Business strategy can be defined as the craft, art and science management that consist of formulation, analysis and execution of cross-functional decision making which help the organisation in meeting their targetted objectives and goals. Global and regional telecom organisation face various challenges and issues faced by the telecommunication among the worker's productivity and monetization of capital in the mature intensified competition of market that is developing and emerging in trade (Ackermann and Audretsch eds., 2013). Telecommunication sector in mobile has been developing more rapidly. There are different practices and elements considered while evolving a proper strategy of business. In this assignment, various aspects of telecommunication sector as well as undertaken organisation Vodafone which is one of the largest telecommunication organisation. This will evaluate various macro environment influence as well as the international environment in regard of developing and evaluating entire telecommunication sector. This report will understand and interpret the concept of strategic direction of entire company using the Bowman's clock model of strategies in efficient way.
P1 Influence of macro environment
Organisation organise different resources from their service environment and supplies of commodities in the environment. There are various components that influence the business ability to service their consumer and carry out business operations. Macro environment of business organisation comprises external forces that influence the strategy of organisation in context of marketing in the wider length (Annabi and McGann, 2013). There are major two external environment i.e. micro and macro which impact on the marketing strategy and decision making process of a company. In regard to understand the different macro environment aspects, PESTLE evaluation would be conducted as this is more suitable.
Vodafone is one of the biggest chain of telecommunication i.e. taking nomadic company in universe expanding their business in various nation such as UK, Europe and India. The organisation is largest web service supplier in the entire UK. It is one of the tool of strategies that is influencing different components like social, political, economical, environmental, technological and legal factors of an organisation. Here is mentioned the macro environment study of referred organisation:
Political Factor: The instability and imbalance in the political system of UK after introduction of Brexit has influenced the telecommunication industry as well. Vodafone, hence, will need to carry out and evaluate suitable strategy of business. Mobile phones licenses are more strictly monitored and are become more expensive (Auzair, 2011). In some cases, tight measures can be examine that has executed by state for reducing the phones usage among children due to increase in health issue. Vodafone has to comply the new regulation of state to support and deploy their network that is fundamental for them to license and register from government.
Social Factor: Customer desire to provide effective and suitable service that they can get in exchange of their capital. Smart phones as well as mobiles are nowadays are more in trending that is inclining toward more telecommunication organisation and mobile operators. But, as the population of United kingdom are more aged than the younger generation, this can direct to less optimisation of the telecommunication equipments in nation.
Legal Factor: UK has been facing the drastic imbalance and uncontrolled in the government framework that has caused of various new legislation and laws in order to build more suitable environment. 1974 act of sales of good should be complied through Vodafone that affirms that the products must be appropriate and according to purpose of manufacture. Also, the organisation require to follow the two major code of conduct of marketing and advertising. These guidelines can limit the growth of Vodafone restraining to its growth in the competitive business environment. However, their rivals companies are also facing the same issues as the organisation is.
Economical Factor: After the recession, there is drastic change in the buying habits of people of UK as they are not willing to spend more. The circumstances has led to the war of price among the different competitors and service provider in telecom industry as this has trimmed the service cost (Azar, 2011). Also, the economical situation of Vodafone has emerged as users are more preferring the smart phones carried by their children for communication and safety purpose in emergency.
Environmental Factor: Vodafone consist of effective program of recycling for their phones and SIM cards in order to create more supportive and healthy environment by optimising the mobile phones. They also provide incentives in the monetary term in exchange of provided phones. Major drawback of organisation is higher energy cost and more emission of GHG gases.
Technological Factor: Modification in technologies take place within certain period of time. For achieving requirements of market and rendering more technological advancement, organisation has been improving 5G technologies. Also through business advancement evaluation, organisation can determined their websites in regard of making more convenient service purchase through offline and online (Bharadwaj and et. al., 2013). Vodafone also support more opportunities to user to investigate about their provided commodities.
Hence, through carrying out proper investigation over the micron environment of Vodafone, organisation can establish and develop their organisation in more significant manner. In order to understand the micro market situation, Vodafone also conduct proper Ansoff Matrix evaluation that can helps in increasing their sale and developing their business strategy. Here are mentioned its components:
Market Penetration: This process support Vodafone's existing products and services in the present market. This is fundamental for organisation to promote and launch their existing services in the present trade by organising proper rivals and market evaluation. The organisation has developed their revenues by the assistance of market penetration over few years. The referred organisation can use this strategy for measuring the parameter of regional and local market in order to meet leading telecom firm in entire market.
Product Development: As per this concept, Vodafone cater new product or service in the existing trade. Thus, organisation has introduced Wi-Fi services recently in UK in their existing market and other organisations are also providing same product. So, for competing them, Vodafone has also launched Broadband in affordable cost in UK and Europe.
