This project is focused to develop awareness relating to different kinds of strategies formed in a business environment. This project encourages learners to assimilate key concepts of business strategy through consideration of internal and external environment factors relevant to EE.
- Conduct an analysis of the external environment factors for EE with the use of the PESTLE and Ansoff growth vector matrix.
- Determine the internal environment and organizational capabilities for EE through the application of VRIO/VRIN.
- Evaluate the competitiveness of the UK's telecommunication sector using Porter's five forces model.
Business strategy is identified as the working plan of firm for accomplishing its vision, competing successfully, optimizing financial performance and prioritizing objectives with its business model. Business strategy influence on organisation's strengths, resources, opportunities and vulnerabilities as well as also reflect on its competitors and market. In simple word, business strategies is the science, craft and art of implementing, evaluating and formulating cross functional decisions (Ackermann and Audretsch, 2013). It is an effective process of specifying the business's objectives, vision and mission, implementing plans and policies, which are planed to accomplish these targets. This assignment is based on the case study of mobile telecommunication sector. The, chosen organisation is EE (Everything Everywhere), it is a British internet service provider and mobile network operator of BT (British Telecom) group. This report is divided into different tasks which cover PESTLE model, Ansoff’s growth vector matrix, VRIO/VRIN’ model, Porter’s five forces model and Bowman’s strategy clock model. All of these help to identify competitive advantages and evaluate the organisation's strategic positioning in an effective and efficient manner.
P1 Impact and influence the macro environment
The mobile telecommunication sector, it is the fastest growing industry across the world. As per the market research, 53% of people in the United Kingdom use smartphones while walking; the equivalent of approximately 22 million people (Global Mobile Consumer Survey, 2017). The main mobile network operator in United Kingdom are; Vodafone's, EE, Virgin, O2, Three and BT.
The chosen organisation is EE which is a multinational telecommunication holding business with headquartered in London, UK. It was founded in 2010 by Jan du Plessis, Gavin Patterson, Simon Lowth (Annabi and McGann, 2013). They provide different products such as Fixed line telephony, Broadband internet, digital television, mobile telephony. Main aim and objectives of this business is to accomplish predetermined goals and objectives. Goal of the business entity is to gain competitive advantages in a given time period (Oestreicher-Singer and Zalmanson, 2012).
Macro Environment: It is identified as a condition that present in the economy as an entire, rather than in a specific region or sector. It includes trends in GDP (Gross domestic product), employment, inflation, fiscal policy, monetary, spending and employments. There are mainly two macro environment such as PESTLE Analysis and Ansoff's growth vector matrix which are determined as below:
(I) PESTLE model for environmental analysis:
It is an analytical technique for strategic business planning. It is also identified as a strategic frameworks and structure for knowing external effects on a business operations. This factor includes different aspects as Political, Economic, Technological, Social, Environmental and legal and is applied for strategic and business planning, organisational change, marketing planning, product and business creation and research reports (Auzair, 2011). By knowing these factor, EE can increase the opportunities and decrease the threats to the enterprise. PESTLE analysis of the Everything Everywhere and its influence on organisation and its business strategies are determined as below:
Political Factors : This factor takes into consideration regulation and political stability within a country. The government is known to modify regulation on the regular intervals so that organisation working in telecommunication industry could be monitored. It has been identified that Britain opting out of the European Union will be beneficial for this organisation as there will be a significant increase in interest rates which further will take away their liability in terms of providing pension. There is an increased rage in debate for net neutrality as people consumers in the considered internet and telecommunication to be treated as a basic human right.
Economic Factors :- Current economic situation of United Kingdom is favourable and beneficial for mobile operators or promoter because of betterment after the recession time period of 2008 to 2010 year. For Example: In 2013, Gross domestic product also maximise by 1.9% and anticipated grow continue in next years. It also make important effect over the clients spending on a service (Azar, 2011). As the income of household that has been maximised the mobile service consumption.
Social Factors:- Growing the youngster's population and their utilization in the social network as well as smartphones and many other aspects of the internet for example: text message, streaming websites, various kind of online tools and application for exchanging files and many other necessary documents.The average population in country stands above 50 therefore there will be an increased usage of internet and telecommunication as most of requirement of people can be fulfilled with the help of internet such as medical consultancy, e-commerce and accessing online library. Therefore it can be said that telecommunication service provider can prosper with this favourable trend.
