share means consumers do not recognize about enterprise's name which can reduce its profitability as well.

Henceforward, with the help of Bowman's strategy clock model firms can rapidly look into various aspects and can give good rivalry to its competitors where they can expect high profit margins as well. here, Vodafone can adopt any of two strategies and these are: Entering to a whole new geographical area where it was not doing business previously or manufacturing new products with innovative ideas so that to sustain at the marketplace of United Kingdom for a longer period of time. With the help of this, the market share of this company can be enhanced right on time(Porter, 2011).

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Conclusion

From the above-mentioned report, it is being summarized that proper utilization of strategy has helped firms in grabbing a good position at the marketplace where they can give good rivalry to other organisations that are dealing in the same sector and are working with the same perspectives. Developing a proper vision may aid the company in delivering good training to employees which will enhance their skills and knowledge and become much more effective in the workplace. Study of the external environment should be done on a regular basis so that it won't have much impact on the decisions of the firm and sustain in the market for the long term. VRIO & VRIN are two sorts of models that are being used by company so that to sustain in the marketplace where unique strategies are being taken under use to overcome all risk factors. Porters five forces is another model which can be considered as an essential approach that can aid firms of telecommunication subdivision also deliberated under the assignment.

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References

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