Business strategy generally concerns as the company's high level plan to reach at potential goals or objectives. Strategies consider various elements such as firm's strengths, different resources, opportunities and number of competitors in the market place. For running an effective business firm, there is requires to formulates best strategies by focusing on highest level objectives or goals within the company. This is an essential for every firm to achieve predetermined targets and increase more values as well as profits by adopting suitable strategy. There must be necessary to analyse business environment with identify internals and external factors so that better action plans can be made for getting success (Ackermann, 2013). This report is based on BT group which is British multinational telecommunication company and its headquartered in London, UK. This assignment will explain PESTEL model to analyse environment and define Ansoff's growth matrix to determine strategic position of firm. It will also apply the VRIO/ VRIN for defining the strategic capabilities and identify the organisation's strengths and weaknesses. This will evaluate the competitiveness of UK's telecommunication sector by using Porter's Five Forces Model.
P1. Analyse the impact and influence of macro environment on organisation and its business strategies
In the present scenario, every firm is focusing on making better position in the market by formulating strategies and finding suitable ways that can be effective for achieving best possible outcomes. Business can be developed by considering forms of promotions, manufacturing procedures and many activities that will support in surviving in the competitive environment as well as tough competition. Therefore, strategies are depends on the various environmental factors that directly affects on the business operations (Audretsch, 2013). It can be categorised in two way such as micro and macro that must be considered by formulating strategies in more efficient manner. Every organisation concentrate on these forces and try to manage or maintain in an effective way by adopting several tools and techniques as well.
BT Group is a multinational telecommunication company that provide number of products or services such as fixed-line telephony, mobile networking services, broadband internet solutions, fibre-optic communication and many more in the market so that maximum customers can satisfied their desired needs and demands in well manner. There are around 106400 employees working in this firm. BT Group is dealing in international market so there are various factors which can affects to the business and telecommunication sector. In this included macro-environmental forces which have direct impact on the firm and it cannot be control by the manager. This can be understood by considerings the PESREL model such as:
- PESTEL model for analysing environment
There are number of factors available in the market which have huge impacts on the business operations and these are related with environment fluctuations as well as changes. Therefore, multinational companies are facing different issues regarding changing climates and factors including Political, Economical, Social, Environmental, Legal and Technological. Therefore, these forces have several impacts such as positive and negative that affects on the profits or productivity of the organisation (Alsoboa and Aldehayyat, 2013). It is the major responsibility of management that consider these factors while formulating strategies such as:
Political: This is an important element which is beyond the control and have direct effects as in this included several political situations that exists in the country. These situations can be arise while changing in environmental aspects so it influence the business and management decisions regarding bringing innovations as well as various changes within the firm. In this included different components like tax policies, stability of the government and employment legislation etc. therefore, all these factors are required for running an organisation in the competitive world. BT Group also dealing in global market so political factors can influence its market shares and profitability as well (Bentley, 2013). There are number of factors available which must be considered by the BT group so that they can attain their set targets and expand business at different countries such as:
- Government stability in the particular country.
- Issues regarding increasing corruptions.
- Proper protection and regulation about intellectual property.
- Laws and legal regulation for pricing strategies.
- Employment acts.
- Minimum wage acts.
- Tax policies and provisions
Hence, all these requires for making favourable decisions so BT group can run business in more appropriate manner.
Economical factors: It is another important factor that can affects on the business as it effects the economies of firm through various changes within the country. It also depends on the environmental situations which also must be considered by the organisations for making better strategies to achieve competitive advantages. In this included several elements such as inflations rates, foreign exchanges, level of income of people, interest rates, saving rates and cash flow of the particular country (Omer, 2013). BT group also have to undertake the economical factor for formulating business strategies in telecommunication sector. They requires proper infrastructure, better skilled labours, economic growth rate, GDP of the nation and many more so that negative effects can be reduced.
Social factors: In this considered several cultures and society impacts that directly affects on the organisational structures and customs in various ways. Social factor is one of the major factor which should be undertake while running the business as in this included different aspects as like gender, age, people's religion, caste, educations and behaviours etc. these all required to make decision regarding producing of particulars goods and services in well manner. BT group can also provide appropriate products and services such as mobile, telecommunication services, television, broadband internet solutions and many more as per the customers requirements so that they can satisfied in better ways.
