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BMP6003 Business Strategy Assignment Level 7

17 Pages 4147 Words 357 Downloads

Introduction:

 The telecommunication sector is one of the fastest growing sectors in today’s world. It tends to occur when there are activities of information exchange through the digital medium. It is also termed as the lifeblood of society and helped in procuring the world to under their network coverage in maximum limit. The sector has its roots over every working sector that is pursuing their activities through the use of digital media. While the telecommunication sector is equipped with positive aspects there are several factors that are responsible for its deterioration.

Regarding this context, the following content is in relevance to the chosen organisation of Vodafone within the province of United Kingdom. There are a few reasons for such choice. Vodafone being a favourable telecommunication company is facing some of the issues regarding the capturing of marketing positions along with customer satisfaction issues. In viewpoint of Curwen and Whalley (2016), further Vodafone is having issues regarding its data plans that are unacceptable for their customers in some regions. Further, with thrising concern of competition, Vodafone is having a lower market outcome in recent years. Hence Vodafone needs some strategic development on virtue of which they can overcome the issues. Hence it is chosen as the content topic.Task 1: Impact and

2.1 PESTLE model for analysis

PESTLE Analysis

Factors

Impacts

Politics

Through politics, UK is having environment of politics. In words of Kelly et al. (2016), there are provisions of tax reliefs towards the investors thus providing them relaxations. There are also chances of change in regulations and policies that can affect invest of visitors towards the telecommunication company.

The regulations of Government with context of Vodafone factored transparency through seeking interest in the protection of consumers. The EU has an impact on Vodafone. The rates of terminations were lowered to 14.32 euro cents within a minute to 1.79 euro cents per minute. Other factors regarded the access to networks through the use of transmitter bases.

Social

The United Kingdom is effective for its cultural aspects that feature traditions and festivals. The UK is also famous for attraction of tourist from all over the globe.

Through the social context, the terms of disposable income is subjected to rise further 7% within further years. In opinion of Jakobsen (2016), such aspects are correlative towards the use of communication through wireless technology with higher saturations. On context of rise of disposable income, the adjoining demands of population grew within a rate, 12.4% on annual basis.

Environment

The united kingdom is effective for its friendly environment. As opined by Eicker and Cilliers (2017), the collaborative approach is effective to achieve the goals along with the objectives. There are much stability in the food sector and is affected by the transforming conditions in climate.

The implications of recycling while manufacturing the products is also termed as a major and challenge that deal synthetic matters. Vodafone subjects to use the program of recycling phones by collecting handsets that are disposable.

Technology

The united kingdom is subjective to be engaged in developments through technology within a frequent scale. The advancement in technology is effective to provide better profits.

Vodafone has subsequent contracts with usage of technology through the procurement of GSM, EDGE and GPRS. The effect is majorly due to technologies that are emerging with Vodafone. As mentioned by Curwen and Whalley (2016), the adaptations of 4th generation network through newer platforms are also subjective to affect the operations.

Legal

The legal factors deals with providing safety to the incoming investors and other visiting bodies. Better enhancement of productivity is achieved through the provision of better opportunities of employment. According to Yeboah-Asiamah et al. (2016), there are significant low crime rates in the united kingdom.

The regulations that were considered as bulk were taken to set prior the initiations in contrast to the sales. Taking instance such as the usage of phones while engaged in driving activities are subjected for reduction of usability as well as revenue.

Economic

The nation of United Kingdom has its GDP with greater effectiveness that can attract other overseas populations for expanding their business. There are also the aspects of being mixed economy that affects the production style and the production outcome by the investing companies.

Under the financial crisis concerning the year 2007-2008 along with crisis in subsequent Euros, the growth in GDP took decrement even to negative percentage.

As mentioned by Mizrahi and Tevet (2014), there were growths in the southern parts of Asia from 3.2% towards 12.5% within 2003. Until the further years, the GDP is factored to rise to 75.4%. As mentioned by Mizrahi and Tevet (2014), the other factors on economy were subjective to high business investment and dedications towards greater amount of resources.

Table 1: PESTLE analysis of Vodafone UK

(Source: created by author)

2.2 ANSOFF’S Matrix for analysis

As per Ansoff’s matrix, the strategic position of Vodafone is the “development of the new product”. As mentioned by Mizrahi and Tevet (2014), the marketing aspects of Vodafone mainly aim to retain their leadership in the United Kingdom telecommunication market. The strategy of Vodafone is led by products; the company is with the concern of developing new products along with better services. Such developments are with alignment of utilising the advancements through the usage of latest technologies. According to Payne and Frow (2014), the strategies are mainly with subjections of meeting the demands of customers by implementing new services in their module. The improvements of older products are also added in the list.

