Strategies play significant role in the success of business unit. Effective strategies support the firm in gaining success and sustaining in the market for longer duration. Present study is based on Vodafone which is operating in the mobile telecommunication field. Company is growing well in the international market (Ghezzi, Cortimiglia and Frank, 2015). It offers quality telecommunication services to consumers across the world. Present report will discus external environment of the industry. It will apply Ansoff's growth vector matrix in respect to Vodafone. Furthermore, study will explain strategic capabilities and VRIO model. Porter's five force model will be applied in the company context. In addition, assignment will use Bowman's strategy clock model for identifying options available to the business.
1. PESTLE model
Vodafone is the fastest growing telecommunication company. It is operating its business across the world. It offers telecommunication services globally. Recently it is operating in more than 30 countries (Heracleous and Werres, 2016). It considered external market situation and accordingly expand its business into the new locations. That helps the organization in gaining success in the market. There are various external factors that impact on its overall performance and business strategies. These are explained as below:
It is the most effective element that influence overall operational aspect of the firm. Vodafone always look at the political stability of the country and accordingly makes decision to run its business in particular region. UK is the place where government is stable and government has makes laws for enhancing telecommunication services, network of the company. This has helped the firm in running its business in the country smoothly (Haaker and et.al, 2017). Due to political stability Vodafone has become able to conduct operations in India, England, Newbury etc. many locations.
It is another essential macro environmental factor that impact on overall performance of the firm. It is essential for dimension of the business unit. If there are unstable economic condition then it will not be able to run its business smooth. UK is the country where GDP rate is high, people have adequate income sources (Fasan, 2015). These people are able to buy products and services of Vodafone easily. This helps the entity in enhancing its profit. But there are many other countries where economic position is not sound in such condition firm has to face difficulty because it fails to generate revenues in these nations. If there is uncertainty in the economic condition then Vodafone makes changes in its strategies (Galperina and Klen, 2017).
It is another essential element that impact on business performance significantly. Life style of people, belief, culture etc. affect overall choice of consumers. If entity is able to meet with their expectation then people will buy its products. Vodafone always consider needs of consumers and provide them products and services accordingly. That is why it has become the leading telecommunication firm in this market (Rafiq, 2016). Company always consider social aspects of different people those who live different location and accordingly makes strategy to conduct operation in the nation. Hat helps the entity in gaining success in the market.
Vodafone always consider innovation and implements new ideas so that it can enhance satisfaction level of the consumer and can improve business performance. Vodafone recently has started providing 4G services that attracts many people towards the brand. It spends huge money in technologies and makes changes in its system if new technology come into the market (Harlow, 2016). That has supported the firm in gaining high profit and gaining competitive advantage in the market.
As Vodafone is operating its business globally. It is very important for company that to follow legislation of each nation. Legal issue can create complication for the business in running its operation smoothly. If employment laws of particular nation are different from hone country then company has to follow these regulations otherwise it may create issue in retaining staff in the workplace for longer duration (Zeschky, Winterhalter and Gassmann, 2014).
It is another external factor that influence performance of entire telecommunication industry. Vodafone always create positive working condition for employees that attract people towards the Vodafone family. It takes into consideration to the aforementioned facts that helps in gaining success in the global market (Florczyk, 2016).
2. Ansoff's growth matrix
Vodafone group has the largest mobile network that has supported the firm in growing well in telecommunication industry. Ansoff's matrix is the strategy that assist in identifying strategic position of business unit. This is the tool that describes effectiveness of strategies of business hat drives the firm towards growth (SammutBonnici and Galea, 2015). It has several four phases:
- Market penetration: It is the simple way in which entity sells its products in existing market only. Company always consider finding new opportunities or strategies through which it can reach to mass audience and can gain their loyalty. Vodafone has improved its market present by opening more than 25000 distribution outlets. That has helped the company in becoming leading telecommunication firm and service provider (Ghosh, 2016).
- Market development: It is another approach that concentrates on developing market. It always emphasis on attracting new buyers by entering into new market. Vodafone has reached to many nations and it is operating its business in many geographical locations. Company looks at the demographic and psychological characteristic of the consumers of particular location and accordingly provide them services. This has helped the company in increasing its market share by 45%. It takes support of promotional strategy and enter into new market (Chathuranga, 2015).
- Product development: It is another phase of Ansoff matrix. In this entity focus on creating new products for the existing customers. Company always tries to satisfy its consumers for that it makes changes in existing products and makee innovation. This helps in developing products so that consumers can get satisfied. Vodafone is continuously trying to develop new products. For example now it is offering 4G services to its buyers. That attracts many people in the existing location. This gives advantage to the firm and it becomes able to gain competitive advantage in this market (Salim, 2016).