Technological Factors:- Goal of Everything Everywhere is to render best services to the target and potential clients. This factor highly effect on business operations and functions in an effective and efficient manner. Along with this, objective of the enterprise is to establish and enhance network coverage within United Kingdom via network service. For example: By evaluating the needs and demands in the marketplace, EE established LTE 4G network at decreased cost. Thus, it highly effects on business operation and strategies when achieving of competitive advantages and better position in marketplace.
Legal Factors:- The government of United Kingdom have formed numerous laws and policies which tend to influence capabilities of a business to carry out its operations. There is a severe impact of legislation of the country on telecommunication sector. The government have been emerged to be a major disrupter of operations due to its regulatory practices considering pricing, monopolistic practices and most importantly treat to consumers (Bharadwaj and et. al., 2013). The results were such that consumers are provided with an authority to terminate contracts with the company on changing of prices and services without prior notice and will not be charged any penalty.
Environmental Factors:-Within the telecommunication sector there are observable environmental constraints and impacts. The element such as climate change and global warming tend to influence business operations in a significant manner. It has become essential for organisation working in the telecommunication sector so that a positive image in market could be developed. It can allows organisation to be in a better and effective variation for achieve further turnover and another advantages due to maximise environmental awareness and interest among individuals. EE telecommunication have also emphasized on reducing amount of carbon emission and switching on renewable sources of energy so that legal trouble is availed along with forming a positive perception in the minds of consumers.
(II) Ansoff’s growth vector matrix to evaluate the organisation's strategic positioning
Ansoff matrix is another part of the Macro factor that impact on business operations and strategy. This factor used by the EE with motive to analysis how each and every chance fits the business activities and strategy in terms of market and product (Bucolo and Matthews, 2011). It is main and essential tool for the telecommunication industry in order to expand their business operations and activities at large. This factors includes four parts which are determined as below:
Market Penetration: It is simply selling maximum number of same products or services to existing clients. The organisation in this feature attempts to penetrate deeper in the market with the use of existing resources and capabilities of a business. This is referred to as one of least risky approach which can be undertaken by an organisation when looking to expand operations. For achievement of this, EE analysis innovative ways in order to maximise loyalty of customers and develop its lifetime values. Further, they are trying to maximise their presence and image in marketplace by enlarging their business activities and operation in urban place or distribution network. In country, Everything Everywhere is having large number of network that renders them competitive benefits and advantages over their challengers. For example: Everything Everywhere having better image and strong market like Zoozoo and many other advertising campaign.
Market development: This is an approach in which a business ventures into new geographical regions. An organisation in this strategy aims to offers existing offers in the newer markets to a newer audience.As per the market research, EE is one of the best telecommunication industry in United Kingdom. It is a best methods to attract maximum number of customers towards latest feature in smartphones and many other equipments. In the UK, various peoples are use EE business products and services thus they can gain higher number of competitive edge all over the country (Jocovic and et. al., 2014). Therefore, it can effects on business strategy and operations in a direct way. With the help of this aspect, company easily attract new customers towards smartphones. In this organisation expand their business operations at new place where they needed to analysis market demands and needs. In this they choose location is china and many other country which help them to accomplish their long term objectives and goals.
Product Development: This strategy which is being undertaken by an organisation supplies new products to existing customer base. This strategy is generally employed when an organisation have modified or innovated products.It is another part of the Ansoff’s growth vector matrix which is essential for developing innovative products and modifications of smartphones in order to sell this to present clients. In this business entity try to render new services and additional feature in their mobile phone to clients which help them to maintain long lasting relationships with them. It is the best part of achieving competitive benefits or edge over other present challengers such as Vodafone's, O2, Virgin etc.
Diversification: It is identified as a highest risk strategy which is available in selling innovative commodity into new marketplaces (Kalyani and Sahoo, 2011). In this role of business manager is to diversity their products and services as per the needs and demands of the customers. According to the research, large number of the populations are used smartphones. Company diversified in other sectors or products such to deals in clothes products which help to maximise their position in marketplace. It is essential because Brand image of the company is well-established with support to maximise their sales in clothing sectors.
