Applied Corperate Strategy

EXTERNAL ANALYSIS

PESTLE Analysis

One of the most important considerations of a business organisation is that they are required to analyse their external business environment which actively or passively influence the working and functioning of a company. Hence, in this relation, below is an application of PESTLE analysis in context of Vodafone which would be helping in identifying opportunities and threats:

• Political:

This is one of the important factor in the external environment and industry as a whole is influenced through factors available in the political environment of UK. Introduction of BREXIT brings huge amount of instability in the political environment of telecommunication sector in UK. In the present time telecommunication services has turned out to become necessary services in different sectors such as education, employment and all business ventures. Political instability that BREXIT has introduced in UK has hampered different businesses. Establishment of new businesses and expansion of current business become quite unreasonable. Instability in the businesses are termed as an threat as in long run all the activities will be suffered. In order to cope with the political threat in UK business organisations like Vodafone may acquire other organisation to become more stable (Zhu, and Chen, 2015). As each organisation is strong at some factor and by acquiring such organisation which is strong in area in which Vodafone is lacking then this instability can be minimised.

• Economical:

Their are several factors combined to make a economy work as desired and targeted. Certain economical factors such as foreign exchange rate, inflation rate, rate of interest and savings possess grate impact on the economy. These factors may generate positive or negative impact on the economy. For example- Tourism industry is contributing 217 Billion British Pounds in UK and providing huge amount of employment opportunities. Economy of UK is facing grate amount of deflection due to BREXIT. Telecommunication industry is getting threat with this unstable economical condition of UK's economy. When rate of Pound is decreasing then purchasing power and capital contribution of businesses in telecommunication sector is affected in negative manner. Growth rate of telecommunication sector is decreasing and due to high rate of inflation organisations like Vodafone is suffering huge amount of losses. As rate of Pound is decreasing and Vodafone while dealing at global level is facing huge amount of losses. This issues can be controlled to a certain level by merging two organisations to become more financially viable.

• Social:

Their are number of social factors that creates a grate impact on telecommunication business in UK. Age distribution, change in taste and preference of consumers, consumer buying pattern, level of education and income level are some of major social factors that affects business of organisation like Vodafone in UK. In UK population which uses services provided by telecommunication organisations is increasing with higher rate as usage of internet and mobile is boosted. High demand, preferable age distribution and favourable change in taste and preference of consumers brings a growth opportunity for business. To grab this opportunity in better and preferable manner two or more organisations can join their hands. Providing more technological services with this merger will provide better services to consumers in the industry and generate better results.

• Technological:

These factors are related to all the technological advancements within the overall country that has a direct impact on the telecommunication sector of the UK. Hence, in this context, there are certain technologies such as SD-WAN, along with AI and Automation, that could be prominent opportunities within the overall industry, due to enhancement in effectiveness in processes, as well as products.

• Legal:

Different rules and regulations are implemented on businesses while performing business activities in different nations around the globe. Various laws such as health and safety laws, employment laws, discrimination laws, equality law are applicable on all the business organisations. In UK laws and regulations that are applied on telecommunication businesses are strict and each business needs to follow such rules in order to perform in legal and valid manner. At the present time there is high amount of legal instability in UK in all form of business organisations. The high amount of uncertainties in the legal environment of business is served as a threat to business because business losses their power to anticipate future in more certain manner. When anticipation of laws become complex then threat of legal compliances arises for organisations like Vodafone working in the telecommunication industry. As frequent changes as per political and environmental situations are made in the legal policies of the business and complying with all these changes become difficult and threat in long run.

• Environmental:

The UK business environment has been currently very much focused upon the environmental concerns that are being evident within the nation. Moreover, there are environmental protection policies and legislations that are required by the companies within the telecommunication industry to follow as part of their CSR activities. This represents the sector and companies like Vodafone with an opportunity to gain government and communal support through enhance their sustainable networking practices which would contribute in protection of the environment (Rugman, and Verbeke, 2017). For get Assignment Writing Service Uk talk to our Experts.

Porter's Five Forces Analysis

This framework is associated with essential analysis of the industrial attractiveness of the sector based on several forces which have an impact on the working of companies. Hence, in relation to the telecommunication industry of the United Kingdom, Porter's Five Forces Analysis is applied below:

• Supplier's Bargaining Power:

These are the individuals who supply the company with effective and essential raw materials that are essential to manufacture the finish goods. In relation to the telecommunication industry within the UK, the number of suppliers are quite large due to ample number of buyers and organisations. This leads to a moderate bargaining power of the suppliers due to the fact that the switching cost in this industry is quite low. Moreover, the suppliers provide their materials at fairly standardised pricing, which again reduces their bargaining power with respect to the industry and companies like Vodafone.

• Buyer's Bargaining Power:

These individuals are the reason for existence of an organisation as they buy the offerings of the company. In context with the telecommunications industry, the switching cost for buyers is very low due to the competitive pricing strategies by organisations such as Vodafone. This enhances the bargaining power of suppliers for the industry and its companies. However, in order to deal with the same, Vodafone is required to differentiate its offerings and innovate in relation to ensure decrease in this bargaining power.

• Threat of Substitutes:

These are the products and service that could be used in place of the offerings by an organisation. Furthermore, in context of telecommunication industry, there are several substitutes within the sector such as Instant Messaging, IP telephones, etc., which enhances the threat for businesses within the sector such as Vodafone. Hence, in order to deal with the same, the firm could ensure merging or acquiring similar smaller scale companies to enhance its market share and cope with the trend (Parawansa, 2015).

• Threat of New Entrants:

Setting up a business organisation is very difficult within the sector due to heavy investment, supply chain management and marketing activities. Hence, it reduces the threat for new entrants for the sector. However, there are certain companies such as BT Group which are bringing in new ways of doing business by SD Wan Technology which is a coming of age technology being used by new organisations. Hence, this threat is high for Vodafone. To ensure decrease within this, the firm must continuously work upon innovation of its services and processes to access new breakthroughs in technologies to enhance its competitive positioning.Want to get management assignment help ? Talk to our experts.

• Existing Competition:

There are certain organisations within the UK, such as Virgin Mobile, EE and U2. These organisations work with effective innovation and better quality services within the United Kingdom. Moreover, due to competitive pricing within the industry, these companies offer their services at somewhat medium to lower price range, which enhances their threat for other players such as Vodafone. Thus, to tackle this issue, the organisation must focus on differentiating its offerings which would allow the firm to exercise better functioning within the marketplace.

INTERNAL ANALYSIS

TOWS Framework

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