- Diversification: It is the next phase of Ansoff matrix that concentrates on diversification. Company concentrates on selling new product in new market. That gives the opportunity to the business to expend the firm. That improves supply chain and enhance revenues of the company. Vodafone has introduces global machine to machine service platform. This system is helpful for the companies to manage their wireless system. It helps Vodafone in providing amazing quality services to the new customers in the other countries.
1. Strategic capability
Strategic capabilities can be defined as ability of the business unit to run its operations successfully and gain competitive advantage in the market. Each firm has some abilities that make the firm different from other competitor brands. It is considered as essential element that helps the organization in remaining in competition and growing well in the market. There are many firms those which has strong financial capabilities, skilled employees. All these capabilities of the business unit helps the organization in accomplishing its goal (Pestle Analysis of Vodafone, 2017).
If the company has strong capabilities then firm becomes able to attract new investors. That helps the firm in expanding its business in new locations and enhancing brand image in the market. Strategic capabilities include: human resource, technical \resources etc. In order to remain competitive in the market it is very important for the firm that to concentrate on its strategic capabilities and always try to raise capabilities. These abilities of the firm makes them able to earn more profit and enhancing satisfaction level of consumers. Vodafone is the leading brand in telecommunication industry (Chathuranga, 2015). That has strong financial position. Company has adequate financial resources that support business unit in expanding its business into the new location. If technological changes occur then entity has ability to implement these changes and run its business in smooth manner. Furthermore, Vodafone has strong command over market. It carries out market research before entering into the new market. This helps the entity in identifying situation of new location and test of people. By this way it makes its strategies and decide which kind of products needs to be provided to consumers (Salim, 2016).
Strategic capabilities give opportunities to the business unit so that it can compete in the market and can grow well. It concentrates on assets of the business, market position etc. Vodafone is the firm that is performing well in the market. Because it is able to provide high quality services to its users across the world. Company has skilled employees and it treats its workers as assets. This is strategic capability of the business that helps the firm in expanding its operations across the world (Ghosh, 2016). Furthermore, firm has adequate financial resources, tangible resources. It has effective strategies that has supported the business unit in utilizing its capabilities in effective manner and gaining positive outcome.
2. VRIO/ VRIN model
Vodafone is the leading telecommunication brand that is operating its business across the world. It offers wide range of network services to the consumers. It has more than 25000 outlets that has made the firm more visible. It is operating is business in may countries that is why it has mass number of consumers. VRIO model is the framework that helps the firm in identifying its strategic capabilities (SammutBonnici and Galea, 2015). This model has four major components: value, rareness, imitability and non substitutable. Values are such elements that enhances value of the business unit and helps the firm in gaining competitive advantage. Rareness can be defined as resources that are available to the business that support the entity in running its operations successfully in many countries. Imitabilities are idea resources that gives chance to the firm to grow well. Non substitutable are ideas resources that are not possible to substitute with other resources (Florczyk, 2016).
VRIO analysis is considered as analytical technique that supports in evaluating capabilities of the company and identifying its growth in the future. VRIO framework for Vodafone is described as below:
- Value: Company has adequate financial resources. It has large infrastructure facilities that helps the business in running its operations smoothly. Due to availability of adequate financial resources company has become able to enhance product quality and it is offering wide range of products. Company has recently invested for providing 4G services to the consumers globally. If it does not have adequate monitory resources then it may create difficulty for the business unit to run its business effectively and satisfying needs of consumers (Zeschky, Winterhalter and Gassmann, 2014). Furthermore, global distribution network is another value of the company. It has skilled human resources that support the Vodafone ion meeting with the needs of clients and making them loyal towards the brand. Company has effective marketing strategies that attract many people towards the brand. Research and development aspect of Vodafone is another major value of the entity (Harlow, 2016).
- Rareness: It is another component of this model, Vodafone has global presence and highly specialized stuff. There are only limited firm those which have global networks in the telecommunication industry. Large product range has made the firm unique from its competitors. Cited firm applies secret formula. It has not revealed its strategies in the market that has helped in gaining competitive advantage.
- Imitability: Vodafone has significant market segment strategy. Its culture is amazing this culture helps the business unit in retaining its skilled labour in workplace for longer duration (Rafiq, 2016). It is very difficult for other firms to imitate its brand image. There are many competitors of Vodafone those which are creating pressure on the firm but due to its strong brand reputation and strong satisfaction level of consumers, it is not possible for others brands to copy it. Company always treats its workers well, it treats them as assets and involve them in decision making process. Leaders empower the employees and take their feedback time to time. This motivate workers and make them positive towards the brand. That is why company has skilled people those who are working in workspace for longer duration (Heracleous and Werres, 2016).
- Non- substitutable: Brand image, large product range aspects can not be substitute by other resources.
