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H/508/0525 Business Strategy Unit 2 Level 5

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Introduction

Business strategy is a type of plan through which a company can operate its activities in a systematic manner. It helps a company in achieving targeted goals and objectives in a given period of time. But to formulate such strategies and policies, managers of a firm need to analyse the whole market situation and its position in terms of competition (Ackermann and Audretsch, 2013). It would help in building effective strategies and executing them in a proper way so that an enterprise can gain a high return on investment. In order to see the importance of such type of business strategies, a company of UK Vodafone has been taking in this report. It has made a discussion on developing policies and strategic rules by analysing the position of the enterprise through PESTLE and SWOT techniques. Along with this, the impact of micro and macro factors on the business environment is also described in this project.

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Task 1

P1 Evaluating the impact of the macro environment on a business organization

The functions of a business are so much affected by factors present in the internal and external environment. It includes political laws, changes in technology, economic fluctuation, number of competitors, business ethics and more. Therefore, the management of an association needs to analyse these attributes in a proper way which would impact business profitability and overall performance in both negative and positive ways (Alsoboa and Aldehayyat, 2013).  In context, Vodafone impact of the macro environment on its functional activities is explained below:-

PESTLE ANALYSIS

Some important factors of the macro environment which impact on functions of ... in an external manner are discussed below:

            Political: Every country has its own political rules and regulations which are made by its regulatory bodies. These laws are amendable for all companies which are working under its territories. Apart from this, such types of regulations are affected much when enterprises are operating businesses on an international level. It generates so much complexities when a firm introduces globalisation in businesses as this process requires it to follow all rules of government in which it wants to sell products. In context with Vodafone, some major benefits and drawbacks of political factors are:      

  • Strengths: Following all rules and regulations helps an organisation sell its products or services easily in the international market. It would help in increasing profitability and sales performance also.
  • Weaknesses: Strict laws of some countries create various barriers to taking business on a global level. In order to cope up with such problems, it is essential for associations to build strong strategies and make appropriate decisions in business before selling commodities in the international market.

Economic: This factor creates a great impact on the profitability of a firm. It includes inflation and deflation periods, fluctuation in currency rates, changes in interest rates and more. These alterations help in enhancing the internal strengths as well as increasing weaknesses. In addition to this, trading laws made by the government also affect export and import business within two countries or states like heavy excise duty, tax policies and more. In terms of Bentley, Omer and Sharp, (2013) impact of economic factors on business operations can be seen below:-

  • Strengths: In an inflation period, the economy of a country hike which increases the purchasing power of people. So, they used to buy more and more products in order to satisfy their own needs. It would help enterprises in increasing sales performance.
  • Weaknesses: Since in inflation period economy has become stable but in this process, companies used to sell their commodities at a high rate. So, people switch minds and look out for similar products which are available at lower prices as compared to others. Thus, it weakens the sales performance of a firm in such a manner.

Socio-Cultural: This factor forces a firm to create modifications and provide a wide range of products at different price rates. But before making any type of alteration, it is necessary for enterprises to identify the demand of customers, their needs, current trends in the marketplace and more. Further, make some strategies in order to manufacture or serve good quality products as per the requirement of consumers. This would help people in satisfying desires and assist them in retaining such associations. Socio-cultural factor also forces firms to bring ethical culture into their business. In this process, managers of Vodafone are needed to build effective strategies and policies by focusing more on providing benefits to employees. It will aid firms in getting retention of workers and getting the right work for them.

  • Strengths:  Ethical business aids employees to gain more benefits. In addition to this, it is more on completing the demands of customers which helps in getting their loyalties and retention for a long period of time.
  • Weaknesses:  Creating modification in business requires a lot of capital and funds. In addition to this, when the tastes of customers change then companies are used to selling their existing commodities at low prices which affects their profitability in a wide manner.

Technological: Rapid change in technologies gives birth to innovation which aids organisations in manufacturing products or services in a short period of interval as well as reduces the chance of defects also (Cadle, Paul and Turner, 2010). In addition to this, when a firm introduces high techniques in a business environment then departments it get various benefits operational management can utilise resources in a more economical way. While functions of the HRM department are also done in fast and accurate manner. Similarly, the marketing division can grab information on new trends, the need for changes, promoting brands in wider places and so on with the help of digital technologies. Thus,  this factor has impacted on business of Vodafone in both positive and negative manner in the following ways:-

  • Strengths: Introducing digital technology in organisational systems aids the firm in doing all its operations in a short period of interval as well as in an effective manner. In addition to this, reducing the chance of error in business activities. It aids such companies in decreasing wastage which would help in reducing extra expenditure also.
  • Weaknesses: Introducing the latest technologies in business requires providing training programs to employees. If managers do not provide the same then resistivity of workers can arise.

