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 are needed to analyse 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 high return on investment. In order to see importance of such type of business strategies, a company of UK Vodafone has been take in this report. It has made a discussion on developing policies and strategical rules by analysing position of enterprise through PESTLE and SWOT technique. Along with this, impact of micro and macro factors on business environment also described in this project.
P1 Evaluating the impact of macro environment on an business organization
Functions of a business are so much effected by factors present in internal and external environment. It includes political laws, changes in technology, economical fluctuation, number of competitors, business ethics and more. Therefore, management of an association needs to analyse these attributes in a proper way which would impact on business profitability and overall performance in both negative and positive way (Alsoboa and Aldehayyat, 2013). In context with, Vodafone impact of macro environment on its functional activities are explaining below:-
Some important factors of 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 type of regulations are affected much when enterprises are operating businesses on international level. It generates so much complexities when a firm introduces globalisation in businesses as this process requires to follow all rules of government in which it want to sell products. In context with Vodafone, some major benefits and drawbacks of political factors are:
- Strengths: Following all rules and regulation helps an organisation in selling its products or services easily in international market. It would help in increasing profitability and sales performance also.
- Weaknesses: Strict laws of some countries create various barriers in taking business on global level. In order to cope up with such problems, it is essential for association to build strong strategies and make appropriate decisions in business before selling commodities in international market.
Economic: This factor creates a great impact on profitability of a firm. It includes inflation and deflation period, fluctuation in currency rates, changes in interest rates and more. These alterations help in enhancing the internal strengths as well as increase weaknesses also. In addition to this, trading laws made by government also effect on 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 economical factor on business operations can be seen as below:-
- Strengths: In inflation period, economy of a country hikes which increases the purchasing power of people. So, they used to buy more and more products in order to satisfy own needs. It would help enterprises in increasing sales performance.
- Weaknesses: Since in inflation period economy becomes stable but in this process, companies used to sale their commodities on high rate. So, people used to switch minds and looks out on similar products which are available on less price as compared to others. Thus, it weakens the sale 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 on different prices rates. But before making any type of alteration, it is necessary for enterprises to identify demand of customers, their needs, current trend for marketplace and more. Further, make some strategies in order to manufacture or serve good quality of products as per requirement of consumers. This would help people in satisfying desires and assist them to retain with such associations. Socio-Cultural factor also forces firm to bring ethical culture in 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 get right work of them.
- Strengths: Ethical business aid employees to gain more benefits. In addition to this, concerning more on completing demands of customers which help in getting their loyalties and retention for a long period of time.
- Weaknesses: Creating modification in business requires lot of capital and funds. In addition to this, when taste of customers change then companies are used to sale its existing commodities on low price which affects profitability of them in a wide manner.
Technological: Rapid change in technologies give birth to innovation which aid organisations to manufacture 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 business environment then departments of it gets various benefits like operational management can utilise resources in more economical way. While functions of HRM department also done in fast and accurate manner. Similarly, marketing division can grab information of new trends, need of 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 way:-
- Strengths: Introducing digital technology in organisational system aid firm in doing all its operations in a short period of interval as well as in effective manner. In addition to this, reducing chance of error in business activities. It aid such companies in decreasing wastages which would help in reducing extra expenditure also.
- Weaknesses: Introducing latest technologies in business requires to provide training programs to employees. If managers will not provide the same then resistivity of workers can be arise.
Environmental: This factor also requires attention of employers while expanding or running their business in a proper manner. It assist enterprises to reduce wastage and recycle the same as much as possible. As manufacturing companies use harmful chemicals in making products therefore, environmental law assisted these firms to destroy the same in a proper and accurate manner. In addition to this, due to alarming rate of global warming, government has prohibited companies and societies to use polythene and such type of products. As these things cannot recycle and destroy easily.
- Strengths: By following all laws of environment, brand image of a company enhances at marketplace (Klettner, Clarke and Boersma, 2014). This would aid in acquiring more attention of customers which increases profitability of Vodafone also.
- Weaknesses: Since products of Vodafone are included much usage of carbon products so follow rules of environment is not possible for this company.
Legal: Every country has its own law so if a company wants to operate business in legal manner then it needs to follow all such regulations. It includes various type of legislations like 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 taking decisions. It will help employees to work in safe and healthy environment.
- Strengths: With the help of employment legislations, an enterprise can improve retention of staff members in an appropriate sense. Along with this, it is much required for business organisation to consider every single act at marketplace so that to improve both profitability and productivity both at the same time. If a firm will do business in a legalised manner it is may be possible that organisation may gain good reputation as well at marketplace (Kernbach, Eppler and Bresciani, 2015).