Market Development: This is one of the major and significant method where company promote the existing service in trade (Bucolo and Matthews, 2011). The organisation has been introducing wireless product in global market. Due to the change in geographical region, organisation has to develop new distribution and marketing method.
Diversification: The organisation has promoted their products in the new nation as well as trade. Due to this, enterprise has been facing various issues and challenges in regard of attracting clients. This method plan for designing more effective strategy in market to increase their service user.
Company's current strategy is to develop by potential service user acquisition, expansion of organisation and retention of present service user along with providing various products and services usages by the advancement in technologies. By conducting proper macro environmental evaluation, Vodafone can design effective strategy determining their mission and vision of organisation.
P2 The internal environment and organisation capabilities
While a proper business strategy development whether it is for small or large organisation, this is fundamental for an organisation to consider and formulate a strategy. A company's strategic capability can be defined as the capacities, skills and resources set that create long term goals and competitive edge of company (Grover and Kohli, 2013). Hence, in short, this can be mentioned as the business firm's ability to employ practices and operations of business successfully opting suitable plans and strategies that can not only enable upliftment in company's market value but also helps in sustaining the firm in competitive marketplace. In regard of evaluating and performing strategic capabilities of Vodafone, organisation require to execute VRIO/VRIN model which can help them in recognising the strengths and limitation of company. Here is mentioned the model of VRIN in context of Vodafone mentioning the strategic capabilities possessed by the referred firm i.e. mentioned as below:
VRIO Evaluation: From this analysis, this can affirm that rivals of Vodafone as well as organisation both have their interim competitive advantages. Competitors of organisation may face loss due to these benefits for operating modified services which firm is not able to imitate radically.
V - Valuable: Company's economies of scale due to the large organisational infrastructure.
R - Rare: International market presence builds small business and beginner in UK recognising the Vodafone as brand i.e. highly differentiated elements for the unified products and service of telecom and mobile (Jocovic and et. al., 2014).
I - Inimitable: Brand provide more convenient admittance to market segments in which organisation has a proper culture of being entire trade leader however the organisational culture does not encourage the limitation of opportunities as the company emerge.
N- non-suitable: None
Thus, it can affirm after evaluating Vodafone's VRIN model that organisation has been developing their business grounds in order to sustain and achieve competitive edge. This can aid in identifying the major weakness and strengths of enterprise in more suitable and effective way that is fundamental for considering the macro environment of organisation.
Weakness and Strengths of Organisation: Vodafone is one of the largest telecom brand that has its roots across the global market and various countries. The company has been enlisted as the UK's largest telecommunication enterprise. After the evaluation of VRIN analysis, the company can conveniently determine their main limitation and strengths i.e. discussed under:
Vodafone is one of the largest company in the industry of telecommunication in United Kingdom that has been announced for award among top 395 companies from all 2000. It is famous for its wide distribution chain and network as the company operated their business from more than 25 countries in the whole world (Kalyani and Sahoo, 2011).
Vodafone generate approximate billion and more each year as their main revenues amount. The company has enlisted on 104 position in term of sales of services. Strong development and research enable organisation in uplifting their competitive advantages by becoming the market leader in context of technologies. The saturated market builds more complex circumstances and complication for organisation to stick among their various competitors.
Strong Vodafone's culture has allowed organisation in becoming one of the successful organisation along with JVs as well as M&A. Managerial resources has reduced and are operating effectively for rapid growth of organisation and creating brand recognition among group members.
Strong condition of finance has render organisation more errors without building situation of bankrupt to Vodafone and their ability to invest. But cause of the extensive Europe competition, the company does not affect the market operation.
The company has flexibility in term of cost control and supporting the more effective cost of manufactured phones and mobiles. This allows them to frame design and upcoming business strategies which enhance their brand recognition. Where, on the different side, in case of mismanagement and unhappenining, this can damage the entire brand image. Hence, there are more potential risks for organisation.
Company's resources are more aimed over the development and research beside the extravagant marketing campaign. The effective recognition of organisation agreed over adopting such methods through without the risk interruption. On the other hand, organisation has been aiming more to generation Y that has lead them to poor Vodafone's marketing and promotion.
