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With an extensive advancement in technologies, the communication sector has seen tremendous changes that laid a big influence in the market. In the present scenario, mobile communication plays a vital role as it is the fastest mode of communication. The market conditions in mobile communication sector, is quite fluctuating and the major players are facing tremendous competition with new entrants (Bentley-Goode Newton and Thompson 2017). For this report, has been taken as organisation of context. It lay emphasis on various macro and internal environmental factors that lay a very deep influence on the telecommunication firm. Besides this, the competitiveness of UK market is been analysed using Porter 5 force model. Other than this, the strategic direction and options have been analysed using Bowman's strategy clock model (Woerner and Wixom, 2015).
IMPACT AND INFLUENCE OF MACRO ENVIRONMENTAL FACTORS
1.) PESTLE model for environmental analysis
The PESTLE model helps in effective analysis of various macro or external environmental conditions that lay a very deep impact on the overall functionality and handling of operations in a mobile telecommunication company like Vodafone. As the cited enterprise is one of major telecommunication firm in UK, it will be deeply influenced by a wide range of operations or factors that are been laid by macro environmental factors, sustaining in market (.Cascio, 2018). This will not only impact growth and development of an organisation, but will also play a deep influence on overall structural functionality of mobile communication firm.
The external environmental factor that affects the enterprise is as follows:
- Political factors: As Vodafone is operational in many countries apart from UK, it will be deeply influenced by different political factors that are operational in various nation of its operations. These factors will lay a very deep influence on the overall structuring and infrastructure of cited enterprise that is operational in that country. Besides this, different conditions too plays a very deep influence on organisation that will include political instability and lack of proper governmental structure create a condition of chaos, that lay an adverse impact on overall growth and development of organisation.
- Economic factors: The economic stability will play a significant impact on growth and development of business organisation. The setting up of effective and growing economy with high GDP will help the organisation to expand its functions in a much better and effective way. The rise in economy of nation as well as enterprise will support more customer base and ease to adapt the latest technologies. Besides this, it helps in better revenue generation. However, any sort of economic crisis in nation will lay a direct impact on growth of company. Other than this, the instability will lead company to alter its strategies, which may have negative influence on its profitability (Johnson, 2016).
- Social factors: The beliefs and ideology of people on local and international level lays a deep impact on organisation. It is a dynamic factor and for a better growth, company has to showcase a good flexibility towards local beliefs, customs and ideas. Thus, Vodafone is required to develop its strategies as per the preferences and policies related to benefit of citizens of a country, in which it is operating.
- Technological factors: the cited enterprise is well known for innovation in technology and services, Vodafone provides to its customers. Although the uniqueness of services and products provided has created many rivals for company. As the sector in which Vodafone is operating is technology oriented, the enterprise is required to adopt the latest technical advancement measures (Scholes, 2015.).
- Legal factors: As Vodafone work on global level, the firm is required to follow different legal obligations and measures that are been followed by trade organisations and government, in order to avoid any law related issue. Besides this, breaching a legal obligation will not only lead to heavy penalties but also cause company to lose its customer's trust level and goodwill.
- Environmental factors: As the globalization has increased, the need of environmental concerns have enhanced on a faster pace. Vodafone has to look after the different measures that will play a very crucial part in development of environmental policies by enterprise and implement them effectively.
2.) Ansoff's growth vector matrix
The strategic positioning of Vodafone is very vital for better growth and development of organisation by a better revenue generation and strategic planning.
As per the Ansoff's growth vector matrix, the influencing factors are:
- Market Penetration: It is the strategic technique that is followed to have minimum risk factor and maximum market share. In this strategy, the existing product or service is been promoted to have a good revenue generation (Spender, 2014). It improves the strategies and lead to proper utilization of capabilities. However, it will only manifest when the market is saturated. I n such condition, the introduction of new product or services will help in better rise in functional capabilities of Vodafone. It helps the entity to grow due to its better market proposition.
- Market Development: This strategy is followed by organisation when the Vodafone required to expand its business in new countries of operations with its existing services and products. This include the better market sensing and the core competencies of the market are required to be held upon for better promotion of products and services. Its is quite riskier that market penetration approach as enterprise is unaware of its potential clients or customer's requirements and expectations.
- Product development: This approach involves the development of newer products and services to launch in existing market. It is beneficial when the firm is well established in market and in need to increase its brand image and product portfolio. Vodafone will look after effective management of offering a good quality products and services. However, it is a riskier approach as there is a consistent uncertainty about needs and demands of users.
- Diversification: This involve the launching of new product in new market that is a very risky approach as it is impacted by uncertainty from customer's and market conditions. Vodafone is required to follow this strategy when there is adequate quantity of financial resources and high chances of returns (Shimizu and Tamura, 2015).