- Weaknesses: Some of acts are there that delivers liberation to organisations. Therefore, it is very much possible that firms may take advantages of it and do business in an illegal manner in order to improvise their profitability and productivity as well at the same time.
P2 Internal environment and its capabilities of an company
An project of internal environment of firms involve determination of strength and weakness possessed by them. It is important for an company to consists all important factors of intrinsic environment like as employees working abilities, workers skills, management efficiency etc. Organisation measure all these factors in a effective way. In these internal factors develop the core competencies which enhance the quality of enterprise operations for achieving benefits by company like as competitive advantages, market share, profits etc.
- a) Strategic capabilities
It is refers to an ability of company for executing the competitive techniques which involve towards enhancing companies value and long term sustainability within a marketplace. For making capabilities improvements, it is necessary for firms to provide an emphasis on effective utilization of important resources. Additionally, there is a need to provide intensity on various aspects like as enterprise assets, market position, resources for developing future which are linked with techniques, purpose behind growth of techniques for gaining advantages of long term and meet targets of company in an proper way (Curwen, 2011). By this company can compete with their strong rivals within a market as well as gain competitive benefits. In term of Vodafone organisation, techniques are useful in fulfilling buyers demand within a telecommunication sector. Modifications in technology changes frequently, so it is important for this company to update their technologies within a span of time. It will bring enterprise competitiveness within a market place. Additionally, there are several benefits which are linked with developing of this kind of techniques to remain 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 additionally take a effective decisions linked with investment, it also help in encouraging members of staff as well as develop their harmonious relations within a market.
- b) VRIN/VRIO Model
It is refers to an analytical strategies for resources examine of company as well as gaining competitive advantages. It is an proper tool utilized by Vodafone management which is used by HRM linked to complete advantages of sustainable competitive within market in UK. Its provision is useful for HR managers to find out different features which company can used to meet higher position within a market as well as gain benefits of competitive. VRIO tools help to make improvement in internal strength of Vodafone organisation and also capabilities to meet its targets within a given period of time. It include four different aspects are explained in detail below:
- Valuable: It is useful in giving organisation success. Different resources which are available are useful for organisation to gather the future linked opportunities within a marketplace by removing all threats. Additionally, important resources are a part of firms as well as also help in meeting long term operations of sustainability.
- Rare: Resources which are used by certain company are regarded as rare. Valuable and rare both the resources give advantages of temporary competitive to organisation. In this sector, having more competitive, so there is requirement to Vodafone firms to enhance its efficiency of working within 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 are very much costly within nature. It is useful in developing a positive effect of enterprise activities as well as also provide proper quality of services to buyers for enhancing value of brand within a marketplace. By this, Vodafone organisation can enhance their profit level as well as market share.
- Organisation: Vodafone organisation organise its enterprise in various countries as well as also a better image of brand. Its base of buyers are very much strong as well as also have good relations with them in an effective manner. It is important for Vodafone firm to make a frequent modifications on updating latest technology in an proper way. Companies structure should be very useful as well as systematic for firms to exploit its resources in an effective way to remove all cultural differences along with meet targets of the enterprise properly.
- 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 in all over 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 found and from then they have made adopted ample number of marketing strategies in order to gain competitive advantages at marketplace. It has also helped them in improvising its image in all over world through delivering appropriate services to consumers according to their needs and requirements. In context of Vodafone, SWOT analysis has been done beneath:
Vodafone is doing business in around 25 countries and comes on 395th rank in almost 2000 brands of all over world. Along with this, Indian business market is being considered as the second largest customer base that Vodafone have. On the other hand, 2016 was the year in which 87.3 billion pound which was generated as revenue. Away with this, it has been located that in order to maximise their benefits that this telecom operator have raised its brand value in an appropriate sense through delivering products and services to customers in a befitting way. Vodafone is also rapidly enhancing their subscribers and carries around 85,000 staff members that are delivering its services in all over world (D'Aveni, Dagnino and Smith, 2010).
Vodafone carries its own network towers in around most of the countries but some of them it does not. It has been located that issue comes in every single month where health care professionals mostly gets people whose skin and organs got reacted because of radiations 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 step by constraining wireless use in school and universities, since students are more delicate to RF fields. To a specific degree, the phone radiation concern diminishes the amount of interest since a section of the market will have least utilization.
It has been located that around 20% development which was seen in telecom business over in almost three years and have 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 European market. Creating nations are 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 center east administration income expanded by 9.8%.
Vodafone's gathering's income originates from rising or creating nations since they have 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 of the gathering. There is additionally the probability of not having accomplished any profits in these business sectors (Williams and Figueiredo, 2011).
