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Unit 4 Strategic Management Assignment Vodafone
Diploma in Business
Unit Number and Title
Unit 4 Strategic Management Vodafone
Strategic management refers to analysis of market and resources that a organization requires for managing the services and products and development of plan to met the objectives by using the corrective methods for improvement. Additionally, strategic management helps organization to enhance the capabilities by working on the weak areas and make changes in the existing plan and activities to gain the competitive advantages. Strategic management vodafone report will provide the external and internal analysis of Vodafone telecommunication organization of UK by using the PEST, SWOT and Porter’s five force analysis. Vodafone is leading telecommunication services provider in UK and second largest mobile phone organization in world. In the current scenario, organization is serving more than 18.2million customers by offering the quality internet and telecommunication services according to proposed standard of higher authority. Organization is rapidly growing its market for high-speed internet services and dealing in the products like smart phones, tablets and computers. Moreover, report will offer the choices for strategic improvement by offering information about key strategies. For organization, report will provide justification for selection of strategy by providing the critical evaluation of alternative growth strategy for UK’s market.
PEST analysis of Vodafone
There are various factors from external environment that have significant impact on the strategy and market performance of organization. Vodafone is leading telecommunication organization of UK and following external factors are influence the growth in domestic and local market:
- Political factors: In the current scenario, rules and regulation that have been proposed by the national government and political parties are having both positive and negative impact on the services of Vodafone that need to be major concern for organization. For development of infrastructure and network in the local and national areas, organization requires the prior permission of government as well apply for license to maintain the legal and ethical approach in the growth of business. However the regulatory measurements and process is good for the market and organization to maintain the standard and transparency but it consume time and cost for implementation of plan of telecommunication organization (Alkhafaji, 2011). The process of applying and take the permission for establishing infrastructure is affecting the speed of growth for services sector organization. Additionally, UK government has started the bid of the spectrum for communication that has significant impact on the financial activities of organization and affecting the process of development.
- Economic factors: For the growth of telecommunication market economic conditionsplays critical role as opportunities for investment and improvement in the market share get affected. The major factors that are affecting the growth of Vodafone is changes in the inflation rate,cost of new licensing and allocation of funds for marketing and development of infrastructure. According to analysis, it is been carried out that, changes in the currency exchanges rate also have impact on the cost of development of services for Vodafone as cost of raw material get high. Moreover, level of competition for providing the services at optimum rate is also big challenge for organization. For upgrading the services like 3G and 4G organization requires high amount for that stability in economic condition is essential (Ambrosini& Bowman, 2009).Hence, it is been considered that changes in the economic conditions has direct impact on the products and services of Vodafone as manufacturing, marketing and operational cost get influence with the changes in the economic scenario. However, organization is forecasting the economical conditions and making changes in the strategy but major changes in the global economy are having negative impact on the ethics business of Vodafone.
- Social factors: The social contestation of UK is better as 90% of people are educated and having the sense which organization from telecom sectors is offering standard services at optimum cost. The top management of organization is utilizing this factor by offering the information and high quality services to customers that helping to gain the competitive advantage. Organization is also targeting the business and working class population to encourage the market as well planning to provide services using their culture and values (Cole, 2013). Moreover, organization is performing the marketing and advertising activities by analyzing the social belief and perception of UK market to enhance the sales. This kind of strategy is helping Vodafone to attract the people and increase the number of customer by creating the social appeal.
- Technical factors: There are continues improvement in the technical innovation and tools to built the more effective telecommunication network and services. For Vodafone implementation of new technology and upgrading of the existing infrastructure is major challenge as new regulation for radiation and utilization of resources are restricting the operational activities of Vodafone UK. According to evaluation of services and products of Vodafone, it is been consider that quality and modification that organization is fostering has positive impact on the services but implantation of new technology like GPS, internet calling and Wi-Fistill required improvement in existing network to meet the benchmarking standard in both local and international context. Apart from that the cost of developing and implementing updated technical tools is high which will influence the cost of services that Vodafone is offering to the customer (Grant, 2010). This is an important external factor that is having vital impact on the business and growth of organization in telecommunication sector. Top management need to focus on the areas of technical development for offering the better services to meet the business outcome.
Porter’s five force analysis
To analyze the business effectiveness and externalposition of organization, Porter’s five force analysis is essential. Following analysis will help to identify the key external factors that affecting the operation and business of Vodafone in UK:
- Buyer power: The buying power of customers in telecommunication industry of UK is high as they are having many options that are offering the similar and more effective services at optimum charges. This could be the major threat for Vodafone as buyer can switch to other organization if the services and cost are not according to their requirement. In order to maintain the sales and brand effectiveness in market, Vodafone need to focus on the prices and quality of services with additional benefits to retain the customers (Hill.et.al. 2014).
- Supplier power: The supplier of Vodafone is having high bargaining power as organization operating with high profits margin compared to other local telecommunication organization in UK. According to observation, it is been identified that power of supplier is affecting the profit of organization as they are demanding high cost for offering the support to maintain the services like network maintainers, marketing and customer care.
- Threatof substitute: The organization is facing considerable threat from the substitute products and services as there are many organizations that offering the common services at low cost. However in comparison of quality these products and services are not according to standard of Vodafone but still affecting the market share (Ma, et.al. 2010). Top management of Vodafone needs to have concern over this area of external environment .