M1 Critically analysing the macro environment and how it determines your chosen organisation’s strategic management decisions.
The macro environmental factors lay a very deep and crucial impact on the growth and development of a business organisation that will lay a very deep and significant impact on the overall business operations of company. The macro environmental factors described in Pestle analysis and Ansoff's growth matrix will improve organisation's knowledge. It helps in developing a better perception about the external factors and their associated risks. This approach of identification of these treats will help in improving the growth and development of business operations and prevent the activities that can adversely affect an enterprise (Scholes, 2015).
1.) What strategic capability means.
Strategic capability defines the company's effectiveness and resources which helps to firm in addressing determined objective. It refers to a business ability to successfully employ competitive strategy that help to survive and increase its value over time. If corporation have effective strategic capabilities then it assists to firm in achieving its determined objective. It is a set of capabilities, resources and skill that creates a long terms competitive advantage for the business enterprise. Vodafone have effective strategic capability and resources through which it has excellently carried out its business activities and function for achieve objective.
A good strategic capability of an organisation is deeply based on a variety of operations that will include the utilization of a wide range of business resources by firm. Other than this, it helps in gaining a good financial stability by increasing revenue generation of firm. It not only help in gaining a good idea about the operations of itself but also of other companies too, that helps in improving the quality of services provided by cited telecommunication firm to its customers or users. Other than this, it helps in better value generation and supports a better rise in efficiency to fulfil customers requirements (Pisano, 2015).
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2.) Apply VRIO/VRIN model to determine strategic capabilities of Vodafone
The VRIO/VRIN model or analysis will help in better development of strategic capabilities of Vodafone by evaluating the internal factors that are been taken in thought process by cited mobile communication enterprise. The VRIO model that will be implemented will help in assessing the micro environmental factors for better handling of business operations. It will also help in effective rise in efficiency and effectiveness of organisation and gaining a good satisfaction level of their customers. The VRIO/VRIN analysis model that will be analysed at cited enterprise is as follows:
- Valuable: This will include the resources or components that are been taken in consideration by Vodafone to maintain the better handling of business operations. It helps the firm to gain a better competitive advantage and have a good control over the business operations that will help in suitable rise in operational efficiency of organisation. The better utilization of resources will help in generating a better value for production. Other than this, it helps in improving customer perception and gaining a good strategic capability of firm. The resources like assets, knowledge, information and work force will be utilized for creating a better value for Vodafone (Leonidou and et.al., 2015).
- Rare: This involves the resources that are rare to find or gain by enterprise. This includes resources that are possessed by only a limited number of companies. The utilization of rare resources and elements is been done by organisation during adverse market conditions like threat of new market entrant, that affects a better growth and development of organisation. It helps the firm to gain a short term competitive advantage and meet the operational requirements to sustain in market. Although, huge finance will be needed by mobile communication firm to gain these resources, but it ensures a better return of investment and a competitive advantage over the newer entrant. Other than this, the utilization will include the better handling of business operations, supporting the enterprise to have a strategic benefit over its rivals.
- Immitation: An asset is expensive to impersonate if different associations that does not have it can not mirror. Impersonation can happen by two courses by specifically copying the assets or demonstrating the practically identical efficiency and administrations. Vodafone have capacities to grew extra minutes, skill picked up will be extremely troublesome for different firms to create and mirror (Peteraf, Gamble and Thompson Jr, 2014). An asset is expensive to mimic if other association that does not have it can mimic, purchase or substitute it at a sensible costs. Vodafone have important, uncommon and exorbitant to impersonate assets can accomplish maintained upper hand.
- Organisation structure: A firm should arrange its administration frameworks, forms, strategies, association structure and culture to have the capacity to completely understand the capability of its valuable, uncommon and exorbitant to mirror assets and capability. A firm should sort out its administration framework, structure, approaches, procedures and culture keeping in mind the end goal to procure the upside of the significant assets. Vodafone has all around oversaw structure, framework and culture so as it can use its asset esteem in a very proper way. Truly Vodafone have competitive capability of its assets and abilities.
Company have high level of infrastructure through which it has design effective product and services in the market. In addition to this, company have used high level of technology through it have produced high quality of commodity (Leonidou and et.al., 2017).
3.) Vodafone's Strength and weaknesses
The strength and weaknesses of Vodafone is as follows:
- Good market coverage: Vodafone is world second the largest mobile telecommunication service provider and thus, has a very vast coverage over local as well as international market. This increases the market approach of company on a wider scale.
