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Unit 35 Business Strategies UK College of Business & Computing

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Introduction

Business Strategies is the summary of how company achieve the target and perceive the expectations of customers. Business is a firm working plans for achieving its goal successfully. Growth, renewal and stability is the main three corporate strategies. Effective business strategies leads to success. In these appraisal we are taking British Telecommunication Company for assessment. BT was founded 49 years ago. BT company is generating £24.062 billion. British telecommunication company is the multinational company operating in world. Head office of Telecommunication company is located in London and in United Kingdom. It has operating in around 180 countries and it the biggest supplier of mobile, fixed line and broadband services in UK and provided IT services. It is the first telecommunication company in Britain. This assessment is introducing the impact or micro environment on BT by answering Pestle model and Ansoff's Growth vector Matrix. The internal environment and its impact is also taken for analysis by taking VRIO Model and identifying the strength and weakness of BT. Various telecommunication sectors are also included for evaluation.

Task 1

P1. The impact and influence the macro environment has on British Telecom Company and its business strategies.

Macro environment is a general condition and situation that exist in the economy as a whole. Gross domestic Product (GDP) , spending, inflation, monetary and fiscal policy are included in the Macro Environment.

Pestle Analysis of British Telecommunication Company

Political Factors-

Laws and regulations issues cum up frequently in the environment which affect the operational activities of BT. It is very difficulty for telecommunication companies to handle. Wi-Fi and internet are regular concern of life. Customer wishes to government to make the internet as a primary human right. Everywhere, in every sector there is need for internet. A conflict for and against net neutrality is violent. But there is always a battle arrive in between the government and service providers. BT has capabilities to overcome all the political factors to ensure the proper working of BT.

Economical Factors-

Taxes and inflation affect BT in Large extent. The pricing per plan of BT is affected by increasing expenses. . Building towers and availing resources in remote and rural areas are very expensive task. The people who lives in remote areas are largely affected. Because it is very important for BT to provide better services in all over the countries. It is the need of every people to be available and accessible 24/7 is flourishing rapidly. BT company has powerful strength to overcome all the economical factors

Social Factors-

It is very important of any industry to work according to the social norms as to remain in the market. BT is also operating effectively and efficiently in social environment. The horizontal growth of BT is limited specially it is very challenging to spread out in remote areas. When it comes to purchasing internet, mobile phones, broadband , customers are left with less. Purchasing is not so much difficult task but to maintain its expenses like recharges etc is very difficult. The daily life of average person, telecommunication has become very important part of life. People in UK admired by the operation of BT which in turn complete the social factor.

Technological Factors-

Innovation is become the important part for telecommunication companies to stand in the market as because technology is now becoming very advance now a days. Mobile phones are becoming more consolidated and the telecommunication sector into a wireless business. BT is investing in large in innovations as to stand strong in the market and in front of competitors. Wi-Fi is developed into vehicles, hotels, cafe, railways station, airports and in many places. BT introduce the latest technologies in the market. The products of BT is appellant as it is beating all of its competitors in UK.

Legal Factors-

Legislation issues have great impact on British telecommunication Company. Conflict with government, competitors and customers are the main issues of BT. BT company is operating in legal forms and in legal framework. Telecommunication sectors allows export and imports of services and products in judicial way. By doing import and exports there is more developments in BT (Maniora, J., 2018). BT company is operating in the norms provided by government.

Environmental Factors-

Telecommunication company is greatly affected by the climatic changes and global tepid. It is big challenge for BT to reach the networks to its customers in climatic changes. Products come and goes infrequently sometime replace from the environment, which is very important task to fight and improve. BT company is doing in advance as-per the changes and requirements of BT.

Ansoff’s growth vector matrix

 

BT company is make use of Ansoff's Growth Matrix to analysis the growth and opportunities in the market in long term. For evaluating the future growth of BT, the senior managers and employees work according to the strategies in Ansoff's Model. A road map is provided by Ansoff's to grow and take opportunities of the market when BT is launching a new product and services. Ansoff's Matrix is presented in four quarters which is Market Penetration, Market Development, Product Development and Diversification (7 principals of Business strategies, 2018).

Market Penetration-

When Existing product is noticeable in a way to increase the market share of BT, market penetration occur. BT is trying to increase the market share by improving its quality of product and services. It is strategies to increase the efforts of Company to increase the market share of BT and ensuring the leverages the actual capabilities and resources.

Market Development-

When BT desire to expand into new markets with their existing products and services., market development occur. Is is very risky to develop the existing product in the market than market penetration. Firm needs due intelligence and complete skills to inter in the market with new products.

Product Development-

When new products is launch in existing market, Product development occur. This strategies leads to success if BT has establish itself in the existing market. BT would ensure that the it has brand image and brand value than it easy to launch the new product in the market ensuring about the quality maintain. Customers do not like same same products, they need some changes and improvement in the products.

