Business strategy is something which needs to be taken care by every single organization from time to so that to maintain the 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 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. Present report in which Vodafone a multinational company has been taken in order to better understand about business concepts which was found in the year of 1991. Along with this, impact of both external and internal environment has also been considered under the report so that business can get run in successful and effective manner. Apart from this, measuring has been done of telecommunication sector, strategic directions under which Bowman's strategy clock model included which will help organization in making effective decisions so that better results can be gained in an appropriate time of manner. Assignment will in the last give better understanding of techniques and strategies that have been adopted by companies so that to gai
P1. Evaluation of impact and influence of macro environment on Vodafone business strategies
Business strategies are much enclosed with various sort of directions and scopes within an organisation that may aid it is attaining all goals and objectives in much more effective and efficient manner. Along with this, it is required for them to keep on fulfilling needs and wants of consumers so that to achieve aims and objectives. External environment should be kept in mind so that to attention can be grabbed right on time so that it won't affect much on organization's performance (Alsoboa and Aldehayyat, 2013).
Business environment combines of various factors which create a great impact on production and profitability of an organisation. it includes micro and macro factors that affects business operation through internally and externally both. Elements like technology, rules and regulations, economic conditions etc. comes in external environment. Managers of a company need to analyse 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 strategic tool for moving business from national to international level. Through this model they can make effective plans of globalisation as well as execute 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 with its politics. It creates much impact when a firm wants to launch its business in other countries. Therefore, before making plan for globalisation, management needs to analyse political system of government which are vary according to territorial regions. The main reason behind difference of political laws of every country is the cultural power. These dissimilarities create many hurdles in running a business organisation in international market. Thus, it assists employers of firm to analyse political rules of such regions where it want to open outlets (Curwen, 2011). It will help management of enterprises to remove barriers from globalisation of a business. With assistance to Vodafone which is a telecommunication organisation, Government of UK has passed various amendments for such type of companies like Roaming Regulation of European Union with common purpose is to decrease cost of calls and internet data usage approximate 70% for enhancement of customer satisfaction.
Economical factors- This factor reflects economical condition of a country which creates direct impact on profitability of an association either in positive or negative way. Along with this, profitability or financial conditions of business affects economy also. It includes changes in taxation rate, trading policies, fluctuations, exchanges rates, inflation, deflation and more. Therefore, if economic condition of a country is good then it will enhance business of organisation too. While if it is low, then firm faces many problems in operating the business in a proper way. In telecommunication sector like Vodafone Group Plc, high inflation rate increase purchasing power of people which consequently helps in enhancing growth of business also.
Social factors- Due to modernisation, lifestyles and preference of people are changing on regular basis. Therefore, before manufacturing any new product or services, employers of a firm are required to identify 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, management of Vodafone, conducts various activities in order to judge what consumers are actually needs 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 also.
Technological factors- Innovation in technology always creates a positive impact on 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 latest technology in operations and productions. This has supported management to create various new applications in networking system. Through this, Vodafone has gained high satisfaction of customers and their retention with services in an effective manner. Innovation has supported technical firms to operate their business operations on international level easily as well as marketing products with full efficiencies. With this assistance, Vodafone has got success in operating as well as managing its business in more than 50 countries.
Legal factors- Rules and regulations of a country are always changes on regular intervals which create a huge impact on sales performance of a company. These legislations include employment act, trade laws, taxation policy and more. All these factors are set some specific rules for firms by government of a country. It assists Vodafone to implement 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 are needed to know by managers of a company to enhance profit level of business. Therefore, Vodafone Company analyse situation of a marketplace first. It has operated business with eco-friendly way(Dobbs, 2014).
2) Ansoff's growth vector matrix
It is another type of model use to determine impact of macro factors on business of a company. This type of marketing theory which helps in identifying needs of changes for future growth. It includes four types of strategies like 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 achievement of business objectives.