- Revenue generation on large scale: As operating in multiple nations, it caters a large customer base. This helps the organisation to generate a better revenue even after facing a stiff competition on international level.
- Effective marketing approaches: the marketing strategies that are been utilized by Vodafone gives it's a unique brand equity. The iconic pug and usage of Zoozoo's to promote its schemes, offers and products has helped the firm to attract a larger customer base and meet the operational requirements on a larger level (Klettner, Clarke and Boersma, 2014).
- Costing of services: looking at the growth of competition on international level, Vodafone has cost cut its service prices to maintain its customer base. Also, the cheaper plans have helped the firm to have positive profit margins.
- Dropping of subscribers: Due to the introduction of cheaper plans and better services, Vodfone had to face a decrease in its subscribers that have affected its revenue generation and ROI.
- Losing market in major countries: The firm has been unable to cope up with the expectations of its customers, which had caused it to lose a big part of its market in countries like India, and USA.
M2 Critically evaluating the strengths and weaknesses of Vodafone’s internal capabilities, structure and skill set.
On the basis of internal assessment of the capabilities of organisation, this can be said that the strategic compatibility of cited mobile communication service provider is deeply based on the factors like utilization of resources and organisational structure that impacts the development of better policies and plans for a business firm (Buckley, Burton and Mirza, 2016). As Vodafone has a good market position and impressive marketing strategy, it is easy of the company to meet its customers requirements. However, it has to also look after the moving out of its customers in its major markets in order to sustain its competitive advantage in telecommunication market.
Evaluate the competitiveness of UK’s telecommunications sector using Porter’s five
With the globalisation and advancement of technology, the competitiveness has tremendously increased in UK's market. This has impacted the revenue generation and managing of business operations that has led to have a deep influence on business operations on a wider scale. The assessment of Vodafone on the basis of Porter 5 force model is as follows:
- Bargaining power of buyers: As the mobile communication industry is booming with a greater pace, the buyers of mobile communication services has increased in market. With the development of more and more technologies on a cheaper rate, the customers now want the services from Vodafone on a reduced rate. The enterprise has to look after it for meeting the competition with its closest rival (Dranove And et.al., 2016). The development of better communication plans or offers for its clients or subscriber in a better way. When they will be provided with a good quality of services at a nominal or reasonable price, the clients will have a good satisfaction level and will prefer the cited business organisation over its rivals. This will also help in gaining a good control of business operations.
- Bargaining power of suppliers: Vodafone is well supplied by the resources required to operate on such a large scale. This impacts the growth and development of business operations of market in a much better way. The suppliers must be provided with better value in return of their resources and should ensure a better growth will help in better management of wide range of business operations in a very effective way. The cost of services that are been offered to customers or buyers will be largely dependent on expenses that are been made on the suppliers. As Vodafone is one of market leader, it can easily negotiate the prices with its suppliers to gain a competitive advantage over its rivals and competitors. Besides this, it will support the firm to make profits even after facing the competition in market.
- Threat of New Entrant: Being a market leader, Vodafone has a nominal risk to get affected by the market entrants (Johnson, 2017). However, the cheaper services that are been provided to its subscribers by other service provider in many countries have impacted its growth and revenue generation. Maintaining the sustaining cost will lay an impact on its sales while the reduction of prices of its service plans may lay an impact on its profitability and revenue generation. Thus, Vodafone has to carefully look after the better management of the risk factor faced by it in its major markets like India and USA.
- Threats of substitute: Although the risk of substitution is quite low for Vodafone, it has to look after the measures in a very effective way, in order to avoid any sort of issue or problem associated with the substitution of its services and products by that of its rivals or close competitor. This will help the firm to have a better control over its operations and meet the operational requirements of its users in a mush effective and better way, to maintain its productivity and revenue generation. As the scale of Vodafone is high as compare to its competitors, temporary fluctuation in pricing wont affect much to the cited organisation (Kellermanns, Dibrell and Cruz, 2014).
- Rivalry within the market: As Vodafone is a market leader on global scale, it will be hard time for the rivals of cited telecommunication firm to cope up with the pricing strategy of Vodafone. Besides this, the operational capacity and customer logistics is also of inferior level as compare to that of refereed firm. Thus, this approach gives it a good advantage over its competitors and help the firm to sustain in market in a very sustainable manner.
M3 Device an appropriate strategy to improve competitive
Edge and market position of Vodafone.
Vodafone will look after the various strategies that will impact its growth and development and will help the firm to sustain in market. Different competitive strategies like Price differentiation or acquisition of a local telecommunication firm will help the firm to improve its productivity and market position by developing innovative products and services on basis of analysis of customer trends in the operating country and come up with suitable and appropriate product and services (Buckley and Ghauri, 2015). While the price differentiation approach will help in developing of good quality products on appropriate pricing range while the acquisition approach or strategy will support the firm to have a better control over the business operations that will help in meeting needs and demands of its subscribers and potential customers in new market.