P4 Competitiveness of UK’s telecommunications sector
The industry of telecommunication of UK which is classified by fierce broadband competition and the mobile sector. Among the understanding, the main current expansion and development of networks, the reach and capabilities for the network reach is increasing rapidly. Other networking organisation including Vodafone, EE , O2 etc. who are involved in the evolution and trialling their 5G digital technology to launch this till the end of year 2020 (Klettner, Clarke and Boersma, 2014). In regard of growth and position of international and global trade, it is vital for organisation to perform and practice their business organisation by opting potential strategy of future that can be developed efficiently with the help of Porter's Five Force assistance in regard of whole telecom industry of UK that is mentioned as below:
Bargaining Buyer's Power: In the sector of UK telecom industry, customer behave as the leader as the organisation enjoy paramount power of bargaining. Due to the regulated nature of industry, there are various sharp rivals of organisation in the entire telecommunication industry. Hence, these market competition benefits the consumer who are entertained with distinct products as well as service at the regarding cost. Thus, this can be claimed that consumer power is more high in the telecom industry. The another cause of the high consumer due to lack of distinct products and services. Vodafone, also keep building more services at the reasonable cost for benefiting enterprise in compare to their market rivals.
Bargaining Power of Supplier: The supplier are the main individuals who are majorly engaged in the organisation form which provide the service operator with the technological infrastructure needed for the mobile setup operation in the country. In this context, manufacturers of mobile are also undertook as the supplier of industry. Due to the larger presence of suppler, the bargaining power of supplier is more intermediate. The company's supplier has more higher bargaining power as Vodafone operate more business advantage in comparison of various market rivals. In telecom industry, market share of Vodafone is more than other business organisation that make certain the main companies such as EE, O2, Vodafone etc. who mainly aim over organisation and influence their operations. Vodafone can easily maintain affordable and lower service cost from their service supplier along with continuing to build more and more benefits.
New Entrants Threats: In UK, the new business threats entrance is more fundamental. The major reason behind this fact is there are more potential growth in the telecommunication industry (Köseoglu and et. al., 2013). However, here are mentioned some of the major components that reduce the level of threats the company:
- Organisations are entertained economies of scale at present in the current market.
- Vodafone has consumer dedication and brand loyalty.
- Huge capital investment require to formulate telecom operations.
Thus, the threat of new entrance in market is lower in the business industry of telecommunication due to the consumer dearth. The company who are aiming over the market entrance has to pay huge licensing fees coupled through spectrum availability along with the issues of regulation associated with the industry. On the other side, determination of new organisational infrastructure is hugely expensive procedure as well as cause of drastic rapid change or modification in the technologies, procedure become more complicated along with the highly expensive that is incorporable for the new entrance. However, the referred organisation can cooperate with various problems by maintaining the high level of efficiency of their services to the uncompetitive level.
Threat of Substitutes: The threat of substitution is very high in the similar products and service presence, there is ease in accessing the information and low switching cost. However, the company can build new technologies and innovative services to develop the competitive advantage of organisation over the another competitors. The organisation is coping up with considerable organisational threat in context of products and services.
Market Rivalry: Cause of various large organisations and less telecom companies in the UK telecommunication, rivals intensity is more higher in the telecom industry of United Kingdom (Svee, Giannoulis and Zdravkovic, 2011). Competitors companies in the sector of telecommunication build both price strategies and non-price plans in regard of attaining their competitive edge among the whole organisations, Another intense rivals signal is the allocation level of budgetary for the marketing and advertisement purpose. Organisation spend more huge research as well as development purpose in regard of adopt the modified and advanced technologies which can assist them in improving more competitive advantages over the organisation's competitors companies.
Hence, the UK telecommunication growth is hiking every day that is directing the market development as well as directing of existing organisations (Murano and et. al., 2011). But cause of the higher market competition among various distinct organisation, there are several advancement and changes in technologies which are happening that helps them in meeting with the industry of business. However, development was observes in this sector during the 90th century which has now entirely alternation. Cause of deregulation and privatisation, company can develop upcoming efficiency of their operation along with the creating new strategy for market competition. After evaluating the numerous sector and components of UK, this has been stated that more than 92% of the adults are opting Smartphones in UK as per the last five year survey. This has been acknowledged that approximate 85% of the old and senior citizens of country will be utilising the smartphones in the country till the end of 2023. The telecommunication practices,s technologies and media in country has been developed rapidly in 2018 cause of the digitalisation emerge as well as usage of advance technologies in the distinct areas of the world.
Vodafone marks their services and plans of telecommunication on the global trade. Since, the company has deployed their business internationally, they have identified as the second largest telecommunication organisation across the UK and global market. Though enterprise is still managing their operations to compete the new entrance and rivals in the sector of business that they are creating more effective plans and strategies executing in the competitive market in ideal and creative way.
P4 Understanding and interpreting strategic direction
Strategic direction can be defined as the practices cause that lead to the organisational success along with the achievement of strategy. The company, Vodafone has been operating their work over the strategies of market that is more weaker than assumed as the organisation has a very strong market positioning (Oestreicher-Singer and Zalmanson, 2012). In regard to consider and suggested the whole direction of strategies of organisation, report will use the model of Bowman's strategy clock for helping organisation to investigate the various components.