Within the context of United Kingdom, the market of mobile telecommunication has taken approach to the maturity within a very short period of time, especially concerning the younger age. In order to maintain the position, the telecommunication market of Vodafone is looking up to add value added services to their plans. As opined by Raddats et al. (2016), further the company is also planning to implement new attractive services with value additions that can be provided in the form a package to the customer in order to meet their growing demand.

Apart from the production and implementation of new products, Vodafone also implements to undertake some new measures. The new objectives in addition to product development were obtaining new customers and to develop the brand with new implementations. In words of Sabillon et al. (2016), the introduction of new technologies along with services like subscriptive texts and WAP services are the main focus. In order to achieve the concerned products, Vodafone tends to introduce new ranges of mobile accessories and enhance their services. In opinion of Špaček and Vacík (2016), they are focussing to update the new services in accordance to the market needs. The company also focuses to implement feedback plans in order to gain the knowledge of user experiences of the new designed products.

The new products were in the form of DPS, the potential system with differentiation. The system was subjective to provide encryption within both ends. According to Yeboah-Asiamah et al. (2016), it is duly designed by the telecommunication company in order to put the insights of new as well as old customers at the priority of developing product. The system was planned to prove its effectiveness while ensuring the integrations of voice records. It was related to procedures of complete business in order to comply with customer’s voice. As mentioned by Curwen and Whalley (2016), it was subjective to be integrated through the ways of developing subscription of both the dialler and the receiver.

Task 2: Vodafone’s internal environment and capabilities

3.1 Strategic capability

Strategic capabilities of a business entity refers to the abilities and the compatibilities of the telecom service providing companies such as Vodafone and other relevant companies in the market. As per Bendell (2017), the strategic capability pertains the company and thus allows it to increase or rather enforce its values in due time. It does not pay attention to the business strategies implemented by the company, but it lays focus on the assets, obtained resources and the persistent market position of the chosen company, that is Vodafone. Martin and Tian (2016) states, the strategic capability of the company cannot be measured or analysed by any method. Moreover, the strategic capability is necessary for third-party investments in the company. It can be analysed and evaluated by the strategic value analysis of the company. The data that is obtained from final reports, surveys conducted and the present market scenario or position of the company in the UK market is used for analysing the strategic value.

3.2 VRIO model for determination of strategic capabilities

With respect to the telecommunication market of Vodafone in context of VRIO model, the primary resource available to the company is technology. Being a listed company, it is equipped with the capability to raise capital by procuring sales with affecting its own securities. As opined by Eicker and Cilliers (2017), such a step is effective to secure the company with easy access towards the funds if there any requirements. On further context, the company is able to borrow capital within a favourable rate. The company is furthermore attested by the investment of the firm through the accreditation of longer terms. It is also favourable for the higher grades with ratings in shorter terms. In opinion of Jakobsen (2016), on further concern, Vodafone has cash and its equivalence that are considered to be higher than annual GBP. With the disposal of stakes at a rate of 45%, the telecommunication company was subjected to procure increment. The increment was more the amount than GBP and followed repaying of debts within GBP with 9.8bn. The aspects were followed by repurchasing of shares which were considered larger than the GBP of 1bn within the same time. In words of Kelly et al. (2016),

on further context, the Vodafone company group was successful in achieving the profits with the following years that raised the GBP with 7bn under higher losses of impairments. Such activities are demonstrative towards presence of strong resources consulting finance of Vodafone. Such resources are useful towards the procurement of advantages with opportunities. The advantages can be of investments within R&D or to improve the services towards the concerned customers along with the investments within the better networks. As mentioned by Mizrahi and Tevet (2014), the rarity of resources is a negligible aspect with the approach to Vodafone being the largest and multinational competitive with the presence of substantial capital. The firm is equipped with the advantages over competition through the aspect of operators of network on a national basis. According to Payne and Frow (2014), such factor ensures that the resources are valuable along within a certain limitation producing the advantages of competition through small scale competitors.

Figure 1: VRIO model

(Source: created by Author)

 

3.3 Strengths and weaknesses

Strength

There are various aspects related to Vodafone that are in relevance to available strengths of the company. Vodafone has total majority of dominance over the cellular market along with wider presence of geographical aspects. According to Payne and Frow (2014), the expansion of company has its footprints over 80 countries. The company has also acquisitions pertaining to 5.6% stake from Airtel while having the percentage raised to 67 in case of Essar. Within the United Kingdom, Vodafone is having collaboration with major mobile networks like Airtel or Docomo, which are the reason for high output and their high productivity. As opined by Raddats et al. (2016), on further context, Vodafone has stronger infrastructures of network and is considered to be one of the global network providers with immense supply of connectivity. Apart from the United Kingdom, Vodafone has its roots spreads over the middle Asian provinces. In words of Sabillon et al. (2016), through such positive aspects, Vodafone has procured the market dominance by the procurement of attractive offers and non disruptive connectivity.