Analyse the strategic direction and options available for Vodafone using Bowman’s strategy clock model
The Bowman strategy clock model is an eight fold strategic assessment model that helps in better handling of business strategies and meeting of operational quality of organisation. This will also help in suitable handling of different functions and measures that are been followed by organisation to have a better meeting of the targeted goals and handle the business operations of the company in a much effective and significant manner (Akter and et.al., 2016. ). Other than this, the improving of the strategic position will help in better meeting of the targeted goals that are been set by the business firm to gain a good productivity and profitability. The Bowman's strategy clock mode involves the following strategic factors for Vodafone:
- Low price and low value added (Position 1): It is not a very competitive position in business. Te products and services offered by the firm will not be much differentiated and customer perceives very less value despite the reduced pricing. It leads to high level of bargaining and the only way to sustain in this strategic condition is to keep the offering prices as low as possible. This will prevent the competition and help the firm to sustain in market. The low prices, however, may impact the revenue generation and thus will have a deep influence on wide range of business operations.
- Low Price (Position 2): In this approach, the business organisation is on a low cost leader in a market. The method of cost minimisation is been used, depending on the economies of scale in an organisation. This approach requires the appropriate utilization of the available resources as the profit margin on each product is low, but the production in excess will help in compensating the loss by generate a high level of output to get more profit. However, the competition in this segment is quite high as many organisations try to work in this position to attract maximum number of customers, creating a condition or situation of market rivalry (HArmstrong and et.al., 2015)).
- Hybrid (Position 3): It is the combination of policies, involves the elements of low pricing and product differentiation. The main aim of this strategic positioning is to provide the client or buyer with a good quality of added value. This is gained by the combination of great reasonable pricing and acceptable product differentiation, which allows the development of high quality products and services. This approach of strategy is used when the added value is required to be put in a product or service on a consistent basis. This help the firm to gain a good strategic position in market and involve the better management of various resources that will help in sustainable growth and development of telecommunication firm.
- Differentiation (Position 4): The aim of this approach is to have a better value addition that will help in better handling of product development. This strategy is used to develop a product as a brand and improve the product quality in a mush effective manner. This method also involve better handling of business operations to enhance the efficiency of a business firm and customer satisfaction level. Other than this, the high quality of product will also help in increasing the brand awareness that will help in improving the brand awareness and customer loyalty that will lay a very deep impact on business operations and revenue generation cited organisation (Akter and et.al., 2016.).
- Focused differentiation (Position 5): it involves the placing of a product or service price on very high level so that customers purchase it for its high value. Such strategy is used by luxury brand to achieve the premium pricing on a segmented market and support a good promotion and distribution of product or service. If successfully implemented, this approach help in gaining a good profit margin for long run.
- Risky high margins (Position 6): The too much placing of an organisation on a high price position, which may lead to the failure of company. This involves the offering of extra valuation of a product by giving extra than the value for money. This strategy may provide the better customer base but also impact the profitability and is of no competitive advantage for larger run.
- Monopoly pricing (Position 7): In this strategy, there is only one market that provide the better quality of a unique product or service. Thus, in this case, customer has no other option to purchase the product or services. Thus, the seller can place the pricing as per their convenience. However, now it is strictly monitored to avoid any sort of exploitation of customer by service provider (Buckley and Ghauri, 2015).
- Loss of market share (Position 8): this strategy is used to recover the losses in market. The pricing of product is placed in middle level and product of lower value is offered. However, it is unable to meet the expectations of customers with better options.
M4 produce a strategic management plan that has tangible
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And tactical strategic priorities and objective
The management plan for Vodafone will involve the following tangible and tactical strategic priorities and objectives:
- To have a better market position and provide the customers with effective value for money product that will help organisation to gain a good profit margin.
- A good implementation of differentiation strategy that will help in achieving and fulfilling the customers need and demands.
- Utilisation of hybrid approach that will help the firm to gain a good market share and meet functional requirements of firm to have a competitive advantage over its rivals (Akter and et.al., 2016.).
Thus, it can be concluded that effective business strategy plays a very crucial role in development of effective business operations of Vodafone. The report laid an emphasis on various macro and internal environmental factors, that lays a very deep influence on cited telecommunication firm. Besides this, the analysis of competitiveness of UK market using Porter 5 force model and the strategic direction and options are been analysed using Bowman's strategy clock model helped in effective management of functional operations of Vodafone.
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