P2 Internal environment and organisation capabilities
Internal environment incorporate certain factors that are important for a company in order to run their business in an effective manner. In includes certain elements like management, employee, 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 out 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. Whereas organizational behavior can be said as the capabilities by which company can manage their resources like for example: sufficient amount of staff members, attain maximum benefits as compared to rival firms etc., henceforth, it is important that enterprise must go through the situation and focus on organizational capabilities so that they can fulfill 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 market area. Thus, it is essential that superiors manage and implement all the strategic capability in such a manner that it is operated in a proper way. This includes elements like resources, skills, knowledge, core competencies by which organizations can attain competitive advantage for longer period. If company hires eligible candidates than they can give their best efforts in their jobs so that firm can attain their set targets and goal under specific time frame. Therefore, it can be said that through competencies, company can gain a superior position and it will enable them in performing their task in a different way. Thus, it is important that organizational capabilities are good so that firm can achieve its aims and objectives in 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 understand and gain competitive advantages. Therefore, 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 is assisting them in expanding their business in a effective manner along with this by providing better services they are sustaining customers loyalty (Scholes, 2015). With new and interesting schemes company is enabling themselves in attracting a large number of people towards their organization. For this, they have optimized new tools and technologies other than this Vodafone are 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 company can identify the resources that can provide them competitive benefits. Therefore, it is utilized by most of the company so that all the elements can be analyzed in order to fulfill the criteria of an organization. This model was profound by Jay B. Barney and the model is discussed below in order to understand in a better manner:
Valuable- In this, designers and engineers are given much importance as they are the one who assist the company by providing and implementing innovative ideas. This helps the organization in eliminating 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 values to the product are avoided and this lead to competitive disadvantage (Tavitiyaman, Qu and Zhang, 2011).
Rare- In this the resources that may acquire 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 a tough competition can be seen in the sector of telecommunications so 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 of managing the risk in a better manner and for this they must hire eligible and experienced professionals who can give their best for taking the company in forward direction.
Imitability- Under this, the resources that are required for manufacturing any products is copied or imitate through other companies whose productivity is minimal. Although it becomes sometimes difficult to use rare capabilities and resources but if it is applied in a proper manner than they can give competitive advantages to the organization at market place.
Organisation- It is considered as the last step for VRIO analysis and it helps in identifying uniqueness, imitabilty and the value of product. If all the steps that are mentioned above are passes by the resources than in this case company can manage their work in a systematic manner. This will enable them in operating 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 firm has the capability of changing the negative aspects into positive one so that they can gain competitive advancement. Thus, some of the strengths and weaknesses of Vodafone are mentioned below:
- Vodafone is considered as one of the leading companies and Sit has strong market share around the globe. They provide better services and it is winning the loyalty of people in large number (Williams and Figueiredo, 2014).
- As company is operating its business on large scale thus, they have more than 1000, 00 number of staff members who are helping them in providing better services to its customers.
- 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 but they fails to give facilities to remote areas.
P3 Porter's five forces model
Porter five forces model plays a vital role in every single organisation. It is being analysed that company can resolve all the complex issues or problems through formulating a proper and effective plan. Along with this, it is must for firms to adopt best sort of tools so that to measure reputation of both of his 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 must for Vodafone to examine perspectives of consumers and make determinations so that to sustain at marketplace for a longer period of time(Firnkorn and Müller, 2012). Vodafone needs to keep in mind of porter five forces so that to maintain its both productivity and profitability in an appropriate manner. Some of its factors are given beneath:
Bargaining Power of Suppliers: It has been examined under telecommunication sector suppliers do stay strong but then also firms like Vodafone keeps on maintaining its profit margins and gives a good rivalry to other organisations like Virgin. As Vodafone has a great brand name in all over world therefore, it generates huge revenue where its suppliers supports it because 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 that to better serve to consumers on a regular basis. Reduction process of cost which is being enhanced by suppliers may aid this firm in grabbing attention of customers in large number at both domestic and at international level 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 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 are already made its existence in marketplace of United Kingdom. It is must for Vodafone to keep on making alterations in their products and services that are being offered by them to customers and charge them with less prices so that 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. But, many barriers are there that can stop new enterprises to enter under this sector. Government asks for high rate of charges which needs to be paid by these organization so that to enter this market. Similar wise, the cost of establishing network infrastructure are high and frequent changes in technology brings more challenges and difficulties to new companies to enter and compete with the existing rivals. However, Vodafone can able to compete with their rivals in more effective and efficient manner through improving their efficiency of their 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 majore examples of line which is being mentioned above. But, broadband have taken its place(Johnson, 2016). Just like this, it is must for Vodafone to keep on making alterations in products and services that they are offering at marketplace of United Kingdom to customers. With the help of this, long term profitability and its reputation can maintained in much more effective and efficient manner.