VRIO model determines strategic capabilities possessed by Vodafone that supports the business unit in gaining success in the market.
3. Strength and weakness of Vodafone
Vodafone is the brand that is popular for its deep telecom roots globally. Its headquarters is in London. It has come into existence in the year 1984 in UK and has impressed the consumers by offering them high quality network services (Ghezzi, Cortimiglia and Frank, 2015).
Strength of Vodafone
Massive market coverage
It has wide distribution network and is the largest subscriber of many countries. It has branches in more than 25 countries.
Vodafone has employed more than 1000000 employees globally. It trains its employees in such manner so that they can serve better to consumers. All its workers have long termed experience of this industry and are associated with the brand since longer duration. They are highly satisfied with the company and its culture that motivates them to perform well in the organization (SammutBonnici and Galea, 2015).
Strong marketing tactics
Vodafone is the first telecommunication firm that has started market its brand. That has helped in creating unique brand image of the business and has gained attention of mass audience. This has helped the organization in increasing its revenues and gaining competitive advantage as well. ZOOZOO concepts of Vodafone has made it popular worldwide. (Ghosh, 2016)
Highly efficient websites
Vodafone adopts advance technologies that support the firm in offering amazing services to the consumers. It has developed its website now people are able to make online payments, recharges and can activate their services easily.
Dropping subscriber base
It is the main weakness of Vodafone. Since last four years its subscriber base is dropping. That is why Vodafone is continuously working for global expansion so that it can maintain its market reputation. It is required to give strength to the core values of business and acquire more customers (Salim, 2016).
Dropping brand valuation
Due to decreasing subscriber base brand valuation of the company is dropping rapidly.
Poor performance in European market
It is another major draw back of Vodafone, Brexit has created issue for the company to run its business in this market. It is unable to generate revenues in European market. More than 40% revenues are generated from Indian market rather than US or UK (Haaker and et.al, 2017).
Porter's five forces model
In order to identify competition in the market, porter's five forces model is being applied by organizations. It deals with the elements those which are related to outside of the company but impacts on overall performance of the firm to great extent. It is very important for the Vodafone that to develop understanding about the competitors and develop strategies accordingly so that it can meet with the competition and can gain success in this market (Chathuranga, 2015).
Bargaining power of buyers
It is one of the main component of porter's five forces. Consumers are the life blood of business. They have high power to influence overall performance of company. It is responsibility of Vodafone that to provide satisfactory products to the consumers so that they be satisfied and remain in the firm for longer duration. If people do not like its products and services then they can easily move towards other brand such as EE limited etc. Each consumer has its own demand and they always want the best products against price theta they pay (Zeschky, Winterhalter and Gassmann, 2014). It creates pressure of cited firm to meet with requirements of wide range of people. Vodafone implements innovative ideas and develop its products. It helps the company in satisfying its buyers and retaining them in workplace for longer duration.
Bargaining power of suppliers
Suppliers of telecommunication industry has high power. There are limited suppliers those which offer raw material to the telecommunication companies. In such condition Vodafone has to be depended highly on these business unit. In such condition it because difficult for the cited firm to run its business if suppliers increases their cost. This enhances pressure on the enterprise and it gets failed to sustain in the market for longer duration (Harlow, 2016).
Threats of new entrants
Threats of new entrants is low in telecommunication industry. Companies required experience of working in this sector and they have to invest huge amount for sustaining in the market for longer duration. In such condition new entrants can not enter in the market so easily. Vodafone reduces its cost and offer services to the consumers at lower rates. That supports entity in gaining competitive advantage. It maintains high level of efficiency in its operations that crate difficulty for the new entrants to enter in this market (Heracleous and Werres, 2016).
Threats of substitutes
Threats of substitute is moderate for Vodafone. Company always concentrates on cost leadership strategy. This strategy helps the organization in creating unique brand image in the market which can not be replicated easily. In the modern time social networking sites, video conferencing, Skype etc. various applications use by users that has reduced demand of Vodafone services. These are substitute products that creates issue for the business unit in the market (Ghezzi, Cortimiglia and Frank, 2015).
Rivalry within the market
Vodafone has to face high competition. There are many telecommunication firms those which are offering amazing services to clients that influence mind of people and affect overall sustainability of the business unit (Heracleous and Werres, 2016).
Bowman's strategy clock model
Bowman's strategy clock model is the framework that is utilized by entities to identify their competitive position in the market. Telecommunication industry is facing high competition in the market that creates problems for the organizations to run their business in the market successfully (Bowman strategy clock, 2017). This theory explores strategic positioning options for the development of the firm so that entity can run its business in smooth manner and can gain competitive advantage. The main agenda of applying this model is to identify options available to the organization to position a product. This model is based on two main dimension: price and perceived value.