Technological factors: In the present era, there are various new techniques launching that helps in reducing work loads and remove stress of the employees by making every task in easy way. It also can affects on the business performance by using the appropriate technologies within the firm. Therefore, it is necessary for every organisation that to bring various changes and apply tools or techniques so that operations can be run in better manner (Sharp, 2013). BT group also adopted several technologies and try to bring changes such as focus on high speed networks and develop 5G technology, cloud computing and many more so that BT can attains its economies of scale.
Legal factors: In this defined various laws and legal legislation that exists in the country and must be followed by every organisation for operating their activities or functions as well. Therefore, BT group requires to undertake the Anti-trust law which formulate by the UK government for telecommunication industry, as well as discrimination acts, employment acts, consumer protection law that will support in making better decisions regarding employees and customers as well.
Environmental factors: This is also an important element of the macro-environmental factors as it is related with climate safety and make it more effective and efficient (Cadle, 2010). It is major responsibility of the organisation that to protect atmosphere by protecting from harmful aspects and care of natural resources. BT group undertakes some main steps for protection of climate such as reduces the carbon emissions etc.
- Ansoff's growth vector matrix
In this defined the appropriate strategies that must be formulated for creating better positions in the future and achieve competitive advantages by considering several components such as environmental changes as well as micro and macro factors. Ansoff's matrix is one the best method for making better plans regarding building brand image in the market place so that goodwill can be increased. This strategy also will support in competing with strong competitors and increase markets shares in an effective manner (Paul, 2010). This theory can be beneficial for BT group in achieving competitive advantages and growth within defined time period.
Different steps of Ansoff's matrix:
Market penetration: It is very useful as company sell its more products and services in the same market with the help of this approach. In this required to develop the new market strategies and attracts huge audiences towards organisation so that they will be able or encouraged for buying particular products. BT Group should take support of market penetration as introduce a loyalty scheme provide various products or services through effective promotions that will helps in increasings the sales volume in more efficient manner.
Market development: In this phase, organisations have to understand the particulars market and find the targeted audiences as well as potential customers by identifying new market for the purpose of selling company's same products or services to the different people. In this BT group has to considered various geographical markets by conducting the PESTEL analysis and also use number of channels for selling like online or direct sales and many other for reaching at potential customers (Turner, 2010). Market segmentation and marketing mix also can be undertake by BT group to increase sales.
Diversification: In this defined that most of businesses are going to expand as they focus on business expansion in totally new market with new products development as well. It also very beneficial for BT group as they can achieve competitive advantages by expanding the business at number of countries in more effective way. It will support in increasing market share within the firm.
Product development: It generally considered as the set of procedures and systems for developing new products in the market so that customers can fulfil their needs or demands in an appropriate manner. It is very easy process as BT group can adopt this strategy and innovate its services or products for attracting customers towards organisation (Curwen, 2011). BT company is concentrating on making alliances for accessing 5G technologies.
P2 Assessment of organisational internals environment and its capabilities
In this describe that assessment of internal environment consider for identifying the strengths and weaknesses of company that have possessed by the people within the firm. There are number of factors available which must be undertaken while making business decisions and these are related with internal factors such as culture, skilled workforce, capital, organisational structure and efficiency of management technological aspects and many more that can affects on the company performance. These elements directly affects on the work productivity and profitability because internal environments are related with these aspects. It can be possible to make appropriate strategies for managing any critical situations so that organisation can achieve predetermine goals or objectives with higher market shares.
- Strategic capability
This is an important aspect that provide the abilities to company for the purpose of implementation of defined strategies and contributes more so that they can achieve long term growth and sustainability in the market place (D'Aveni, 2010). Therefore, in this required appropriate resources and their effective utilisation such as proper assets, funds, tools or techniques etc. for attaining set targets and also for surviving in the dynamic environment.
BT group usually formulates these strategies and make decisions for adopting different techniques for satisfying customers needs or desired expectations in the field of communication sector. Company have to consider proper environmental study and define the major factors that can be controllable for developing the firms and operate business in an efficient manner. The main factor is technological changes which generally happens in this sector, therefore BT Group requires to adopt best techniques and advanced technologies for running the business in better ways.
