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Business strategy is termed as development of strategic organizational objectives and standards which increase and encourage the present approach of enterprise. Telecommunication market is constantly moving forward; the pace of change and development is accelerating. Present report is based on analysis of Vodafone group which is a global telecommunication organization having its presence in many countries (Bharadwaj and et.al., 2013). Vodafone's current target is to become of the world's top five brands and its global presence through dual branding exercises within 30 companies has also accelerated them towards growth. This report will cover analysis of influence of macro environment on Vodafone by using PESTLE analysis model. Further, strategic positioning of organization is also determined by Ans off's matrix model. Strategic capabilities of Vodafone are also determined by using VRIN model along with the strengths and weaknesses. In addition to this, competitiveness of UK's telecommunication sector is also evaluated by using porter's five forces model along with development of appropriate strategies for improvement of competitive edge and market position of organization. At last, analysis of strategic direction and options available for enterprise are also discussed by using Bowman's strategy clock model along with the development of strategic management plan.
Macro environment is analysed as external business environment that effects an organisation's decision making, performance and its strategies. The environmental factors also involve economic factors, demographic, legal, political and social conditions along with technological changes and natural forces (Johnson, 2016). Vodafone is a leading business enterprise in telecommunication sector across the world. As per the given scenario, there are various implications that have been provided by external business environment on business operations and strategic decision of Vodafone.
PESTLE analysis model is used to determine the influence of external factors such as:
It is the most important factors that provides the road map for organization to grow depending upon the whether are lunching the new or entering new markets or combination of these options. In this context, strategic position is analysed as positioning of organization in the future while taking in to account the continuously changing environment along with the systematic realization of that positioning. In this, Ans off is matrix is used to determine firm's strategic position in market.
Market penetration: This is strategy in which company will market its existing products in way a to increase the market share as compared to competitors (Higgins, Omer and Phillips, 2011). It is identified as minimum risk strategy for Vodafone because all they have to do is increasing their marketing efforts and improve its market share in telecommunication sector. In this, Vodafone needs to ensure that it leverages the current capabilities, resources and accelerates towards growth oriented strategy. For example; Vodafone always used television and media houses for promotion in order to maintain its existing features in this market.
Market development: Vodafone needs to utilize this strategy if they want to expand into new markets with their existing products (Reich and Benbasat, 2013). It is suitable for them as they have the capabilities and resource to establish business operations in new markets for achievement of growth. Market development is identified as more risky than penetration because the organisation in other market requires experience and high financial strength to adopt risk. Example of market development would be like Vodafone and Nokia entering and African markets where these market are yet to be trapped.
Product development: It is also effective strategy for Vodafone when they seek to introduce new products in market. This strategy will be successful for organisation as they have already established themselves in exiting markets and all that they need to do is launching new products.
Diversification: It happens when organisation introduce its new product in new market. This strategy of Ans off matrix contains higher risk and it is only justified for organisation when there are chance of high returns for the business enterprise (Acquaah, 2013). In this, differentiation strategy for Vodafone is not effective because they desire to expand their business in existing market. Diversification strategy was previously adopted by organization when they have started developing mobile phones but in this diversification of business they have faced various losses due to low demand of their mobile phones in market. Other than this, company was also facd losses due to its outdated technological service strategy
However, it is clearly analysed Product development strategy needs to applied by Vodafone to achieve continuous growth in market and satisfying customers requirements.
Critical analysis of macro environment clearly determines that Vodafone is facing major challenges in business due to rise in tax burden and implication of laws that affected its cost of operations. With adaptation new technology, company has also increased its strategic position in market and also focus on development of new products in order to meet customer requirement. Rise in use of Smartphone between age group of 16- 75 people, has increased revenue of telecommunication services. Vodafone needs to decrease to prices of service in order to sustain in competitive business environment (Köseoglu and et.al., 2013). This environment factors also provided support in development of strategic decisions. Analysis of Ans off's matrix provides clear understanding that organisation needs to adopt product development strategies for achievement of strategic business objectives. Vodafone needs to focus on increase its promotion of products through appropriate channels which reduce their cost. Thus, it can be said that organisation will tend to achieve its objective by implementation of product development strategy.
Strategic capabilities have been analysed as capabilities of the employees of organisation which enable the enterprise towards formulation and deployment of strategies in pursuit if sustainable competitive advantage. Moreover, accomplishment of operations within strategic management framework, capable employees are mainly woven within effective processes, inspired by business design construct and also compelled by purpose to create competencies of business enterprise that produces advantage (Ghezzi, 2013). In present context, Vodafone also posses strategic capabilities of innovation and creativity which they have applied to promote their business operations that needs to be adopted by organisation. Corporate strategies of Vodafone does not depend upon the products or markets but is depends upon business processes. Research and development strategy of organisation always depends upon the ability to develop new products. Vodafone has the capacity to conduct market research. They always carry out market research for analysing issues and identification of customer requirements. With effective strategies, organisation has also developed their business in new market of mobile manufacturing sector with an aim to achieve growth and remain financially viable in market (Woodard and et.al., 2012). Vodafone also track strategic capabilities not only for their own companies but also for their competitors to analyse effective telecommunication sector. Moreover, Vodafone has also promoted strategic thinking between managers so that they will not work to complete job but also provide their support in expansion of business. Effective leadership and discipline within organisation has also provided them support in expansion of business operations.
