The scenario of this report discussed growth of telecommunication sector as well as growth and market entry of new network operator. Therefore, it is required for Vodafone to implement different strategies that can assist them to increase their market share or gain maximum competitive advantages.
- Evaluate the potential impact of external environmental factor upon business strategies of Vodafone.
- Discuss internal environment aspects and business capabilities of Vodafone.
- Apply porter’s five force model and evaluate competitiveness of telecommunication sector of UK.
- Discuss available strategic options and direction for Vodafone.
A business strategy acts as a guide in providing direction to an organization to follow a path which can yield advantage for a firm by configuring its available limited resources within a challenging and dynamic environment to cater the needs of demands of market and to fulfil needs and aspirations of its stakeholders (Business Strategy, 2015). These course of actions are formulated by the top management and are enforced and implemented by middle level managers to achieve the vision, mission and objectives of an enterprise .
Vodafone is a second largest brand in telecommunication having more than 444 million subscribers. It was established in 1982 with its headquarters in Newbury, UK. Vodafone has a team of over 13,000 people across UK and its operations are running in more than 26 countries with partnership with more than 55 networks all across the world.
This assignment will discuss about the impact and influence of macro environment on Vodafone through PESTEL and Ansoff analysis. It will further explain the capabilities of companies internal environment along with its strength and weakness. Moreover the project will also give synopsis of competitiveness of UK's telecom sector along with certain strategies adopted by company to improve its competitive edge.
P1 Impact and Influence of Macro Environment on Vodafone
Vodafone being on of the top telecom company has its operations expanding with great pace in different regions of different countries. Being a global player, Vodafone is exposed to a number of external factors that organization need to consider for evaluating its success. The impact of macro environment can be analysed through Vodafone's PESTEL Analysis.
- POLITICAL FACTORS
Political factors greatly influences the progress of a company like Vodafone as it is depended upon political scenario and stability of ruling political party. It is because to establish and develop infrastructure to be operational in a particular state Vodafone need to take permission from government and other regulative bodies (Barberá and et. al., 2012). Besides this, the company has to comply with various communication and media acts and regulations of a particular country. Other factors includes trade restrictions, tariffs, public concern, tax policy etc. For instance, with a substantial increase in tax policy and VAT by UK government along with high inflation rate in some nations, company has to alter its pricing policies resulting in significant decrease in its price in past years.
- ECONOMIC FACTORS
Economic factors contributes a lot in company's success as more the state will grow higher will be chances for a firm to diversify and open its new units in developed and developing zones. Parallel to this fact another likeable scenario is that the overall economic crisis faced by world economies also has direct influence on company's operations according to which Vodafone has to modify its strategies every now and then (Bastian and Muchlish, 2012). For instance with high inflation rate of 3.6 % prevailing in Mexican market in order to make its consumers to afford high rates, the company decreases its product price making it economical for everyone to purchase their products and avail services. Other factors involves exchange rates, interest rates, partnership with government, level of economic growth etc.
- SOCIAL FACTORS
These factors are based on the social culture, value and beliefs of people in which firm is conducting its business. Vodafone although been a European company has flexibly changed its preferences, policies, programmes as per local culture. Some prominent social factors includes health consciousness, adult content, career attitudes, emphasis on safety etc.
- TECHNOLOGICAL FACTORS
Vodafone follows its mission to always be ahead in trends related to technological and communication spheres. Being working in a competitive and dynamic environment it is of crucial importance for Vodafone to stay ahead in technology. The company dedicates a fair budget to its research and development department for finding out and produce products adhere to latest technology equipped with latest features (García‐Rodríguez and et. al., 2013). By providing features and technology like Wi-max, 4, navigation in all its handsets company is able to maintain and develop strong customer relationship. Other technological factor looked upon by company includes broadband services, handsets with latest and most prominent features etc.
- LEGAL FACTORS
For a global brand like Vodafone having immense business rivals, company needs to be circumspect about certain legal issues like copyrights, piracy issues, patenting etc. and has to abide by many legal restrictions of domain in order to enhance its customer base and to maintain a clean and positive brand image in market so as to gain trust and loyalty of its consumers.
- ENVIRONMENTAL FACTORS
In modern scenario, due to an enhancement in globalisation trends in economy people has been adopting the ethical factors in their business operations. In present scenario not only customers but government also ensures that company fulfils its Corporate Social Responsibility for the betterment of society and its environment (Hall and Wagner, 2012). Vodafone are among some top companies which make sure that it fulfil its social responsibilities. For which Vodafone foundations worldwide supports projects that focuses on public benefits and social welfare by application of technology in fields like health, education, disaster management and relief etc.