 Environmental: This factor also requires the attention of employers while expanding or running their business in a proper manner. It assists enterprises in reducing wastage and recycle the same as much as possible. As manufacturing companies use harmful chemicals in making products, therefore, environmental law assisted these firms in destroying the same in a proper and accurate manner. In addition to this, due to the alarming rate of global warming, the government has prohibited companies and societies from using polythene and such types of products. As these things cannot be recycled and destroyed easily.

  • Strengths: By following all laws of the environment, the brand image of a company is enhanced at the marketplace (Klettner, Clarke and Boersma, 2014). This would aid in acquiring more attention from customers which would increase the profitability of Vodafone also.
  • Weaknesses: Since the products of Vodafone include much usage of carbon products so following the rules of the environment is not possible for this company.

            Legal: Every country has its own law so if a company wants to operate a business in legal manner then it needs to follow all such regulations. It includes various types of legislation like the Health & Safety Law, Compensation Act, Sex Discrimination Act, Salary and Wage Act, Environmental Act, Anti-Discrimination Act, Employment Act and more. So, it is necessary for firms to strictly follow these laws while making decisions. It will help employees to work in a safe and healthy environment.

  • Strengths: With the help of employment legislation, an enterprise can improve the retention of staff members in an appropriate sense. Along with this, it is much required for business organisations to consider every single act in the marketplace so as to improve both profitability and productivity at the same time. If a firm does business in a legalised manner it may be possible that the organisation may gain a good reputation as well in the marketplace (Kernbach, Eppler and Bresciani, 2015).
  • Weaknesses: Some of the acts are there that deliver liberation to organisations. Therefore, it is very much possible that firms may take advantage of it and do business in an illegal manner in order to improve their profitability and productivity as well at the same time.

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Task 2

P2 Internal environment and its capabilities of a company

A project of the internal environment of firms involves the determination of strengths and weaknesses possessed by them. It is important for an company to consist of all important factors of the intrinsic environment like employees' working abilities, workers' skills, management efficiency etc. Organisations measure all these factors in an effective way. These internal factors develop the core competencies which enhance the quality of enterprise operations for achieving benefits by a company like as competitive advantages, market share, profits etc.

  1. a) Strategic capabilities

It is refers to the ability of the company to execute competitive techniques which involve enhancing the company's value and long-term sustainability within a marketplace. For making capabilities improvements, it is necessary for firms to provide an emphasis on the effective utilisation of important resources. Additionally, there is a need to provide intensity on various aspects like as enterprise assets, market position, and resources for developing the future which are linked with techniques, the purpose behind the growth of techniques for gaining advantages in the long term and appropriately meet targets of the company (Curwen, 2011). By this companies can compete with their strong rivals within a market as well as gain competitive benefits. In terms of Vodafone organisation, techniques are useful in fulfilling buyer's demands within the telecommunication sector. Modifications in technology change frequently, so it is important for this company to update their technologies within a span of time. It will bring enterprise competitiveness within a marketplace. Additionally, there are several benefits which are linked with developing this kind of technique to maintain developing enterprise as well as financial viability regularly. It is useful in giving opportunities to several stakeholders for gaining future growth. It can be utilized by several investors and additionally make effective decisions linked with investment, it also helps in encouraging members of staff as well as develop their harmonious relations within a market.

  1. b) VRIN/VRIO Model

It is refers to analytical strategies for resources examination of the company as well as gaining competitive advantages. It is a proper tool utilized by Vodafone management which is used by HRM linked to complete advantages of sustainable competition within the market in the UK. Its provision is useful for HR managers to find out different features which the company can use to meet higher position within a market as well as gain benefits of competition. VRIO tools help to make improvement in the internal strength of Vodafone organisation and also capabilities to meet its targets within a given period of time. It includes four different aspects that are explained in detail below:

  • Valuable: It is useful in giving organisation success. Different resources which are available are useful for organisations to gather the future linked opportunities within a marketplace by removing all threats. Additionally, important resources are part of firms as well as also help in meeting long-term operations of sustainability.
  • Rare: Resources which are used by certain companies are regarded as rare. Valuable and rare resources give advantages of temporary competition to organisations. In this sector, there is more competition, so there is a requirement for Vodafone firms to enhance their efficiency of working in a proper way. In terms of, Vodafone management should provide training to employees for the growth of skills so they can provide their performance properly (Dobbs, 2014).
  • Imitability: It provides proper resources which are available within the organisation and are very costly in nature. It is useful in developing a positive effect of enterprise activities as well as providing proper quality services to buyers for enhancing the value of a brand within a marketplace. By this, Vodafone organisation can enhance their profit level as well as market share.
  • Organisation: Vodafone organisation organises its enterprise in various countries as well as also a better image of the brand. Its base of buyers is very strong as well and also have good relations with them in an effective manner. It is important for Vodafone firm to make frequent modifications to update the latest technology in a proper way. Companies' structure should be very useful as well as systematic for firms to exploit their resources in an effective way to remove all cultural differences along with meeting the targets of the enterprise properly.
  1. c) Swot Analysis