Diversification-

This strategies is very much risky than other strategies of Ansoff's Matrix as because it is very difficult to sell the new product in the market which company doesn't have any know;ledge about the actual taste and preference of people. This strategies is done by the critical research of market and than the product is launched in the market.

BT Company is using Pestle Model and Ansoff Matrix so efficiently by this company is gaining higher level of profit margin. The Profit margin is increasing day by day and year by year.

Task 2

P2. Conduct an assessment of the British Telecommunication company's internal environment and its capabilities.

Strategic capabilities

The competitive advantage and organizational capabilities are the strength of BT company. This company also have different types of capabilities like real-time, global market and open platform for customer. This company is also using a basic line strategy to increase the value of customers. BT company is trying to expand its location not only in urban areas but also in rural and remote areas. This company has power to overcome the negative effects of internal environment. The strategic capabilities of BT Company are competitive advantages, resources-based strategies, organizational capabilities and venture which are the various schemes of BT company. Being the best supplier of communication and services as well as solutions, BT Company is using a basic line strategy to create value to stockholder. To focus on global market, real-time and open platform for customers are the strength of company. BT Company is increasing capacity to enhance the capabilities to expand scope not only in urban areas but also in rural and remote areas. BT Company is expanding online services to serve the small scale businesses and it ties up with more overseas companies to expand businesses at global level. BT company is fighting with the threats of its business like long-term vision, stiff competition and global economic depression. BT Company has strategical capabilities to overcome with all the factors affecting internal environment of business.(Buckley, Burton and Mirza,2016). BT company is growing at high growth rate. The goodwill of BT is valued at highest level.

VRIO/VRIN MODEL :

VRIO model is a tool for an organization to analyses the internal capabilities of an organization to evaluate that are they capable to fight against the competitive environment. This model is best and a largest scheme. Framework of this model is done by four types of questions such as :

  • value
  • rarity
  • imitability
  • organization

Question of value :

The first question in the VRIO model, is the resources of an organization is capable enough to the firm ? Resources such as human resources and financial resources are the capabilities and the strength of a company. As all know that resources are the limited factor. Wastage of the resources is not good for the company(Naor, Druehl and Bernardes, 2018). It reduces the efficiency of productivity. BT company is utilize the best of their resources which increase the opportunities in the market.

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Question of rarity :

Rarity of the BT company regarding to the network area. It has the best network quality. BT company is growing fast in the telecommunication industry because of capability of network quality. No company in the telecommunication industry can beat this company. BT company has rarity in the business which lead to strength of the business and lead to competitive plus point. Rarity in the BT Company is its network quality. No telecommunication company can beat the network quality of BT company. With this advantage company is growing very fast as compare to other.

Question of imitability :

imitation of a company appears in two different ways such as submission and duplication. BT company maintain its market share and position in the market with the helping of high imitation cost(Naor, Druehl and Bernardes, 2018). If a company wants to increase the profitability margin and advantages of competition then imitation cost must be high.

Question of organization :

next question in the VRIO model is all the resources are in proper manner? Company has to organize it's all resources such as human resources and financial resources to gain maximum utilization and efficiency of productivity. VRIO model helps in to manage all the resources accordingly. Valuable refers to the competitive advantage, rare refers to competitive parity, inimitable refers to temporary competitive advantage and organized refers to unused competitive advantage(Buckley, Burton and Mirza,2016).

Strategic capabilities means a ability to survive in the competitive market with increasing a value over time. It includes the asserts, resources and market position of the company in the market.

Analysis of VRIO model by this table :

RESOURCES

VALUE

RARITY

IMITATE

ORGANIZATION

COMPETITIVE IMPLICATIONS

STRENGTHS AND WEAKNESSES

Human resources

low

high

medium

low

Temporary competitive advantage

weakness

Customer relationship

high

medium

medium

high

Sustained advantage

strength

Managerial expertise

medium

high

low

high

Temporary advantage

weakness

Service level

high

low

medium

low

Competitive advantage

strength

technology

high

medium

high

low

Competitive advantage

strength

Strengths and weaknesses of an organization of BT company :

BT company is a brand known company in the world. There are different kinds and characteristics of strengths and weaknesses of this company. Which generates from the environment. Environment includes both macro and micro. Strengths and weaknesses of a company can be identified by SWOT analysis. Strengths of BT company are :

  • high coverage area in the market
  • revenue generated
  • development of marketing strategy
  • premium cost is very low
  • the highest base of subscriber
  • brand valuation

BT company covers the highest coverage area in the market which is the best strength of a company. The balance sheet of BT is healthy and strong financial position in the market. . Wide network area and wide distribution area is also well known characteristic of this company. Other companies in telecommunication sectors is using strategy of penetration marketing but BT company is using differentiation marketing strategy. Brand valuation of BT company is also highest rather than other companies. BT has large number of users and it has wide products and service range. BT has signed the world's largest renewal energy deal which company has unique strength from its competitors. BT has invested in new Internet Protocol century Network 21CN.