Rivalry within market- Companies like Virgin and some others are being stated as rivals that are rapidly looking into different aspects and are making strategies so that to give good rivalry to Vodafone. Therefore, it is must for 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 that to stay one step forward to them. Continuation of this process may aid Vodafone in attaining a good reputation at marketplace of both domestic and international level. Apart from this, telecommunication sector is being stated as one of main section of United Kingdom which is helping in enhancing economical 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.
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 as company can make heavy profit by using this approach in an appropriate manner. David Faulkner and Cliff Bowman were the two intelligent human beings who have introduced this model of marketing into business world. IT is being considered as an essential tool that may aid firms in analyzing their position that they have in marketplace of United Kingdom. Apart from this, it is very much needed for Vodafone to understand the business environment and to do examination of its own position and of its rivals as well. Another name of this model is 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 competitive phase. It has been located that firms do manufactures limited commodities and deals with consumers in small geographical areas and do not have much reputation so that clients do get to know about products by looking at its logo. Along with this, this phase consists with low profit margins where firms in high number do not like to compete with each other.
Position 2. Low cost- At this position most organisations builds their products and services high in quantity which directly makes the firm much valuable in nature at 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. But, it has been examined that just because of low profit ratios Vodafone keeps on making changes accordingly so that to sustain at marketplace of 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 comes under this section. They keep o making different products and services and try to compete with rivals of it so that to maintain its reputation at marketplace of United Kingdom. Products Cost stays low which directly grabs the attention of consumers in huge number 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 company manufactures products with proper utilization of raw materials and then asks for an average amount in exchange of them. Satisfaction gets improvise which directly helps organization in raising its reputation among rivals in marketplace. Away from this, profitability also get raises which directly affects its goodwill in positive way at both global and domestic level.
Position 5. Focused Differentiation- Here, cost of products starts taking raise as 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 customer's perception as if they are going to purchase it or not. Profitability of organization directly gets rises if money which is being charged by company have been accepted by users of products and services.
Position 7. Monopoly Pricing- This stage is pretty much enclosed with monopoly system. It is being analysed that if a firm is making products and services that nobody else does then it is possible that 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 organization do not have proper reputation among marketplace then it is may be possible that market share of it get decrease which takes firm to a losing position. Low market share that 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 to manufacture new products with innovative ideas so that to sustain at marketplace of United Kingdom for a longer period of time. With the help of this, market share of this company can be enhanced right on time(Porter, 2011).
From above mentioned report, it is being summarized that proper utilization of strategy which has helped firms in grabbing a good position at marketplace where they can give good rivalry to other organisations that are dealing in same sector and are working with same perspectives. Developing a proper vision may aid company in delivering good training to employees which will enhance their skills and knowledge and become much more effective at workplace. Study of external environment should be done on a regular basis so that it won't put much impact on decisions of firm and sustain in the market for a long term. VRIO & VRIN are two sort of model that are being used by company so that to sustain at marketplace where unique strategies are being taken under use so that to overcome from all risk factors. Porters five forces is another model which can be consider as an essential approach that can aid firm of telecommunication subdivision also deliberated under the assignment.
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