- VRIO/ VRIN model
This model is explain about the proper utilisation of available resources for the purpose of achieving sustainability and long term growth in the marketplace. Every organisation focus on improving its business performance by utilising human resources as well as manpower so that they will be able to accomplish set targets. BT group also consider the employees development for bringing more creativity and innovative ideas so that better products and services can be provided to customers (Dagnino, 2010). They provide adequate training and development programs to employees so that they will be able to perform every tasks in well manner and achieve set targets. human resource is most important component in the organisation that support in attaining goals and developing firm. It also helps in improving the strengths abilities through utilisation of various tools such as:
Valuable: This related with important aspects that helps in providing emphases for the purpose of getting success. It is very necessary for every firm which support in optimising available resources and reduces chances of risks or uncertainties as well as avoid delays in well manner. This is also beneficial in removing the threats and negative impacts to promote the business in the competitive world. BT group have to focus on allocation of resources and get maximum outcomes with minimum inputs as well.
Rare: it is defined that company has rare chances regarding having adequate resources in the company for providing better quality of products and services in the market. Therefore, company have to consider the available resources regarding telecommunications sector so that better solutions can be provided through better formulation of strategies.
Imitability: It is defined as the important and best suitable resources that required for making effective goods and services and also that cannot be steal by other person (Smith, 2010). BT group is most famous firm who provide better quality of internet solutions, mobile networks and many more through available resources in more effective manner.
- Organisation's strengths and weaknesses:
The best strategies can be formulated by analysing the particular strengths and weaknesses of the organisation because it is necessary to identify the major points of the firms. This will support to BT group in finding the various opportunities to attain set targets and objectives while running an organisation.
- Strong base in UK with large customers: BT is serving various products in the market such as telephony, fixed-line telephony, internet solutions, broadband and many more. This firm has acquired EE limited for maximising wealth so that they can occupy good positions in the market in an efficient way.
- Focus on customers satisfaction by providing better products or services: BT group is also try to serve best facilities and services in the market place (Dobbs, 2014). It is an essential for increasing growth and sales volume because satisfy customers needs and make strong relationship with them.
- Based on UK market: In this considered that BT group has generated more revenues in the market of UK. There are huge people who are taking these products and using services but they are serving only UK. This is not much famous in other market areas such as in the Asian countries. Therefore, they are not able to generate higher revenues and profits in the other market place.
- Separation of open-reach from BT: This is another weak point of the company as their brand image is declining and also costs are increasing in the firm. It has direct impacts on the company because BT is loosing its profitability and productivity as well.
P3 Evaluate the competitiveness of telecommunication sector through porter's five force model
For analysing the environmental aspects and formulate strategies within the firm for achieving set targets or goals can be possible by the applying porter's five forces. This an essential which support in evaluating the competitiveness within telecommunication sector. Therefore, in this requires adequate strategies and appropriate plans for surviving in the competitive environment. This model can be understood by following aspects such as:
- Competitive rivalry: In this process, company try to finds its competitors by analysing environmental stud. They also find out the competitors strengths and weaknesses in the field of telecommunication (Firnkorn, 2012). BT group is dealing with providing various products or services such as broadband, internet solution, fixed-line telephony and many more in the market place so it is necessary to identify strong competitors. There are some competitors of telecommunication sector like Vodafone, O2, EE limited and Virgin who are providing mobile networks.
- Threats of new entries: In this, company always focus on new entries who are coming with new ideas, innovation and creations in particular products or services that can attracts number of customers towards firm. BT group provides several products and services regarding telecommunication sector so they have to manage and maintain the brand image among competitors in the market place.
- Bargaining power of customers: This is another important aspects of the porter's five forces as in this defined that buyers have rights as well as powers of bargaining while buying any products or services in the market place (Müller, 2012). On the other side, customers used to compare the prices and quality of same products or services which serve by different companies. They can make purchasing decisions for fulfilling their demands and desired expectations as well.
- Suppliers powers: This component is related with the production departments or manufacturing process in which goods and services are produced and also defined the delivering process so that those products can be provided to the right customers. Therefore, BT group is focusing ons building good relations among peoples for making strong networks and maintain the supply chain relations for the purpose of avoiding delay in the production process.