BT is operating in 28 million UK telephones lines. BT has largest penetration network in work wide (Juneho, U and et.al, 2018).

Weaknesses

Unsound cable lines, slow service and lustreless sales are the main three weaknesses that would be the weak points of telecommunication company. Their is lack of convergence of BT in fixed mobiles. The operation in mobile phones is underdeveloped. The lack of business strategies towards the publicity of Cheap Voice calls. Their is occasional pay phones issues due to BT operations. The customer services are also not good, users is not liking the customer services. In global crisis BT is not able to stand strong the market. Sometimes there is fund management crisis. Their is limited liquidity in the operation in BT. BT is convicted for practices such as activity targeting. Sometimes business is may be losing money in specific areas like in remote areas and rural areas as there is lack of resources.

Critically evaluating the strengths and weaknesses of BT.

As per the Lim, E.K - The strength and weaknesses of BT Company which affect the internal capabilities, structure and skills of the company. BT company has excellent strength which proves the company the best telecommunication company of the world. The weaknesses of BT company affects its profit and market share in the market which is its lack convergence (Lim, E.K., Chalmers, K. and Hanlon, D., 2018).

Task 3

P3. Analysing the telecommunications sector

Porters-five-forces-Porter's five forces is a instrument for analysing the competition of a business. It is the model which analysis the competitive position and strength of a business. It a frame work which ascertain the competitive magnitude and quality of market. Every telecommunication company in UK is using Porter's Five Model as the competitive position and strength of business is influenced by this model. BT is also using the Porters-five-forces Model which helps in enhancing its position.

Bargaining power of buyers -

Porter's five forces of buyer refers to the pressure exert on British Telecommunication Company by buyers to get them available of high quality, better customer services and lower prices (O'Brien, A. and Welford, R, 2018). According to the Porter's five Model- buyer power is one of the forces that shapes the competitive structure of BT company. BT buyer's are in numerous subscriber's but still the bargaining powers of buyer of BT is strong as because of competition in the market. The buyer's of BT is powerful which reduces the cost of services and products. These buyers cut down the leader monetary value but not past the level of rivals. To control the bargaining powers of buyer BT. BT should ensure the returns above the competitors in the telecommunication sectors to survive in the market. Company is using this porter's model which analysis the competition spreading in the marketplace which influenced the prices, prime quality of services and products of company. Sometimes, Buyers also bargains for enhancing the services of products in same charge before.

Bargaining power of suppliers-

Porter's five forces of buyer refers to the pressure exert on British Telecommunication Company by suppliers that how easy they increase their Prices. The suppliers of BT is also bargains in supplying various products like Sim, mobile phones, fiber optical cables etc. For controlling the the powers of suppliers,BT has relationship with numerous suppliers, which in turn control the bargaining powers of suppliers. More suppliers, company is in better position. Thus model determines that what is the cost will increases in switching of suppliers (Hartmann, J. and Vachon, S., 2018). Suppliers bargaining power is excepted when their is uniqueness in the product of him otherwise company switch to other. BT have to ensure the bargain powers of suppliers because if they increases the prices, the cost of product increases which in turn decreases the customers.

Threat of new entry-

The first impact on telecommunication sector is Threat of new entry. When the threat is high, BT must hold the customers with minimum prices of the product and services. But in telecommunication sector the threat of entry is not so high, it is low because the development of structure of telecommunication sector required immense fund, and secondly the another issues which stop the new entrants is telecommunication sector is facing competitions with established firms. BT company faces considerable threat of products and services still BT does not has to minimize its prices due to impressive economic scale and strong power of buyers. Arranging finance is also become a biggest barriers of entry as telecommunication sector as it require huge cost and typically need massive cash in hand to start up the business. In UK, telecommunication company has to apply for the license Federal Communication Commission (FCC) for approval to start their business. BT has excellence skills of management which also become challenging for new entrants

Threats of Substitutes-

Porters-five-forces studies that in telecommunication sector the rate of switching is high. The competition level in telecommunication sector is at peak level. BT is facing worthy substitutes of products and services. The CDMA services and basic land line phones are declining with the innovation of Broadband services which are becoming middling. BT does not need to pass down the cost of submission due to strong and powerful and effective scale of management. The services provided by the buyers of loves BT services and its products, which can be identified by the coverage of market share in the telecommunication sector. Social networking sites like Facebook, Instagram, Video calls, emails, yahoo, Skype and many other services have taken place as substitute of mobile services.