It has been located that SWOT analysis includes strengths, weaknesses, opportunities and threats that a firm carries. Vodafone is a well-known brand all over the world and it is famous for its services and these are telecom roots. Therefore, it has also been located that 1984 was the year when this firm was founded and from then they have adopted an ample number of marketing strategies in order to gain competitive advantages in the marketplace. It has also helped it improve its image all over the world by delivering appropriate services to consumers according to their needs and requirements. In the context of Vodafone, a SWOT analysis has been done beneath:

Strengths:

Vodafone is doing business in around 25 countries and comes on 395th rank in almost 2000 brands all over the world. Along with this, the Indian business market is considered the second-largest customer base that Vodafone has. On the other hand, 2016 was the year in which 87.3 billion pounds was generated as revenue. Away with this, it has been stated that in order to maximise its benefits this telecom operator has raised its brand value in an appropriate sense by delivering products and services to customers in a befitting way. Vodafone is also rapidly enhancing its subscribers and carries around 85,000 staff members who are delivering its services all over the world (D'Aveni, Dagnino and Smith, 2010).

Weaknesses:

Vodafone carries its own network towers in most of countries but in some of them it does not. It has been located that the issue comes in every single month where health care professionals mostly get people whose skin and organs got reacted because of radiation and other things. These radiations that have been generated by networks have raised various diseases and these are cancer and many more. The nearby well-being experts and the World Health Organization concur there is no confirmation on the same. The harm however has just been finished. It is an issue looked by all telecom administrators. Government experts in a few nations have effectively taken prudent steps by constraining wireless use in schools and universities since students are more sensitive to RF fields. To a specific degree, the phone radiation concern diminishes the amount of interest since a section of the market will have the least utilization.

Opportunities:

It has been located that around 20% development which was seen in the telecom business over in almost three years and has built up around 4.7 billion as supporters. Developing markets like India, China, Turkey and South Africa have been enhancing execution with expanding income which adds to the piece of the pie (Pagani, 2013). In developing markets, versatile entrance is around half when contrasted with the European market. Creating nations is relied upon to convey quicker GDP with minimal option settled line framework. Turkey in the fourth year had income growing 31.3%. Vodafone India's income expanded by 14.7%. Other Asia Pacific locales and centre east administration income expanded by 9.8%.

Threats:

Vodafone's gathering's income originates from rising or creating nations since they have a greater part of its clients in such markets. In developing markets, be that as it may, political, administrative, financial and legitimate frameworks are less unsurprising. This condition makes Vodafone's ventures helpless and any legitimate improvements are outside the ability to control the gathering. There is additionally the probability of not having accomplished any profits in these business sectors (Williams and Figueiredo, 2011).

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Task 3

P3 Porter's five forces

This model plays a necessary role in the procedure of developing effective business strategies which aid in achieving competitive benefits in the marketplace. With an application of provisions offered through this management model, Vodafone firm can understand various competitive forces which are available in the marketplace for increased return amounts. This model contributes towards making a business firm successful (Porter’s Five Forces of Competitive Position Analysis, 2018). It is helpful in making improvements in the decision-making process of the firm in an efficient manner. It increases the motivational level of Vodafone business firm is looking towards the actions or policies of rivals and determining those factors which affect on business environment. Some factors of Porters five forces are given below as above:

            Competitive rivalry: Under this, there is a large number of competitors in a marketplace which perform or conduct their functions in a similar sector. In addition to this, there is a determination regarding the threat of quality of services and products in a significant manner. The main motive of every organisation is to earn profit and increase the productivity of the firm. In market marketplace, there are many competitors of this organisation and are Virgin Group, EE etc. In addition to this, it has been observed that the cost of products which competitors provided is more high.

            Bargaining power of Suppliers: Under this, the power of the supplier is identified as related to the effect on cost. In addition to this, the firm is based on its suppliers because they provide better quality raw materials at a reasonable cost. If the quality of raw materials is good then products will also be manufactured of effective quality. It will be helpful in attracting a large number of consumers. This organisation has many distributors which exist in various nations for doing the final delivery of goods. In the market of the United Kingdom, there are many distributions. It affects on profit level of the firm.

            Bargaining power of Buyer: It consists process of determining the power of consumers regards its effect on costing strategies along growth profit level of the company. Under this, cost include determining a large number of consumers and their order size in exchange for the money they pay. Vodafone business firm manufactures products on the basis of the demands or requirements of customers in the marketplace. It is helpful in targeting a large market share. At the time of conducting business, this organisation focus on generating more profit level.