Weakness

There are various weaknesses available for the telecommunication market of Vodafone. There are present aspects regarding development and research in lower levels. In opinion of Špaček and Vacík (2016), the researchers are not adequate and are subjective to provide fewer outcomes through quantitative or qualitative analysis. There is also presence of ROA that is the return of assets value in negative scale for the Vodafone Company. Such factors are responsible of lower under performances within the present key competitors. On further context, Vodafone fails to provide network coverage within the rural segments. According to Yeboah-Asiamah et al. (2016), there is no availability of Vodafone assets in rural segments that affects its productivity. Being in second position within the industry of telecommunications, the company was able to establish in the form o premium brand after Hutch. On such context, the company faced aspects of market in competition. As stated by Lee (2016), it was very difficult for the company to implement charges at the rates considered premium for the customers.

Task 3: Telecommunication sector analysis

Bargaining power of buyers: A telecommunication company in the UK can make a strategic decision based on the several kinds of buyers and the characters of the different kind of buyers. The telecom users in the UK are given the utmost priority and as a result, the customers enjoy the bargaining power in the market. Due to the presence of a strong and competitive range of customers in the market, the telecom service providers in the country are facing a high rate of competition among themselves. As opined by Frederiksen (2014), due to the high bargaining power of buyers in the UK market, telecom companies such as Vodafone also face price wars among themselves. This, in turn, forces the telecom service providing companies including Vodafone to lower the prices of the service and primarily focus on the business of customer pulling.

The Bargaining power of buyers is relatively high also due to the extensive range of users and the potential revenue it provides to the telecom companies. As Greiman (2015) states that the competition in the market only results to the benefit of the buyers and thus bringing the bargaining power to high. Telecom companies such as Vodafone can lower the bargaining power of the buyers and increase their profit margin by implementing the fifth generation mobile network service and charge appropriately as per the service.

Figure 2: PORTER’S five forces model

(Source: created by author)

  • Bargaining power of suppliers: The bargaining power of suppliers for the telecom industry is relatively moderate due to the presence of a large number of suppliers. As per Kańciak (2016), suppliers refer to the companies which deal with the primary service provider to the telecom service providing companies in the UK. These companies help the primary telecom companies such as Vodafone in setting up mobile network infrastructure throughout the country. As opined by Frederiksen (2014), these companies also assist the telecom companies by providing required manpower and technical infrastructure whenever required.

However, the bargaining power of the suppliers being moderate adds a benefit to the telecom companies in the UK. Vodafone too faces much lower disadvantage due to the presence of a large number of suppliers. According to McNaughton (2018), the bargaining power of the suppliers can be even lower if Vodafone and other telecom companies start investing and creating their own range of supply branches. Extra costs incurred due to the suppliers shall also gradually decrease and bring in more profit for the company.

  • Threats of new entrants: The threats of new entrants are low among the telecom service providing companies in the UK. Vodafone has a relatively low risk of the new entrants into the prevailing mobile network. The prime reasons for the low threat of new entrants are due to the high cost of establishment in the country. According to Omenugha (2015), a huge capital is required in order to set up a telecom network service providing company in the UK, and so it is not possible for many to go for the step. Further, the current status of the already present companies is also at the peak level of sale. Due to which a new company shall have to delve into customer destruction of the rival companies in the market. The loyalty of the present customers has also decreased the threat level for the new entrants in the market. According to Yeboah-Asiamah et al. (2016), in order to maintain the same and similar genre of marketing and also prevailing in the market, Vodafone and other relevant companies must focus on better service to the customers and maintain the loyalty they already possess for the company.
  • Threats of substitutes: The threats of substitutes refer to the existing similar products or similar services in the same market. The threat of substitute is very high in the UK market for Vodafone and even other relevant network service providing companies. The threats of substitutes are relatively very high due to the presence of many relevant companies who also are on the same platform. As opined by Sutherland (2014), the rise in these threats gives rise to utter competition and results to minimising of the profit margin of Vodafone. However, Vodafone can gradually minimise or even lower the substantial threats of the substitute products by making changes in the technology and implementing innovation in the products and services offered. As per Sutherland (2016), modern innovation and changes in technology include moving to the new generation of network service provider and opting for the fifth generation network.
  • Rivalry within the market: The rivalry and the competitive intensity are comparatively high in the network service providing industry than in any other industry. The rival companies in the market implement all kinds of strategies such as price, marketing, and innovation in order to persist in the telecommunication market of UK. As opined by Sutherland (2014), Vodafone can implement a newer innovation in the present market and increase the fund allocation in the research section to produce more innovative designs for its customers. Doing so, Vodafone might gain a potential advantage in the persisting market over the rival companies.