There are various kind of strategies within Ansoff's Matrix for selecting a Product-Market Growth Strategy:
Ansoff Matrix helps an organization to analyse how market opportunities fits with strategies of business in terms of markets and products.
- MARKET DEVELOPMENT
Through this strategy a firm tries to diversify its business operations into new markets having more opportunities by introducing its existing products in new market environment. In Vodafone case it applies to -
It involves wider and more in depth coverage with high speed capability in leading developed and developing nations and to further enhance data networks in other networks that already exists.
Making adjustment in strategies related to pricing and encouraging data usage and adoption for existing customers.
Enhancing company's customer support, customer care and online services ( IJocovic and et. al., 2014).
Providing customized and attractive priced data packs, calling offers and smart phones.
- MARKET PENETRATION STRATEGIES
By applying this strategy, a firm tries to expand its market share in present market scenario. It is done by increasing share in market by selling more goods and services to existing customer base and to attract new potential clients through aggressive promotional and distribution strategies
( Johnson, 2016).
Providing high speed uninterrupted 4G/LTE technology
Providing clients with various meshed and other solutions related to mobile communication like SoHo, Vodafone one Net etc.
To introduce latest and easy payment methods of mobile payment application of NRFC
Launching Vodafone Tv
More focus to regional promotional and advertising strategies for establishing good connection with rural consumers.
- PRODUCT DEVELOPMENT STRATEGIES
In this strategy, a firm creates new product and services to be introduced in existing market to the target audience to attain higher growth. In case of Vodafone it applies to :-
Mobile SMS, voice and validation of economic and affordable data and launching of Vodafone web box.
Introduction of Vodafone M-pesa
Retain loyal customers and attract new ones by continuously updating its phones and services range and by regularly taking customers review and communicating benefits and new offers and schemes of all Vodafone products and services (Li-Hua and Lu, 2013).
In this strategy, a firm expands its share in market by introducing new products and new offers in entirely new market. It is most risky strategy adopted by any organization as a firms deals in new market as well as new product (.Maté, Trujillo and Mylopoulos, 2012).
Launching smart metering and track down care telematics, push advertising and promotional campaigns.
Collaborating with other leading brands like Microsoft, HTC, Samsung for providing its clients with hosted conferencing, email and other partnership services in a single pack.
P2 The internal environment and organisation capabilities
The analysis of company's internal environment including its internal resources, core competencies analysis assist a firm in providing a platform to its strategies that underlines its long term survival and profitability. Mentioned below are discussed some strategies that a company can analyse to know about its internal strengths and weaknesses.
- Strategic capability is defined as a set of potential capacity, skills and resources that helps an organization to get an over its business rivals in long run. It includes formulating tactics to successfully accomplish day to day business activities besides to achieving target of increasing growth, adapting into new changes and to seek competitive advantage in market. Vodafone being second largest telecom network across the world requires to continuous brush up its strategic capabilities to survive intense market competition and be innovative by identifying its present resources and potential in light of various complexities of market. One of most substantial strategic capabilities of Vodafone is to provide low cost affordable telecommunication services with quality.
In regard to technological up gradation company give considerable focus in exploiting available technological opportunity.
Due to intense association between its capabilities and resources the firm have become successful in effectively and efficiently handling its external and internal environment.
- “VRIO” Model: It is an analytical tool for evaluating company's resources to analyse its competitive potential of a firm through a framework including questions of value, rarity, imitability and organisation. The main purpose behind this analysis is to know about firm's resources and potentials by getting response in yes or no.
- Value:- It includes determining resources which add on value by allowing firm to explore and exploit market opportunities and get mitigation startegies formulated for potential risk. If the answer of this question comes positive for a firm than resource are considered to be valuable (Murthy, 2012).
- Rare:- Obtaining resources which are rare and valuable and can grant transitory edge over competitors are analysed in this determinant. There are certain resources that should not be ignored by a firm even though they might not provide the expected competitive advantage.
- Cost to Imitate- Another determinant is top see what and how much cost is involved in imitating or substituting a resource. It can be done in two ways, either by directly imitating that particular resource or by providing parallel goods and services.
- Company whose resources are unique, valuable and costly to be substituted is able to achieve sustainability within competitive business environment. In case of Vodafone, company has various resources that are hard to imitate (Schaltegger and Wagner, 2011)
- Organised to capture value:- There are various resources which don't specifically yield any benefit for a firm if they are not exploited for value within them. Therefore, it is highly recommendable for an enterprise to effectively organize its management system, policies, procedures and business structure together with its work culture so as to fully explore capabilities of its rare, value and costly to substitute its competencies and resources.