- Threats of substitution: in this defined that every firm can be affected due to threats of substitutes products and services in the market (Grover, 2013). There are various substitutions can be seen in the global marketplace but there are less substitution of the BT group because it is selling best quality of products and services such as television, internet solutions, broadband services, fixed-line telephony and many more in more effective way. It is UK's best firm ins the sector of telecommunication.
P4 Analyse strategic directions by using Bowman's strategy clock model
In this describes that every business firms required to formulate the strategies and adopt effective tools or techniques for achieving competitive advantages and long term benefits in well manner. There must be required to consider appropriate plans and corrective actions such as bring innovations, create or develops new products and modified existing one so that customers can be satisfied. Every firm wants to create its value into customers mind by analysing their needs or demands and provide them best effective items as per their expectations in more efficient manner.
BT Group also try to make better positions in the market by undertaking the Bowman's strategy clock model because it is an essential in providing several dimensions. There are define some strategies such as:
Position 1, Low price and low value added: This is an effective and best strategy which is beneficial in identifying the position of the firm in the competitive market (Kohli, 2013). BT Group is dealing with variety of products or services as they provide these in best quality with lower prices. It can affects on the customers buyer decisions so it is necessary to formulate pricing strategies in better ways.
Position 2, Low price: In this defined that every firm required to focus on minimising costs or expenses that can be occur while running the business. This another important strategy that can be adopted by the BT group as they are providing several products and services in the market with effective pricing to attracts more customers towards firm. BT company generally formulated strategies which is minimums pricing on fixed-line telephony, broadband internet solutions, digital television and telecommunication equipments by considering consumers capabilities as they can afford and buy to fulfil desired needs as well.
Position 3, Hybrid: It generally concern with various components such as lower prices and product differentiation which are required to formulate particular strategies and actions plan in more efficient manner (Johnson, 2016). BT Group focus on modifying products by adding some more values and also create number of customers by wining their trust.
Position 4, Differentiation: The main objective of every organisations is to provide effective quality of products or services by considering the various tools or techniques such as launching new products and modify existing one. This can be possible by formulating an appropriate strategies so that more customers can be attracted towards firm.
Position 5, Focused differentiation: It defines that there are various products and services available which created better positions by charging high prices. Customers are ready to pay such amount to fulfil particular needs (Kernbach and Eppler, 2015). Therefore, BT provide effective services or solutions to the customers.
Position 6, High risky margins: There may be find risks or uncertainties in selling products and services with higher prices. Customers may not be prefer to purchase.
Position 7, Monopoly pricing: It is helpful for developing and forming best business in more effective way. BT group wants monopoly in providing telecommunication services.
Position 8, Loss of market share: In this defined that there can be chances to loose market shares so company requires to formulate strategies and set price strategies so that number of customers can be attracted.
From the above report, it has been concluded that every firm requires proper strategies and effective plans to achieve competitive advantages. This is an essential to attain sustainability and business growth for long term benefits. This report is based on BT group that deals in providing various services such as mobile networking, telephony and internet solutions and many more for satisfying customers needs and wants. There are number of internal and external factors that can affects on organisation and its operations in various ways.
- Ackermann, S.J. and Audretsch, D.B. Eds., 2013. The economics of small firms: A European challenge (Vol. 11). Springer Science & Business Media.
- Alsoboa, S. S. and Aldehayyat, J. S., 2013. The impact of competitive business strategies on managerial accounting techniques: A study of Jordanian public industrial companies. International Journal of management. 30(2). p.545.
- Bentley, K.A., Omer, T.C. and Sharp, N.Y., 2013. Business strategy, financial reporting irregularities, and audit effort. Contemporary Accounting Research. 30(2). pp.780-817.
- Cadle, J., Paul, D. and Turner, P., 2010. Business analysis techniques: 72 essential tools for success. BCS, The Chartered Institute.
- Curwen, P., 2011. Question for Vodafone: are minority stakes worthwhile?. Info.13(2).
- D'Aveni, R.A., Dagnino, G.B. and Smith, K.G., 2010. The age of temporary advantage. Strategic management journal,31(13)
- Firnkorn, J. and Müller, M., 2012. Selling mobility instead of cars: new business strategies of automakers and the impact on private vehicle holding. Business Strategy and the environment. 21(4). pp.264-280.