Task 4: Strategic direction interpretation

The clock model featuring marketing strategies by Bowman is used for the analysation of competitive positions within the market. The competitive positions are taken as the comparison against competitors offerings. It stays in the form of a diagrammatic representation that is effective for showing relationships existing between the price rates and the customers. According to Frederiksen (2014), there are eight present positions of strategies within the clock model. The positions are namely lower value additions, lower price rates, hybrid differentiations, standard differentiations, differentiation with particular focus, the standard increment of rates of products, higher rates with lowered values and standard rates with lower rates.

With respect to Bowman’s model clock for strategies, the concerned Vodafone company need to put the highlight on “focused differentiation”. In relevance to the implemented strategy, the company is subjected to focus on the stress towards the luxury along with products of high-end. Such subjections are incurred to higher rates towards customer along with the service user. According to Greiman (2015), from that the company also puts highlight on targeting of segmentation of products along with the promotion of their new launched products.

Figure 1: Bowman’s clock model

(Source: Created by Author)

Vodafone has already procured investments along with implementations of services that were termed to be consumer friendly. The services took the inclusion of improvised services of WAP along with the subscribed service of texting and much more. In reference to the products segment, the company is hereby aligning with chosen directive strategy. The company is in need of procuring investments on the “Internet of Things” namely the IoT within the market of consumer. As per Bendell (2017), IoT or “Internet of Things” is capable of binding intelligent products in a greater volume that falls under the Internet web. The “Internet of Things” is able to establish connection as well as adjoin the appliances that are both having uses within the domestic and corporate firm. As stated by Sutherland (2014), the assumption of company that there would be appliances in a population of 400 million along with connections, with consumers durables within the year 2020. Further analysis can be taken down as of gaining turnover for the company within the year 2020,if procured the investment of new launches. According to Frederiksen (2014), strategies are to be implemented and it also requires the highlighting other sub-branches of “Internet of Things”. A single application development shall be effective to prove the user friendliness apart from implementing connections with goods of consumers.

The launching of “Auto SOS” can also be effective. According to Frederiksen (2014), the effectiveness of such implementations can be put onto the business related customers who are dealing with automobiles. Such facilities are equipped with capabilities that enables auto calling as well as messaging to the numbers saved within the car module. Such module shall prove to be effective in case of any emergencies or any sort of negative incidents. If there is maintenance of higher rates, a proper quality can be ensured while maintaining the satisfaction of concerned customers. As opined by Sutherland (2014), aspects would be proven effective to safety of the Vodafone customers who are subjected to use the automobiles or any other vehicles. Other options are available in reference to the clock model of Bowman’s in the form of security cams through the use of mobile devices.

Conclusion

Regarding the above content, there are various conclusions available that to be drawn in light of the topic. From the consideration of external environment, Vodafone is with focus of developing new products in order to regain its market position. The implementation of subscriptive texts and DPS services can effectively level up the position of Vodafone. Considering the internal environment of Vodafone, the weakness of Vodafone precedes its strength factors. The presences of ROA along with lower coverage within the rural areas are disruptive of the network infrastructure of Vodafone. Considering the analysis of telecommunication sector of Vodafone, it is having high power of bargaining through bargainers against which subjects the company to lower their price rates. With lower threats of new entrant, Vodafone is ahead with their product facilitation. Further concerning the interpretation and understanding of directive strategies, we can conclude that Vodafone is in need of focusing on directive strategies, regarding differentiated focussing. Developing the differentiation within the existing product might bring the valuable outcome for the company.

Recommendations

  • Focussing on revising existing plans

Focussing on the existing plan can also level up the market position of Vodafone. By devising the older plans with newer existing rates, customer satisfaction and attraction can be procured on a greater scale.

  • Building up connections within the rural areas

Rural areas are devoid of telecommunication aspects. In viewpoint of Curwen and Whalley (2016), by building up the sectors within those regions, the brand endorsement of Vodafone can be enhanced as well as the expansion of business can be procured.

Reference 

  • Lee, S.M. and Olson, D.L., 2016.Convergenomics: strategic innovation in the convergence era. Routledge.
  • Martin, B. and Tian, X., 2016.Books, bytes and business: the promise of digital publishing. Routledge.
  • Sabillon, R., Cavaller, V. and Cano, J., 2016. National Cyber Security Strategies: Global Trends in Cyberspace.International Journal of Computer Science and Software Engineering,5(5), pp. 67-81.
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