In the present world globalisation has raised the total level of competition which has direct impact on the profitability of an enterprise. It is important that effective plans are formulated so that the competitive advantage can be achieved. In business strategies refer to the variety of guidelines that are formed in advance so that the desired results are achieved (Ackermann and Eden, 2011). need for making policies has developed over the period of time due to the dynamic business environment in which a particular enterprise deal in. when planning is done beforehand the capacity of firm to face distinct challenges increases. Vodafone is a leading brand in telecommunication sector and it is important for same to work continuously on developing appropriate strategy for its operations so that it can maintain the standards and can proceed towards growth. The following report will talk about the different tools that act as a supporting to make plans for the referred firm and will also discuss how Vodafone gets effected by different factors.
P1 Impact and influence the macro factors have on organisation strategy
There are two different surroundings in which Vodafone deals in which are internal and external. Organisation has no control over the changes that take place outside the boundaries and needs to make modifications according to them. Business strategies are the actions that ensures long term growth of firm and assist in designing the mission vision and objectives. Before determine the impact of external environment it is important to know the following elements of Vodafone.
Vision – Vodafone aims at delivering best quality products so that customer can rely to brand completely for which efforts are given towards maximising the excellence of user’s excellence.
Mission – Objective of the firm is to ensure customers confidently so that sustainability can be maintained. It helps organisation in establishing long term connections with them which further raise the profitability of firm (David, 2011).
Different issues are faced by the refereed enterprise due to the changes that take place in the business environment. In order to understand how Vodafone is effected by the global changes use of pestle analysis is done as it provide information related to the present political, economic, social, technological and other factors is determined that how the impact on the telecommunication industry.
Political aspects – In order to operate in a particular state, the most important factor that needs to be maintained is of the present government policies. It is important that stability is maintained in the area where expansion is planned as countries which do not have political constancy makes it difficult to operate. The country becomes more prone to wars and hence investment on infrastructure may go in vain. For instance, the issues that take place in Europe had an adverse effect on the sales on Vodafone which clearly reflects how changes in external factors has their influence on business. Other than this there are certain parts of the world where the procurement process for telecom industry is very tough like Mexican which further restricts the scope of Vodafone to expand. In these areas government makes strict rules and demand top quality of products that may lead to additional cost for the firm. Therefore, this makes it important that the present government policies are determined in advance so that the accordingly the strategies are formulated (Eden and Ackermann, 2013).
Economic factors – After political this is the second most important aspect that has its great influence on the operations of an enterprise. It includes state of economy that is present in the market. Inflation take place in the market which increase price of commodities and therefore put pressure on companies to maintain their total cost. Prices keeps on raising in the inflated market which effects the total sales volume for Vodafone. In case of increased prices, the labour cost also develops which further add more pressure as getting employees on same rate becomes difficult. The capacity of customers to purchase is greatly effected by the present status of their income which shows that places where the economic conditions do not fluctuate much should be selected so that constant working is maintained.
Social factors – This is another element of the external factor which has indirect influence on the company’s profitability. Trends in market keeps on fluctuating which shows that Vodafone faces ups and downs in its sales depending upon the current fashion. People these days are more cautious towards the brand value instead of its features and services. Costly products are more demanded in the market considering them as a status symbol. Strategies need to be framed in such a manner that the products are updated with the current trends as this will help in ensuring the right amount of sales.
Technological factors - Vodafone is dealing in telecommunication services, which is in huge demand. As these services are widely used by businessmen, corporates, students which provides ease in their operations. The technological environment deals with the technical element that have potential to increase competitiveness of company. Vodafone is famous for its innovation. It includes technology advancement, up gradation of application, setting up mobile operators and towers, improving internet services. There are many competitors of Vodafone now. It is necessary for the company to go one step fast from technology. It is one of the important areas where predictions cannot be done. Currently this company is highly advanced and has it access to new kind of system in industry (Gayle, Tewarie and White 2011). Internet speed and mobile network are another area of technological environment which must be consider by Vodafone in coming years. If this adopt new technology frequently then there is less chance of increase in productivity because old employees are not able to adopt changes on regular basis. It has been technology driven company and focusing on the latest trends of technology. Slow speed will give more time while fast speed of technological disruption may give a firm little time to cope and be profitable. This analyses involves understanding the following impact these are recent technological development by Vodafone group with competitors and Impact on product offerings. If the new system is adopted by company, then its image is good in market and there is increasing in productivity in their system. Mobile technology is advance all time in providing new services, better coverage and higher speed. Current system involved many new services like Wi-Fi,3G,4G services so that more customers take the benefit of new applications. Research and development is very necessary for company so that they can search for new applications for their system and upgrade their technology easily which help in increasing product quality.
Legal factors – In order to maintain security and safety aspect of a particular country legal conditions are framed by the political parties for different industries. Telecommunication is one of the most sensitive enterprise which faces maximum restrictions and intervention of government. Vodafone has to make sure that it carries out its distinct operations with higher level of efficiency as if found guilty than strict actions are taken against them which may affect the brand image to a great extent. It also includes the effects of treating employees differently as to consider everyone equal is the basic requirement and no entrepreneur can compromise with the same legislations (Ginter, 2018). Apart from these the other elements that fall under this category are health and safety law antitrust law etc.