VRIN model is analysed an important tool that is used to analyse organisation's internal resources and important capabilities to identify if they source of sustained competitive advantage. It is also based on assumption that business differs depending upon analysis of these resources and how these resources are combined with each other. Moreover, resources includes effective processes, capabilities, assets, attributes, information and knowledge. Moreover, this analysis is used to focus on competitive advantage or weaknesses that of Vodafone in market as compared to telecommunication sector. This model to demonstrate the strategic capabilities of organisation to identified measures that needs to be taken for achievement of success in business operations and its competitive edge to company on the basis of four important elements which are mentioned above:
Strengths are identified as capabilities of organisation which they have achieved after accomplishment of business operations from last several years. Vodafone is identified as second largest mobile service providers by subscribers. Vodafone posses strong financial strength and position in market as they achieved customers base of 435 million in different parts of world is its biggest asset. Such strong business position implies to the financial leverage, high capacity to adopt risks and to steer the market direction. Further geographically diversified business in European country is also identified as major opportunities for organisation to achieve success in market. Findings provides information that Vodafone has strong presence in market in all kinds of mobile markets (Gershon, 2013). It also achieved its highest revenue from developed markets like Germany and UK. Therefore, decline of business in one region will be compensates by increase in growth in another country. Another strength of organisation is its developed and advanced network. Vodafone has also deployed LTE and it high speed wireless networks in their most its markets.
Strong brand recognition in market and creative advertisement has also provided support to Vodafone in cementing its place among the successful telecommunication brands in the world.
This makes it easy for them to achieve new customers and retain existing base.
Apart from this, sluggish economic situation in Europe has also decreased the capabilities of organization to earn profitability in market. Lower disposable earnings and major unemployment in country have provided influence on their customers to cut down their mobile phone expenses. Increase in competition have also affected their sales and growth in telecommunication sector. This tends reduce competencies of organisation to sustain its competitive position in market. Less effective strategies is also identified as major weaknesses of organisation which has increased competition in market.
Critical analysis of strengths and weaknesses of organisation also provides understanding company has strong financial position in market which provide them capabilities to achieve its business objectives. Vodafone has strong brand equity among customers in different as they developed strong customer's customer base within its market segment (Webb, 2013). Increase in market share of competitors in industry has also increased challenges for organisation to attract customers and carrying out business operations effectively. Moreover, it is identified that brand needs to increase its core values and also apply effective strategies to acquire more and more customers. Moreover, due to Brexit and other major economic situations in Europe, performance of Vodafone in its home market is also decreased and its revenue in market is also decreased. In order to achieve previous position, they need to develop new and attractive product and service to meet the requirements of customers.
For example- vodafone's can provide offers at festive seasons to attract people. This will help in retaining customer's and increasing market share.
UK's telecommunication sector went through a process of privatisation and vertical unbundling in the 1980's and 1990's. Competition in telecom industry in UK are largely healthy and it is directly affected by the underlying network infrastructure. Changing nature of technology is well observed feature of telecommunication industry. Market structure in UK can facilitates the effective competition in telecommunication industry (Adi, 2015). It underpins the customer's demand and expectation and offers a communication services to their customers. UK telecommunication sector operate within the legal framework set by the communication act 2003.
Porter's five forces model applying in UK's telecommunication sector
THREAT OF NEW ENTRANT
Threat of new entrant in UK's telecommunication sector are not easy. It affects the market of telecommunication and the entry barriers are low then its difficult for existing company to maintain there prices. The barriers of entry in UK market are high licences fees which is affects the new entrant in market because some times this fees are not affordable by new entrant. Setup cost of infrastructure are also high its difficult to set the business in telecommunication sector in UK. New entrants are face the problem to rapid changes in technology and techniques which are used in telecommunication sector always changed with the demand of market. So it affects the new entrant in the telecommunication industry (Roos and Von Krogh, 2016). Customer switching cost is very low so its barriers to new entrant in the telecommunication market of UK and easy access to the distribution channels are the barriers to the new entrant to set there business in telecommunication sector.
BARGAINING POWER OF BUYERS
Bargaining power of buyers can affect the market when power of buyers are high then the competition are also high, buyers can down the prices of product or services cost to the buyers of switching from one supplier to another and it creates competition in market. For the telecommunication sector in UK buyers can influencing the business by asking for lower prices because buyers have full knowledge and information about the telecom market in UK. They are enhancing the services and improving the quality of product and services of telecom company in UK, It creates competitive environment. Bargaining power of buyers can switches the cost at low level especially after introducing the concept of mobile number portability. It is important of each individual buyer to the organization because their expectation and satisfaction are important to every business as well as UK telecommunication sector (Buil, Catalán and Martínez, 2016). In UK the customer are aware and have a knowledge about prices and quality so it is the power of customers to create competition in UK market.