            Threat of substitution: Under this, the substitution of goods is determined in context to measure its effect on profit as well as sales of the firm. There are several competitors present in market marketplace, and provide their products all over the world. In order to minimize the negative effect, it is necessary for Vodafone organisation to use better approaches which gives an effective opportunity for attracting a large number of consumers by providing attractive features in goods. This organisation uses innovation in its business to make products more; valuable. It is the responsibility of an organisation to produce a better quality of goods by using advanced technology in business or enhance the efficiency of operations; of the firm in an effective or systematic manner.

            The threat of new entry: The position of the firm at the market marketplace is more impacted by the threat of the new entrants at the marketplace (Tavitiyaman, Qu and Zhang, 2011). In context to this, it is necessary for firms to determine rules, conditions and regulations which are required to be followed for conducting business online. In this present time, new business firms conduct their business online. In this, it has been determined that firms invest more money at the time of adoption as well as advanced technology for carrying out activities and operations of business. This organisation develops better quality goods which can attract people so that they can not go anywhere and will be retained towards the firm for a long period of time.

These all are the necessary stages in Porters-five-forces which develop a positive effect on the business related to similar potion in the marketplace and provide benefits to consumers in an effective manner. If is helpful in developing a positive impact on business.

Task 4

P4 Implementing Concepts, Theories and Models to Help with Interpretation and Understanding of Strategic Plan

Bowman clock strategy can be understood by the following points:

  • Low price: In this strategy for maintaining its position in the market firm delivers its products and services at lower prices. This helps in attracting a large number of customers and provides competitive benefits to the entity.
  • Low price with low value-added: This is another strategy in which low value is added with low-price products in order to utilise all resources at an optimum level. Overall, in this products with low value added is offer to the customers.
  • Hybrid: This is one of the effective strategies, this company offers effective and featured products at low prices but at the same time various factors are examined in this related related with product differentiation. It is very important that all factors should be analysed properly as this helps in maintaining the differentiation. This is known as one of the effective and profitable strategy for business.
  • Differentiation: Under this company offer different products and services as compared to its rivals. One of the main benefits of this strategy is that it helps in attracting a large number of customers. This also provide competitive benefits to top companies.
  • Focused differentiation: This strategy is related to focusing on certain aspects while dealing with products and services. One of the main feature of this strategy is that it brings the value of the product high and increases the customer base of a company. This also supports keeping customers for a long time period (Scholes, 2015).
  • Risk high margin: This is known as one of the most risky strategies because in this company sets high prices for its products without offering any extra benefit to them. In today's business environment, this type of strategy is very difficult for a firm to apply. This strategy encourages diversification of business in various areas which contributes to its growth.
  • Monopoly pricing: This is another type of strategy in which only a single seller exists in the market and offers the product. Monopolists does not care about the value which customers are receiving. In this type of situation, monopolists have the opportunity to set high prices of products through which they can generate more profits.
  • Loss of market share: This is most ineffective strategy in which the company loses all its market share.

All these are the major strategies that can be used by firms in order to set the price of their products and to generate profits. Before choosing a strategy, it is very essential for managers to carry out situational analysis as various factors exist in the business environment and change on a continuous basis. By adopting the right and effective strategy, the company can maintain its position in the market and can survive in the long run. Of all strategies, differentiation is one of the effective strategies because when a firm offers something unique to its customers then helps in satisfying their needs and also supports in retains them for a long time period (Porter, 2011).

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Conclusion

It has been concluded from the above-given report Vodafone is a large size organisation which provides its services in all over the world. There are some necessary challenges or problems which are faced by Vodafone organisation at the time of conducting business in an effective or better manner. This report studied porters-five-forces which explains about competitiveness of an organisation. Organisational capabilities and also internal environment has been discussed under this mention report. Before conducting business in to a new country, Vodafone firm analyses the external environment of that country by using the pestle analysis.

References

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  • Johnson, G., 2016. Exploring strategy: text and cases. Pearson Education.
  • Kernbach, S., Eppler, M. J. and Bresciani, S., 2015. The use of visualization in the communication of business strategies: An experimental evaluation. International Journal of Business Communication 52(2). pp.164-187.
  • Klettner, A., Clarke, T. and Boersma, M., 2014. The governance of corporate sustainability: Empirical insights into the development, leadership and implementation of responsible business strategy. Journal of Business Ethics. 122(1). pp.145-165.
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  • Williams, B. and Figueiredo, J., 2011, June. Strategy and technology management: An innovation-leader case study. InTechnology Management Conference (ITMC), 2011 IEEE International (pp. 806-811). IEEE.
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