Environment factors – This is the last element of pestle analysis in which concern of surrounding is taken. Guidelines are given to different organisations which are towards maintenance of good and healthy surroundings. It is important that the operations of enterprise are carried out in a manner it does not affect the society like dispose of garbage should be done properly, use of appropriate technology should be done which is environmental friendly. It should be ensured that no harmful effect should be them of the product on the animals too. This restricts the choice of technology for entrepreneur as there are certain applications which are effective enough but are not healthy for the surroundings.
Ansoff growth matrix – This is an appropriate tool which helps in gathering information for strategy formulation. There are different departments in which the organisation is dealing in and therefore it is important that planning regarding each is done in a way that improvements in them can be made. Senior managers and executors use this tool to analyse the areas of improvements and make appropriate strategies for the same. In order to analyse the organisation strategic positioning ansoff growth vector matrix is used in the following manner (Goetsch and Davis, 2014).
Market penetration – In order to attract different customer towards the offerings of Vodafone it is required that management of same uses effective strategies so that it can attract maximum customers. For same changes are made in the existing products which has the capacity to increase the value of commodities. Strategies are made through which customers can be influenced to choose Vodafone over others as this way the sales can be raised. Issues may come across while doing same as there are a series of legal formalities that need to be maintained which are not easy when companies wish to make change in the present offerings.
Market development – growth of the present market helps in increasing the total customers for a particular brand. Vodafone can enter to those areas where it is not operating in present. This also develops a good connection between different countries which further add value to brand.
Product development – In order to place the Vodafone products effectively in market noticeable features are added to the product which are unique and better than those which are already existing
Diversification – Use of proper and effective marketing strategies is used by the enterprise so that knowledge regarding the new product is provided on a maximum scale.
In the views of Hair, and et.al., 2012) changes that take place in the external environment of Vodafone such as advancement of present technology will have a direct impact on business. It will become necessary for the referred institution too to adopt same as only than the competitive advantage can be achieved. apart from these change in the present legislations also hinders the working of Vodafone and limits its total scope.
P2 Internal environment and assessment of organisation capabilities
In the above discussion it was found that there is an indirect impact of the factors that are present in the surroundings on the operations of Vodafone. Apart from this there is presence of other elements that are present within the business surroundings that also effects the capabilities of company to carry out its operations with the same efficiency level. These factors have their direct impact on the strategic capabilities of the firm. VRIO model can be used in order to analyse the strategic capabilities of the firm. VRIO Analysis is considered as technique which is being used for the evaluation of firm resources and to take competitive advantage. The acronym of VRIO is Value, Rareness, Imitability and organization.
The resources which are evaluated by company are as:
- Financial resources
- Human resources
- Material resources
- Non-material resources
Moreover, there is a large dimension of VRIO for the Vodafone and it is be like as:
- Value:Expensiveness of resource and how in easy manner it can be obtained on the various market.
- Rareness: It is required to know limited availability of resources.
- Imitability: Although it is required to know that is it difficult and complex to imitate the resources in better manner.
- Organization: Resources are such which is supported by existing arrangement and is they can use it properly or not.
Hence. The VRIO analysis is said as complement to PESTLE analysis, as this help to assess and identify the situation inside the organization like: - resources, their competitive implication and possible potential improvement for the given area.
VRIO analysis is also used as combination with other analytical techniques which do help in organizational management which help to evaluate the business resources in proper manner (HillJones and Schilling, 2014). In Vodafone company, financial resources indicators are there which evaluate the financial condition and the performance of business in context to different perspectives. Moreover, human resource is also act as indicator of information or property are also considered as the showing case of their performance efficiency or quality in right context. The perfect advantage of VRIO for Vodafone is as its simplicity and clarity in understanding.
There is some advantage of external and internal process with securing services as it is being like:
- If the resources are somewhere a valuable and but not rare then the firm is in competitive conformity. It does mean as not having worse than competition.
- Although, if the resource is rare and valuable but it is not being expensive to imitate it, even temporary competitive advantage is there, and other company will try to imitate and it will lost the competitive advantage in market.
- If the advantage is managed and able to organize the firm in right context even though temporary competitive advantage as well it becomes the permanent competitive advantage in proper way too (HittIrel and Hoskisson, 2012).
- None the less, if resources are not valuable then it should be outsourced as because it does not bring any value to it.
Strength and Weakness of Vodafone
In order to understand the areas of improvements and sections which are performing well in the business it is important that tools are used which are capable of providing the required information:
Effective work force – The referred enterprise is dealing in different parts of the world which makes the work more complex. The employees of the referred enterprise are capable of managing the different conflicts that arise and maintain uniformity in the work.