Model of Bowman's Strategic Clock: It is one of the fundamental and effective model used for the purpose of marketing in regard of investigation the competitive enterprise by the comparative scaling it along with the competitors offering. This model was given through Cliff Bowman and David Faulkner, as the statement of 3 major Porter's generic strategies. This model focus over the competitive position of organisation in the market. The major model purpose is to render the commodities position associated on the major two dimension that is perceived cost and value. Here are mentioned the model which is mentioned under in the illustration:
Position 1 (Adverse Cost as well as Adverse Added Value): This position will not be considered as the competitive business in which the services are not different as well as perceived value of consumer is adverse despite of a low price (Deloitte predicts UK telecommunications sector trends, 2018). This can be referred as the negotiation or bargaining basement approach that can be advised to keep their cost of product are as cheaper in order to compete their rivalry.
Position 2 (Adverse Price): It is usually interlinked with concept of economies of scale that need the minimisation strategy of cost for attaining success. Provided service cost is lower and the volume of outcome is higher that enable organisation more revenues and high benefits. It is often optimise the lead the price wars emerged among the company's rivals in the industry.
Position 3 (Hybrid): According to the position name, the condition presents the higher cost along with the service and product differentiation through the referred company. This focus over the persuasion of customer by rendering better values of products and reasonable service cost i.e. very efficient method to build more effective market positioning.
Position 4 (Differentiation): Focusing over the distinct products and service, this deliver high value level added to the products and services to their customer. Branding and quality of products play very essential role in the entire firm. Vodafone disseminate and create effective brand awareness among market in order to build more dedication among their service user and loyalty by rendering relatively more high quality and better value products and services manufactured as per the market demands and consumer requirements (Schaltegger and Wagner, 2011).
Position 5 (Focused Differentiation): This focus over retaining the cost of value added service more higher that are more demanded by the clients for consuming quality and perceived value. This can be termed as the positioning strategy adopted by the luxury firms which stress over the premium price by higher focused over promotion, distribution and segmentation of market. This direct to products threat sustaining in the global trade which can lead to more better quality and unique selling proposition that lead to the higher margin to the enterprise.
Position 6 (Dangerous High Margin): This can be defined as the higher hazards positioning strategy in which the high cost determination without rendering any perceived value of service. If the clients and customer are continuously buying their service, this will create more advantage but due to the consumer gradually seek a effective services and products with the affordable price as well as perceived value (Scholes, 2015). It is uncompetitive strategy and short term.
Position 7 (Monopoly Costing): In the monopoly condition of business, organisation does not stress or light over the values of their provided service and products as the clients or consumer are often bound to buy the product due to lack of any alternative. In several counterspies, the monopolies are strictly operated in regard of preventing themselves from setting price as the desired of organisation.
Position 8 (Market Share Damage): The activities or position can be defined as the competitive trade disaster recipe. In this, the cost standard is being determined with the middle commodity range along with the lower quality perceived by service that lead to consumer loss and downfall in market share of any business organisation.
As per the above mentioned components of entire model of Bowman, position 6, 7, 8 are more uncompetitive according which the quality is considered as the major focus beside the product cost. In case of of Vodafone, the company use the position 1, 2, 3, 4 for the delivery of service in regard of their products support (Slack, 2015). The organisation has been successfully able to maintain good positioning in the international market that has been used as different plans and strategies to evolve. By the help of external and internal company's environment, organisation can successfully develop their direction and maintain strategic positioning of organisation in effective manner. Hence, it can affirm that business strategy is very fundamental to formulate, design and frame before executing it in the marketplace in order to achieve best outcome in more significant way.
The above discussed report summon that global and regional telecom organisation face various challenges and issues faced by the telecommunication. There are various components that influence the business ability to service their consumer and carry out business operations. through carrying out proper investigation over the micron environment of organisation can establish and develop their organisation in more significant manner. While a proper business strategy development whether it is for small or large organisation, this is fundamental for an organisation to consider and formulate a strategy. In regard of evaluating and performing strategic capabilities, organisation require to execute VRIO/VRIN model which can help them in recognising the strengths and limitation of company. The industry of telecommunication of UK which is classified by fierce broadband competition and the mobile sector. It is vital for organisation to perform and practice their business organisation by opting potential strategy of future that can be developed efficiently with the help of Porter's Five Force assistance in regard of whole telecom industry of UK. Strategic direction can be defined as the practices cause that lead to the organisational success along with the achievement of strategy. In regard to consider the whole direction of strategies of organisation, use model of Bowman's strategy clock is more efficient and effective.
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