- Threat of new entry: In telecommunication industry threat of new entry is low as it requires high investment for licensing, infrastructure development and management of services. This is could be in favor of Vodafone to maintain the business profit making approach in telecommunication industry. The rapid changes in technology and regulation are big challenges in entry of new organization in this segment but Vodafone can cope with this by maintaining high-level efficiency of its services to unrivaled heights.
- Industry rivalry: According to analysis, it has been identified that Vodafone is facing extreme rivalry in UK market of telecommunication as local organization are offering low cost high quality services. Organizationlike BT is giving tough computation to Vodafone as it providing low cost internet services to customer that helping it to enter into market of Vodafone and gain the competitive advantage (Rika, 2009).
Internal analysis of vodafone
To analyze the internal factors that influencing the operational and functional activities of Vodafone which have significant impact on the business strategy of organization would be identified through SWOT analysis.
- Strength: The major strength of organization is quality of services that having positive impact on the customer satisfaction and improvement in the business size. The brand awareness and in introduction of new services and technology Vodafone is market leader in UK. Moreover, Vodafone is offering services in wider geographical areas and the connectivity of network is good which also haspositive impact on the business of Vodafone.
- Weakness: The organization is using cauterized management system that is causing inflexibility in the processes and services of organization (Taylor,.et.al. 2012). This kind of system is affecting the decision making of organization which is being considered as key weakness for organization. In addition to this, high level of churn rate in customers as well as high prices of services also major weak areas of Vodafone that affecting the business.
- Opportunities: There are many opportunities for Vodafone to deal with by crafting improvement in marketing and customer services. By effective positioning of services and products Vodafone could gain the competitive advantage. For that management could use strategic partnership more use of internet services and improving the numbers of global presences.
- Threats: The high competition in local and international market is one of the major threat for organization as it affecting the profit margin of Vodafone. Additionally, changes in the rules and regulations for licensing and developing the infrastructure arealso having direct impact on the management development approach of Vodafone. Limited access of resources is also threat for organization to maintain growth in business.
Strategic choice: Following are the choices for Vodafone for developing business and operational activities within UK:
Limited growth strategy: This kind of strategic choice for organization will be beneficial for organization to implement and craft improvement in the business. According to this strategy, Vodafone could introduce the existing services and products by using the trends and events of local market in which organization will provide the additional benefits to customer for limited period of time which will help to increase the sales and customer base (Vieceli&Valos, 2010). By implementing this strategy organization will able to meet the trends and needs of market by developing and offering the services according to customer needs. For that organization have to review the competitor policies as well new regulations to maintain the effectiveness.
Figure 1: Key benefits of limited growth strategy
Substantive growth strategy: For improvement in the business and gain the comparative advantage, Vodafone could use the substantive growth strategy in which management willdiversify the existing products and services into different segments. Use of this business strategy will help organization to maintain the effectiveness through vertical integration starting joint venture with local telecom sector organization (Trott, 2011). Thiswill overcome the cost of services and help to cover large area with minimum investment.
Figure 2: Key elements of substantive growth strategy
Selection of strategy: In order to overcome the impact of external and internal factors identified through analysis, Vodafone management can implement the limited growth strategy. The implementation of limited growth strategy would provide improvement in the capability and flexibility in the Vodafone activities to bring new modifications in the retail operations and daily functions of Vodafone. By using this strategy, Vodafone could introduce the existing services and products by using the trends and events of local market in which organization will provide the additional benefits to customer for limited period of time which will help to increase the sales and customer base (Grant, 2010). This would improve the effectiveness in supply chain, and would enhance the superiority of its products and services. Additionally, organization would be aware of the desire of the prospective market for the development of new innovative products for magnetizing the customers towards the brand.
From the study, it is been considered that there are various factors from external and internal environment have significant impact on the business of organization like Vodafone. Report has conduct the PEST, Porters five force and SOWT analysis to consider the issues that affecting the business strategyof organization to achieve the business objectives and goals. Moreover, report has provided information about the different strategies to overcome the impact of issues and provided evaluation of limited growth strategy for improvement.
Books and journals
Grant, M. R., (20100.Contemporary Strategy Analysis and Cases: Text and Cases. John Wiley & Sons publications.
Cole, A. G. (2013). Strategic Management.Cengage Learning EMEA publications
Alkhafaji, A. F. (2011). Strategic management: formulation, implementation, and control in a dynamic environment. Development and Learning in Organizations: An International Journal. 25(2).
Ambrosini, V. & Bowman, C. (2009). What are dynamic capabilities and are they a useful construct in strategic management?.International Journal of Management Reviews.11(1). Pp. 29-49.
Hill, C., Jones, G. & Schilling, M. (2014). Strategic management: theory: an integrated approach. Cengage Learning.
Ma, Y., Ding, J. & Hong, W. (2010). Delivering customer value based on service process: The example of Tesco. com. International Business Research. 3(2).Pp.131.
Rika, N. 2009. What motivates environmental auditing? A public sector perspective. Pacific Accounting Review.21(3). Pp. 304-318.
Taylor, W. C., Franzini, L., Olvera, N., Poston, W. S. C. & Lin, G. (2012). Environmental audits of friendliness toward physical activity in three income levels. Journal of Urban Health.89(2). Pp. 296-307.
Trott, P., (2010). Innovation management and new product development. Harlow, England: Financial Times/Prentice Hall.
Vieceli, J. &Valos, M., (2011). Marketing Management. Atlantic Publishers &Distri.