Effective promotion strategies – It is required for telecommunication industry to use effective mode of marketing products in the market. This is due to the reason that high competition is prevailing in this sector and in order to reach more customers the marketing strategies need to be efficient. Vodafone uses appropriate mediums to reach its distinct customers which makes it capable of expanding its total customers.
Continuous change in the legal factors – In order to maintain the security of different customer’s government keeps on making fluctuations in their laws. This creates pressure on Vodafone to deal with the same. Due to internal issues that are present within the enterprise it becomes complex process to maintain balance with the changes taking place.
According to Hodgkinson and Healey, 2011 Vodafone is effective enough in placing its product in the eyes of customers as they are using the most appropriate tools of marketing. He further adds that due to some external factors company also develops some weaknesses like inefficiency in dealing with change which has major impact on the business.
P3 Analysis of telecommunication sector
In order to analyse the market of Vodafone different models can be used. It is an important technique that is adopted by business organisation in order to examine various competitive factors that are present in market place. It is described in five components that have distinctive feature and characteristic associated with it. There are several factors that are present inside and outside of business environment that impact the business system in various ways. If there any change and modification in any of the five factors than, they have to alter their whole change system accordingly, for instance it consists of threat of new entry, this may pose a huge problem in front of Vodafone due to presence of strong competitors. For this they have to make strategies that re focused on achieving final set tasks and objectives in particular time period (Keupp, Palmié and Gassmann, 2012). Porter have drafted this model in response of SWOT analysis that may do not whole information to the company and which is provided by them in conducting this model.
The five force porter's model of Vodafone is as follows:
Buying power: Customers in telecommunication industry is very high because of presence of high competition that is present in current market place. This is directly linked with the set prices of products of the company. This mean they will charge know price for selling their product due to high competition.
Supplier's power: Vodafone have distinctive feature that they operate with high margins as compared to their competitors hence, they lead in telecommunication industry. They have high market share and place. They also make high revenues and profits in current market area.
Threats of substituents: There are number of substitute that are present in market area of Vodafone that include Google Talk, Video Conferencing, Skype, social media platforms. All these are substituents of mobile services. But due to economic of scale concept Vodafone do not have to cut down its overall cost because of customers. Thus, company have to properly examine all these options properly and correctly so that they have to
Threat Of Entrants: There is system of barrier of entry in current market place. Thus, Vodafone do not have much problem related to new entry in telecommunication industry. If they face such situation because they have proper structure of maintaining high level of effectiveness and efficiency which is related to their product and services. As Vodafone is performing well and have well established image and goodwill hence, this feature does not pose problem in front of them (Wheelen and Hunger, 2011).
Industry Rivalries: There are number of competitors that are present in telecommunication industry thus, it is beneficial for customers as they will offer low price of products. Competitors of Vodafone also charges some competitive prices so that they do not lose their potential customers. The main advantage that is enjoyed but the people in current market place is that they are offered products and services in lower price. If one company charges high price than they can shift their demand from one firm to another.
With the help of implementing porters five force model Vodafone can successfully achieve the competitive advantage. It should formulate the strategies for future accordingly so that the gap between actual and desired results can be minimised. Targeting the customers is an appropriate tool through which
P4 Strategic direction and options available for Vodafone
In order to face different challenges that are prevailing in the market it is important that Vodafone should adopt different models which are capable of providing assistance to the management. Using same enterprise should be capable of taking corrective actions and for same assistance of Bowman’s strategy clock model can be taken as it provided appropriate data. It helps in determining the competitive position of enterprise in comparison to other in the same field. Through this model Vodafone can explore the different options through which effective positioning can be done in the market. There is different position in this clock each of which give data regarding the present state of business at a particular time (Merkert and Hensher, 2011).
Low price and low value added – This is the simplest position for any enterprise. Vodafone can increase its total market share through reducing the total prices of its offerings. Maintaining reduced cost is tough but helps in attracting more customers and also this has to be ensured that the price at which it is offering products in the market is minimum and no other brand can beat it easily.
Low price – This is another state in which the main aim of enterprise should be to bring control over its cost. Vodafone needs to minimise its profit margin so that sales can be increased and new customers interest can be developed.
Hybrid Position 3 – This as the name suggest organisation to bring differentiation n the products. It says that in order to cover greater market share organisations needs to bring changes in their existing products as this way customers find organisation to be concern about the desires of the customers. Along with the innovation some consideration is also given to the price at it should not exceed much to bring change (Keupp, Palmié and Gassmann, 2012).
Differentiation – According to this Vodafone needs to maintain the high quality in the products as this will make it better in its field. People are more brand cautious and it has become necessary that the minimum level of standard are maintain so that it can create value in the eyes of customers.
From the above discussion this has been summarized that in order to achieve success in the market it is important that appropriate strategies are formulated as only than the competitive advantage can be achieved. the business strategies are effected by different factors that are present inside and outside the organisation boundaries and needs to be evaluated while formulating the strategies so that they can be implemented in the same manner. it is examined that there are a number of tools that can be used in order to analyse the market trends so that fluctuations can be minimised in the profitability.
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