Long term planning which is done by management of company for attaining set objectives is known as business strategy. Every organisation need it because it is required for moving in right direction and removing confusions regarding various aspects of business which can come in the mind of stakeholders (Ang, 2011). Virgin mobile is among leading telecommunication firm of UK. This company is part of Virgin group and they are currently present in more than 10 countries. This assignment will discuss about impact of external factors like economy of a country, on the operations and performance of company. Beside this, Ansoff matrix will be used for analysing strategic position of Virgin mobile. VRIO model will be included in this project for evaluating the capabilities of organisation. Strengths and weaknesses of firm will be explained for understanding internal environment of company. Porters five force model is an important tool and it will be used for analysing competitiveness of the telecommunication sector. This assignment will also cover interpretation regarding strategic direction.
P1 Influence of external factors on Virgin mobile
In business world, an organisation may have some control on their internal environment but they will always face the challenges which is arose by external factors. If a company feel that their employees are not working well then they can fire them. If company have some problems with their suppliers then they can switch to other one, but business organisation cannot control economic growth of a country (Burlton, 2015). They cannot set social trends or decide political condition of a nation. This proves that external elements can make a huge impact on the operations of firm. Below is PESTLE analysis of Virgin mobile:
Political factors – All the business organisation are failing to predict the outcome of Brexit. Their is an atmosphere of political uncertainty in Britain because government and their ministers are not happen their leader. These kind of situations affect company like Virgin mobile in negative way because this company mainly focus on prepaid customers. Although government support firms like Virgin mobile because they are serving to prepaid customers but in unstable government raises questions on the policies which is started by new ruling party.
Economical factors – Economic growth of UK is below average and inflation is also increasing in this country. Rising inflation means customers will not spend much money on prepaid mobile recharge. The result is less revenue to Virgin mobile and failure to attain their short term goals (Champoux and et.al., 2012). Poor economic growth and increasing inflation affect performance of this company in a negative way. Telecommunication industry saw an enormous growth in between 1999 to 2003 because economic condition of country was fine, but in presence scenario company is facing heat of low economic growth and rising inflation. If inflation is increasing in a country then people start spending less money of telecommunication services. It ultimately decreases profit of company and create new challenges for them.
Social factors – Use of mobile phones is continuously increasing. Young generation is using more prepaid services compared to WIFI or postpaid facility. This emerging trend is opening new opportunities for the company and it is affecting the organisation in a positive way by enhancing their profit. If a social trend support an organisation then it make a positive impact on performance of company but if trend is against the business strategy then it create more troubles for the firm and affect them negatively (Firnkorn and Müller, 2012).
Technological factors – Rapidly changing technology is creating opportunities as well as threats to all the firms who are operating in telecommunication sector. Virgin mobile basically focus on offering more services instead of concentrating on technology advancement. In present scenario, Virgin mobile is using infrastructure of EE for providing 4G services to the customers. When most of the firms are working on 5G network, Virgin mobile is stilling focusing on their 4G coverage. Lacking behind in terms of technology may create much bigger issues for the company in upcoming time because they will fail to offer new technology to customers if they would not have a 5G network. This will influence organisation's growth in negative manner because company will loose many customers who want to use latest technology (Ross and Blumenstein, 2013).
Legal factors – Government is responsible for making and controlling regulations. Their are various acts which impact companies like Virgin mobile in both positive or negative way. For example, competition laws restricts company from giving more discount to customer. Company may want to expand their market by offering heavy discount tariff plans but sometime they cannot do it because law stop them from releasing such plans. Legal hurdles make a negative influence on companies business and generate troubles for the firm at the time of making strategies (Godlevskajavan, Iwaarden,and van der Wiele, 2011).
Environmental factors – Virgin mobile understand that they are responsible for clean environment and they have taken part in various programmes which are related to promoting pollution free atmosphere. Promoting healthy environment play crucial role in improving image of company and it made a positive influence on the goodwill and valuation of enterprise. Society seek sustainable growth i.e. launch latest technology but without doing any harm to environment.
Application of Ansoff growth vector matrix for analysing growth Virgin mobile's strategic position
Market penetration – Virgin group is facing tuff competitions from rivals like Vodafone. This company is using market penetration strategy in England for increasing their market share. They are enhancing their expenditure on the advertisements and at they same they are offering heavy discount on some of their prepaid tariff plans (Kernbach, Eppler and Bresciani, 2015).
Market development – Under this strategy, an organisation launch their existing product or service new market so they can earn more revenue by increasing their number of customers. Virgin mobile entered in South African market in 2006 and launch many existing products like EDGE, 3G services in this country. This strategy helped company in reducing their dependency from their domestic market.
Product development – Virgin group started offering mobile internet through LTE which is a completely new service. This company already has sound presence in domestic market and launching a new service is giving them additional benefits. Virgin mobile give high importance to innovation and this is the main reason that they are launching new products in present market.
Diversification – Diversification is a strategy which contain highest risk. When an organisation enter in new market and start selling completely new product for the purpose of business, then it means that they are adopting diversification strategy (Reinhardt and Stavins, 2011). When Virgin mobile started their operations in Canada, they launched their mobile phone. Canada was a new market for them and mobile phone was a new product which they were not selling earlier. This was a risky move but it helped them in getting attention of customers.
P2 Assessment of internal organisation of environment
The parent company of Virgin mobile is Virgin group. This organisation does lack any kind of resources, whether it is financial, technology, human resource etc. Virgin mobile get the advantage of having strong parent company because they understand that in case they need support for fighting big and unpredictable challenge then their parent organisation will assist them.
It can be defined as the combination of resources and skills, which is possessed by a company, that is used by a organisation for attaining long term goals and competitive advantages (Killing, 2012). Every organisation has some strengths along with weaknesses. Capability means the power contained by an enterprise at the time of deploying the strategies which they have have constructed. It can be related to financial, HR, technology etc. resources. Strategic capability can be divided in three part for better analysation i.e. leadership and management, innovation and business architecture. First one is related to strategic thinking and intuition. If an organisation have great leaders and fine board of management then they it work as a strength of company and assist them in moving forward in right