BARGAINING POWER OF SUPPLIERS
This force of porter's model have an important role in telecommunication sector in UK. Bargaining power of suppliers to drive up the prices of product and services. They can be driven the prices by uniqueness of product and quality of there services. Its important to the supplier can maintain their prices for the success of company. Cost of switching from one supplier to another are important for power of suppliers. Higher number of suppliers of telecommunication industry can make low level of profitability while lower number of supplier are easily getting success. It can affect the industry by increasing the price and reduce the quality of product and services which increases the competitive environment. Availability of many telecommunication supplier affects the power of supplier at low. Lack of differentiation among suppliers give negative impact on prices. Low switching cost are affects the power of supplier. Suppliers can increase their power to maintain the standardization of service and product. They should have gives preference to demand of customer and gives proper network facilities in UK. When the telecom services are good then the power of suppliers are also good because it is the distribution channel of services and product.
THREAT OF SUBSTITUTE
This force is say that when the close substitute are available in market then it is barriers to achieve a success in market, by this availability of substitute company can not drive their prices according to them because customers switches the services and give chance to alternatives, this affects the profit the telecom company and increase the competition among UK telecommunication industry (Gould and Desjardins, 2015). Its affects the power of supplier and attractiveness of the market. When the substitute of telecom company are present to give their services with low price then the customer attracts to the offers and moves to that substitute. It one of the important power that is forgotten by most of the companies in telecom industry. This is the treat of substitute product and services where the substitute provides the same quality and function as alternative for the origin product and services of telecom company. The customer's willingness to change and move the product are threat of substitute. Prices of substitute of product and services are affect the business of existing company when prices of substitute are lower than the existing company then it is loss for the company because customer moves to alternative by the low prices at great satisfaction. Substitute offers a same services at reasonable cost so it is barrier for success of existing product.
For example- people may prefer to use multi net instead of mobile internet for meeting their needs.
Competitive rivalry is the situation where the many competitors in the market offering undifferentiated product and services and they will reduce the attractiveness of market. The main driver is the large number and capabilities of competitors in the market. In telecommunication of UK this is at high level because many competitors are there. For the success of telecom company they should be aware of its competitors marketing strategy, pricing and quality or updating the changes made. For any business its compulsory to innovate there product and differentiate the service to others. Telecom company in UK are too highly expensive for marketing and advertising to promote there services and product. It can help to resolve the rivalry problem in market. They are maintained the level of advertising expenses. Telecommunication sector should make a powerful strategy and maintain the degree of transparency (Sutherland, 2014).
There are various important methods and strategies which must be involved by Vodafone to make continuous improvement in competitive edge and market position of business enterprise but some major strategies involves application of positioning strategy by enterprise which provide support in identification and analysis of actual position. It is also essential for organisation to reduce its prices in market which has provided them support in increasing profits. It is also important for organization to target local middle class customers for selling of their products in different geographical segments. Moreover, products development strategy also needs to be adopted by management in which they will introduce new product and service to meet the current changing requirements of customers.
In order to analyse strategic business position of enterprise, Bowman's strategy clock is the most which is used by organization at the time of developing and designing marketing strategy in order to analyse its competitive position in comparison to the offering of rival brands. This model is also based on competitive strategies of porter's model which are further expanded by author in Eight strategic options. These options needs to be followed by company when comparing their competitive edge against its competitors in market (Reich and Benbasat, 2013). In this context, Vodafone also needs to use the Bowman strategy clock as frameworks for creation of edge against competition.
Strategic management plan is identified as important element that aids the management to fulfil the overall business strategy and business plan. It will be properly designed and executed in order to achieve effective outcomes (Woodard and et.al., 2012). It also provides negative influence on the behaviour of consumers.
Vision: Finding provides clear understanding that Vodafone has the vision of being market leaders in telecommunication sector and attaining high number of customers as compared to competitors.
Gather information:In this stage, information about current trends and development will be gathered to identify changes in requirement of customers (Webb, 2013).
Strategy formulation: Effective strategy will be followed to meet the requirements of customers and accomplishment of organisational objectives. In this context, product development strategy will be adopted which implies to development of new product service for achievement of growth in existing market.
Implementation At this, new products and service are introduced by organisation to attract customers at competitive prices.
Evaluation: Monitoring performance and progress of business is important aspects that enables organisation to achieve objectives.
In this report, it is analysed that development of effective business strategy involves analysis of various important aspects that provide influence of business operations. Analysis of macro environment factors provides clear understanding that Vodafone is high affected by political and economic condition of country. Strategic capabilities have been analysed as capabilities of the employees of organisation which enable the enterprise towards formulation and deployment of strategies in pursuit if sustainable competitive advantage. Most effective business segment for Vodafone is identified as geographical segments where they will also find potential customers. Low price and product development strategy will be effective for organisation to sustain its position in competitive market.
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