Low price and low value added
It is low competitive position for the business. In this position entity has poor differentiation of products and customers perceives low value. In this position entity offers products at lower price. This helps the organization in sustaining in the market (Salim, 2016).
It is another position where entity concentrates on providing high quality products to the consumers. Company looks at the needs of consumers and offer them valuable products. Though entity sells its products at lower rates and always prefer to earn low profit. In this position company mainly focus on satisfaction level of customers. In this position Vodafone has to focus on cost minimization. This is another good option available to the cited firm because it an offer high quality products to the consumers at lower rates (Zeschky, Winterhalter and Gassmann, 2014). This can enhance production of the firm and can help in increasing its profitability as well.
It is position 3 in which company can differentiate their products. All its products need to have high quality and these can create value for the customers. But in this position Vodafone has to concentrate on low prices (Galperina and Klen, 2017). If company becomes able to offers high valuable products to the consumers then it can generate reasonable profit in the organization. This is effective positioning strategy and the good option available to the Vodafone because by this way it will be able to gain competitive advantage in the market.
It is another positioning strategy or option in the Bowman's model. Companies can concentrate on variety of products with high quality an average prices. This can satisfied to the buyers at higher rate. It creates high value to the firm and help the entity in branding of the organization. This is good option available to Vodafone (Heracleous and Werres, 2016).
In this position Vodafone can offer luxurious products to the premium consumers at high prices. People are ready to pay high amount if company is giving them quality services.
Risky high margins
It is the another option available for the Vodafone in which it can provide products which have mediocre value. But it is risky for the longer duration and entity may face loss (Harlow, 2016). Because in this company will have to offer high quality products at lower rate which may enhance cost of business and can reduce profit.
In this company can concentrates on monopoly in the market. Customers will have be depended upon the monopolist offers that are offered by company (Bowman strategy clock, 2017).
Loss of market share
If company keeps high prices then consumers will not prefer to buy its products thus, it would not be good option for the business unit.
From the above report it can be concluded that Vodafone is the leading telecom brand that offers amazing services to consumers. Its strengths are : strong financial resources, wide distribution network, skilled employees, etc. All these resources support the firm in gaining competitive advantage. Company has to analysis competition in the market and has to make strategy accordingly so that it can gain competitive advantage and can sustain in the market for longer duration. Company has strong command over the market and has good market knowledge that support the firm in sustaining in this market for longer duration.
- Chathuranga, D., 2015. Analysis of the impacts of Merger and Acquisition on business development in Telecommunication industry in India: Case study of Vodafone & Hutch (Acquisition) and Indus & Bharti Airtel (Merger). GRIN Verlag.
- Fasan, P., 2015. Defining a Strategy to Achieve Sustainable Operational Excellence in the Afghan Telecommunications Sector.
- Florczyk, P., 2016. Marketing in der Fitnessbranche. Preismanagement, Kooperationen, strategische Analysemethoden, Corporate Identity und Digitalisierung.
- Galperina, L. and Klen, Y., 2017. Global Trends of International Mergers and Acquisitions in the Energy Sector. International Economic Policy. (26). pp.43.
- Ghezzi, A., Cortimiglia, M. N. and Frank, A. G., 2015. Strategy and business model design in dynamic telecommunications industries: A study on Italian mobile network operators. Technological Forecasting and Social Change. 90. pp.346-354.
- Ghosh, D., 2016. Promises and Performances of ICTs in Rural India: A SWOT Analysis. International Journal of Research in Economics and Social Sciences. 6(11). pp.154-179.
- Haaker, T. and et.al., 2017. Business model stress testing: A practical approach to test the robustness of a business model. Futures. 89. pp.14-25.
- Harlow, H. D., 2016. Vodafone Egypt (B), managing corporate cultural change and organizational performance. Emerald Emerging Markets Case Studies. 6(4). pp.1-17.
- Heracleous, L. and Werres, K., 2016. On the road to disaster: Strategic misalignments and corporate failure. Long Range Planning. 49(4). pp.491-506.
- Rafiq, T., 2016. Comparative analysis of Robi Axiata Ltd.
- Salim, A., 2016. Impact of Higher Learning Institutions Expansion on the Adequacy of Network Infrastructure in Developing Countries: A Case of ICT Planning at the University of Dodoma (Doctoral dissertation, The Open University of Tanzania).
- SammutBonnici, T. and Galea, D., 2015. SWOT Analysis. Wiley Encyclopedia of Management.
- Zeschky, M. B., Winterhalter, S. and Gassmann, O., 2014. From cost to frugal and reverse innovation: Mapping the field and implications for global competitiveness. Research-Technology Management. 57(4). pp.20-27.