P3 Porters five forces
This model plays necessary role in procedure of developing effective business strategies which aid in achieving competitive benefit at the market place. With an application of provisions offered through this management model, Vodafone firm can understand regarding various competitive forced which are available at market place for increase return amount. This model contribute towards making business firm successful (Porter’s Five Forces of Competitive Position Analysis, 2018). It is helpful in make improvement in decision making process of firm in an efficient manner. It increase motivational level of Vodafone business firm is look towards an actions or policies of rivals and determine those factors which affect on business environment. Some factors of Porters five forces given below as above:
Competitive rivalry: Under this, there are large number of competitors at market place which perform or conduct their functions in the similar sector. In addition to this, there is determined regarding threat of quality of services and products in significant manner. The main motive of every organisation is to earn profit and increase productivity of firm. At market place, there are many competitors of this organisation and these are Virgin group, EE etc. IN addition to this, it has been observed that cost of products which competitors provided is more high.
Bargaining power of Suppliers : Under this, power of supplier is identified related to affect on cost. In addition to this, firm is based on its suppliers because they provide better quality of raw materials at reasonable cost. If quality of raw material will be good then products will also be manufactured of effective quality. It will be helpful in attract large number of consumers. This organisation has many distributors which exist in various nations for doing final delivery of goods. In market of United Kingdom, there are many distribution. It affect on profit level of firm.
Bargaining power of Buyer: It consists process of determination of power of consumers regards its affect on costing strategies along growth profit level of company. Under this, cost include about determine large number of consumers and their order size in exchange of money which they pay. Vodafone business firm manufactures products on the basis of demands or requirements of customers at marketplace. It is helpful in target the large market share. At the time of conduct business, this organisation focus on generate more profit level.
Threat of substitution: Under this, substitution of goods are determined in context to measure its affect on profit as well as sales of firm. There are several competitors present at market place, and provide their products in all over the world. In order to minimize the negative affect, it is necessary for Vodafone organisation to use better approaches which gives an effective opportunities for attract the large number of consumers by providing attractive features in goods. This organisation uses innovation in its business for making products more valuable. It is a responsibility of an organisation to produce better quality of goods by using advanced technology in business or enhance efficiency of operations of firm in an effective or systematic manner.
Threat of new entry: Position of firm at market place is more impacted through threat of the new entrants at market place (Tavitiyaman, Qu and Zhang, 2011). In context to this, it is necessary for firm to determine rules, conditions and regulation which are required to be follows for conduct business online. In this present time, new business firm conduct its business online. In this, it has been determined that firm invest more money at the time of adopt as well as advanced technology for carrying out activities and operations of business. This organisation develops better quality of goods which can attract people so that they can not go anywhere and will be retain towards firm for long period of time.
These all are the necessary stages in Porters-five-forces which develop positive affect on the business related to similar potion at market place and provide benefits to consumers in an effective manner. If is helpful in develop positive impact on business.
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 maintain its position in market firm deliver its products and services at lower prices. This help in attract large number of customers and provide competitive benefit to 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 in an optimum level. Overall, in this products with low value added is offer to the customers.
- Hybrid: This is one of the effective strategy, in this company offer effective and featured products at low price 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 help in maintain 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 compare to its rivals. One of the main benefit of this strategy is that it help in attract large number of customers. This also provide competitive benefit top company.
- Focused differentiation: This strategy is related with focus on certain aspects while deal with products and services. One of the main feature of this strategy is that it bring the value of product high and increase customer base of company. This also support in keep customers for a long time period (Scholes, 2015).
- Risk high margin: This is known as one of the most risky strategy because in this company set high prices of 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 encourage diversification of business in various areas which contribute in its growth.
- Monopoly pricing: This is another type of strategy in which only single seller exist in the market and offer the product. Monopolist does not care about the value which customers are receiving. In this type of situation monopolist have the opportunity to set high price of products through which he can generate more profits.
- Loss of market share: This is mots ineffective strategy in which company loss all its market share.
All these are the major strategies that can be use by firms in order to set the price of its products and to generate profits. Before choose a strategy, it is very essential for manager to carry out situational analysis as various factors exist in business environment and change on continuous basis. By adopt right and effective strategy, company can maintain its position in market and can survive in long run. From all strategies, differentiation is one of the effective strategy because when firm offer something unique to its customers then help in satisfy their needs and also support in retain them for long time period (Porter, 2011).
It has been concluded from the above given report Vodafone is large size organisation which provide its services in all over the world. There are some necessary challenges or problems which are faced through Vodafone organisation at the time of conducting business in an effective or better manner. Under this report studied about porters-five-forces which explain about competitiveness of an organisation. Organisational capabilities and also internal environment has been discussed under this mention report. Before conduct business in to the new country, Vodafone firm analyse external environment of that country by using the pestle analysis.
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