Both PESTLE and Ansoff’s growth vector matrix are important and beneficial for the business to innovate their new products and services in marketplace. These factors identify business's strategic management decision in order to accomplish long term goals and objectives in an effective and efficient manner. Further, it also assist to attract large number of customers by providing quality products and services. It is the role of business manager to take an effective decision about attaining predetermined targets.
P2 Organisation capabilities and internet environment
(I) Concept of strategic capability
It is identified as a set of capacities, skills and resources that develop a long-term competitive edge for an enterprise (Klettner, Clarke and Boersma, 2014). It mainly emphasis on the business's assets, market position and resources, projecting how it will be capable to utilize plan of action in the future. With the support of this tech, Everything Everywhere can evaluate their strategic value or plan of action in related to existing financial initiatives that require to be apply in proper manner. EE is a famous and popular organisation across the world that help them to attract large number of the customers towards business services and products. T-Mobile and Orange settle for Everything Everywhere in different ways such as new name for merged T-mobile and orange, plan to open 100 shops as well as cover more area with Wi-Fi.
Organisation capabilities identified as a ability of business in order to handle resources such as workforce in an effective and efficient manner. Further, it can help them to gain maximum amount of competitive benefits over challengers. It must be focus on the enterprise ability to meet with customers needs and demands.
Internal environment: It is also important part of the business strategic capability. This factor includes SWOT analysis which consists Strength, weakness, threats and opportunities. It is essential for company to maximise benefits by introducing their strong products. The first two elements of this analytical tool persuades a business to identify its own strength and weaknesses of business so that they can be further channelised in goal attainment. The internal capabilities of business are tested against opportunities and threats which lie in external market so that changes could be incorporated. This analysis support in different term to increase customer base in the organisation by providing quality products and services t the customers. Better image of the company is also essential to achieve competitive advantages in given time duration.
(II) ‘VRIO’ model to determine the strategic capabilities
‘VRIO’ model: It is analysis as a business framework that related with the larger strategic scheme of company. It include elements such as Value, Rareness, Imitability and Organisation which effects on business operations and functions. It is essential and beneficial process which support organisation to meet with their objectives, vision, mission and continues on via external and internal analysis, business and corporate level and strategic development. With the help of this model they can achieve competitive edge in given time period.
VRIO model used by the EE with an attempt to evaluate all resources in an effective and proper manner. With the use of this factor business entity understand regarding their all resources such as human, knowledge, information, material, financial and many to gain competitive benefits effectively (Köseoglu and et. al., 2013). This model includes different parts which are determined as below:
V:-Value: It is identified as a capability or resource of company in order to maximise sales and revenues in a given time period. The value possession in context of EE are its financial capabilities and its workforce. The use of its financial and human resource capability by this organisation assure that this telecommunication service provider is successful in availing competitive edge in the operating market. Their financial resources are valuable.
R:-Rarity: A resources is considered as rare when it can only be availed by few organisation. Therefore it can be said that workforce of this organisation and financial expertise are a rare feature.It is a part of business to achieve long term competitive benefits. It is apply by the Everything Everywhere when they has a valuable capability and resource that is perfectly unique between potential and current challengers. It must be short in persist and supply over time of period to be a rootage of sustained competitive benefits.
I:-Imitability: In this capability or resources is not easy to imitate. For achievement of this, Everything Everywhere can generate cost disfavour to the competing business. In order to overcome this, company try to obtain, duplicate and develop this with aim to accomplish long term goals and objectives in a given time duration. Financial strategy of this company is imitable but their quality workforce cannot be copied by any other organisation.
O:-Organisation: It is the last part of the VRIO model which is beneficial for them to achieve competitive edge (Murano and et. al., 2011). This segment attempts to identify whether the value feature and resources which are being possessed by an organisation are sufficient to capture value in the market. The financial and workforce capabilities of an organisation are to be organised in such a manner that they help an organisation thrive in operating market. In this Everything Everywhere is based approximately management structure, policies, process, systems and culture.
Everything Everywhere apply this model with motive to deal with difficult situation which are arise in the enterprise. Further, this framework also set strain on following aspects:
If business resources or capabilities are expensive, rare and valuable to imitate but EE is not capable to apply