Competitive Rivalry-

Telecommunication sector is facing cut-through competition in the market. Their are number of competitors in UK still BT is facing and fighting intense competition with their competitors. Porters-five-forces examines the intensity of competition currently in the market and also evaluate the strength to overcome it. Rivalry competition is very high when there are just a few businesses evenly selling a product or service. BT has to charge same price what other telecommunication sectors in UK is charging as because the switching cost is very high. Today there is competition everywhere in each sectors. Enhancement in qualities is important but customer instantly take decision regarding price when their are so many substitutes available (Cubas‐Díaz, M. and Martínez Sedano).

Task4

P4. Using Bowman’s strategy clock model, the strategic direction and options available for BT.

Bowman-strategy-clock model is the framework used by telecommunication company to analysis the competitive position of a company. It was developed by Cliff Bowman. With the help of this model BT can assemble all the information on its market position in respect to the competitors. Bowman model has 8 competitive directions Bowman-strategy-clock model is the expansion of Porters-five-forces Model.

Low Price and Low value (Position1)-

This position is not a competitive position of BT. Generally telecommunication companies do not use this position because the switching cost is very high and there is intense competition in the market.

Low Price (Position2)-

For attracting customer's companies often use this position keeping the price very low. BT company when introduce its products and services in the market, keep its prices very low which attract many customers and automatically the market share increased.

Hybrid (Position3)-

This position includes low price and some differentiation in products and services. They produce lower cost products and services and also offer some product specialization. Many minor businesses fall into this position as they cannot compete with giant businesses. In this position more focus is on manufacturing goods dependable products and services at reasonable price (Nadeem, A and et.al, 2018).

Differentiation (Position4)-

For creating unique position in the market it is very important to differentiate it from competitors products. The aim of differentiation in product style and in service management and its quality also. In this position branding plays a key role. The services and products of BT is different from other. Differentiation leads company to great success and win the market. Differentiation also leads to monopoly in the market (Cottle, C and et.al, 2018).

Focused Differentiation (Position5)-

In this position the products and services has high perceived value at highest price level. This position is adopted by luxury brands companies who desire to gain superior prices at highly targeted market. In this position customer is ready to pay for it.

Increased Price (Position6)-

This position is followed by many companies who takes advantage and opportunities of market supply disequilibrium and approach short term strategies and increase the price of the products. Any telecommunication sector producing differentiated and innovative products utilize this position of increased price. If the increased price is accepted by consumers, company enjoy high profit in the marketplace, and if it not accepted by customers than company loses its existence as its market share fall, and it keep on falling until company make improvement in price level.

High Price/ Low price (Position7)-

This position is for company who has monopoly in the market. In UK,BT is the first Telecommunication company. In that time BT has its monopoly powers in UK. The qualities of companies that position themselves as a monopoly in the market. In this position company has no fear of competition. Customer's have only single choice, whether to purchase or reject. In telecommunication company it is not easy for new entrants because of its cost of infrastructure, monopoly remain for long lasting.

Loss of market Share (Position8)- This position is very desirable position for company as company comes to the stage of shutdown. The whole market share of company is disappeared from the market. In this position company has only two choice, whether to quit or adjust the price at low. Their are two reasons that company reaches to this position either the price is too high or the quality is rejected (Cascio, W., 2018).

Conclusion

In the above report it is concluded that businesses strategies are very important for each and every organization to sustain in the market. Efficient and Effective strategies helps in gaining competitive advantages and opportunities in a market as well as support in improving performance of BT. The report identified various external and internal factors which are affecting business functions and strategic planning in Telecommunication Sector. The report included various analysis tools such as Bowman Strategies of clock Model and Porter's Five Forces and Ansoff's Matrix in order to identify the factors affecting business operations of BT. Moreover, the report also discovered various strategies that can be adopted by the organization in order to gain competitive advantages and sustain a leading position in the telecommunication sector. Furthermore, the assessment giving direction to BT Company how bargaining power of buyer and suppliers and how to analysis the threat of new entrants and threat of substitute can be controlled and how the porters-five-forces can be implemented in the organization. This report also helps in fixing the price level of products and services in manner that leads to success.

References

  • Buckley, P. J., Burton, F. and Mirza, H. eds., 2016. The strategy and organization of international business. Springer.
  • Cottle, C and et.al, 2018. Carbon Pricing in the Private Sector: How the Science, and Politics, of Carbon Pricing and Climate Change Influence Business Strategy.
  • Cubas‐Díaz, M. and Martínez Sedano, M.Á., 2018. Measures for sustainable investment decisions and business strategy–A triple bottom line approach. Business Strategy and the Environment. 27(1), pp.16-38.
  • Hartmann, J. and Vachon, S., 2018. Linking environmental management to environmental performance: The interactive role of industry context. Business Strategy and the Environment. 27(3). pp.359-374.
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