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Impact of External Environments on Business Strategies - Vodafone

University: UKBC College London

  • Unit No: 32
  • Level: Undergraduate/College
  • Pages: 5 / Words 1344
  • Paper Type: Assignment
  • Course Code: K/508/0574
  • Downloads: 811
Question :

Companies in telecommunication sector of UK need regular evaluation of the strategies. With increased competition, mobile telecommunication majors, like Vodafone, want to assess existing business strategies.

  • Assess impact of external environments on business strategies of Vodafone.
  • Analyse internal capabilities of Vodafone by conducting VRIO analysis.
  • Apply Porters five force model on UK telecommunication industry.
  • Examine strategic directions that are available for Vodafone. 
Answer :
Organization Selected : Vodafone


Business strategy is known as long term planning of business activities. This is the means by which an enterprise set out to achieve set goals. Business strategy typically cover a time period of 3-5 years.  Mainly business strategy is concerned with major issues related with resources such as raise funds in order to develop a new plant (Aithal and Aithal, 2016). One of the main benefit of business strategy is that it help managers in take better decisions and guide employees to perform their job roles. With effective business strategy, entity can achieve optimum utilisation of resources which enhance efficiency of organisation. Business strategy does not ensure success of organisation but provide basis to handle complex and difficult situations (Akter and et. al.,  2016). Vodafone, a firm that operate in telecommunication sector and provide its services in various areas of globe such as United States, Europe, Africa and Middle East is consider under this report for study. Evaluation of external environment and its impact on strategic decisions of firm is all detailed in this. Further, tools that can be use by Vodafone to ascertain its strengths and weakness is also given in this report.


P1 Analyse the macro environment

External environment is known as macro environment which consists various elements and factors on which firm has a little or no contralateral and that largely affect the actions and decisions taken by firm (Basco, 2015). Carry out a study for identify and examine macro factors is very important for Vodafone as this help in formulate a better strategy and also provide basis to deal with complex situations. Mainly macro environment consists factors such as political, technological, legal, economic and many more. To determine the impact of all these factors on functioning of  Vodafone, here is a tool called PESTLE analysis that can be use by firm.

PESTLE analysis: This is tool that provide an opportunity to manager to analyse the factors exist outside the entity and affect its functioning. Today Vodafone operate in more than 20 countries so carry out this analysis is very essential for Vodafone for formulate better strategies and policies.

  • Political factors: Government and the various rules and regulations introduce by it for monitor and keep a control on business activities is come under this (Cascio, 2018). Before expand its business activities in new areas, every entity require to get approval from government. Further, government stability and modification in the system is all come in this.  It is very essential for Vodafone to carry out an analysis of political system of a country before take expansion decision.
  • Economic factors: This is known as another most significant macro element as this reveal the rate of inflation, deflation, exchange rate and GDP of a country. Good economic status increase the chances of firm to achieve success (Ghezzi, Cortimiglia  and Frank, 2015). Good GDP indicate high purchasing power of citizens and increase the sale of of firm's good. All this help entity in generate more profits and ensure its long term survival. This is one of the element that require to be consider by Vodafone as economic crisis largely affect its activities.
  • Social elements: It is another component of PESTLE tool and this provide an opportunity to firm to collect information about the beliefs and culture of people living in the area in which entity wants to operate. This make the manager inform about the features which should be there in product to attract more customers and to get customer satisfaction. Further this increase trust and loyalty of consumers towards the brand. Vodafone do modification in its strategies and policies as per the social elements and this provide various benefits to firm.
  • Technological factors: In today's business environment, every size or type of firm use technology for increase its customer base and to keep them for a long time period. In case of Vodafone, one of the main feature of entity is that it use up to date technology and offer innovative services to its clients (Higgins, Omer and Phillips, 2015). Effective use of technology help in maintain competitive position in market and at the same time support offer better services as compare to its rivals. It bis very important for Vodafone to keep a eye on technology trend in market to respond to the changes in better manner.
  • Legal factors: This factor of external environment contain the rules and regulations given by legal bodies which require to be follow by firms otherwise it give rise to a legal penalty. Vodafone also face some issues that entity is fail to pay attention to the specific requirements of its employees and due to this, employee turnover is very high. In this kind of situation to keep its workers for a long time period, entity require to pay more attention to the needs and requirements of its customers so they can contribute more in success of entity (Johnson, 2016). For maintain its activities in various areas of world, firm require to follow rules and regulation. It is alos very important for organisation to provide healthy working environment to its workers for retain them for long time. 
  • Environmental factors: Concept of globalisation increase awareness of individuals about various factors and safety of environment is one of them. Today, every individual want from their brand to be participative in social development activities (Lueg, 2015). This help in create positive image of entity and help in get attention of large number of customers. In addition to this, it is very important that decision of firm should be taken by consider the element of environment safety.

Overall, changes take place in business environment largely affect the activities and decisions of business firm. In this situation, effective business strategy help organisation in deal with those changes and provide basis to respond in an effective manner. Identify and examine the factors of external environment make the entity inform about strategies and decisions taken by its rival. This help in take better decision so firm can serve more customers as compare to its competitor. Before take expansion decision, it is very essential for Vodafone to use this tool as with this it can take better decision and at the same time can maintain its market share.

Ansoff's growth vector matrix: This is another tool that help entity in determine the best and effective strategy for complete business activities. According to this matrix, mainly there are four options available to an  enterprise on basis of new products or market and existing product and market. Benefit of this tool is that it help in utilise the market opportunity in effective manner. All major parts of this matrix is given under the following points:

  • Market penetration: One of the major advantage of this matrix is that it ensure optimum utilisation of all resources and less risk is involve in this. This provide an opportunity to organisation to increase its market share but this strategy has limited scope.

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